Predictions are a dicey business, though they’re certainly a cottage industry at this time of year. Given the changes and forces roiling the once-placid waters of the social sector, however, a look ahead to the trends and ideas that may help define the coming year for nonprofits, social enterprises, foundations, and do-gooders of all forms and structures is worth the effort. My own experience in this exercise over the last decade or so argues for a meta approach, so we’ll dive into some of the bigger thoughts from other thinkers out there and add a few morsels to the stew.
1. Privacy vs. Transparency
The revelations of widespread government surveillance in digital communications brought privacy to the fore in 2013, and in social ventures – particularly among donors – it’s easy to see its prominence continuing next year. Stanford social sector trend-watcher Lucy Bernholz named privacy one of her buzzwords for this year in her annual Blueprint forecast: “Our pervasive reliance on digital communications makes us all vulnerable, and the delicate balance between private and public that defines associational life makes us all stakeholders.”
Yet it seems to me that we’ve never really had the privacy conversation in the nonprofit world, and that the trend lines point toward more transparency and less privacy – at least with respect to philanthropic transactions – in the coming year. There’s a real tension here: in the U.S. nonprofits themselves, including foundations, are in part defined by what they are required to disclose to the IRS; other reporting is largely voluntary. This has always stood in great contrast to the political world, where most transactions – though notably, not as many in the post Citizens United world of SuperPACs – are public. And in fundraising, there are always new services and databases coming on line that are designed to ease donor identification and research – which might be framed as a continued erosion of privacy rights (I know a few donors who certainly think so). And Bernholz predicts that “donor disclosure rules will return to the US media spotlight with the 2014 midterm elections.”
So where’s another potential flashpoint? Here’s an idea that might have been unthinkable a couple of years ago, but I believe is quite likely now: the nonprofit sector will have its own Edward Snowden in 2014, a leaker who blows the lid on the finances and practices of either a major national nonprofit or foundation or social venture in stunning detail, perhaps spurring other revelations from other leakers in other organizations. I think the only safe Snowden prediction is that there will be other Snowdens.
2. Crowdfunding vs. Crowdhyping
Have we reached Peak Hype on crowdsourcing yet? I think this will be a major question during 2014, when the possibilities of fundraising on myriad crowdfunding sites meets the reality of a glut of underfunded projects, donor fatigue and the limits of the marketplace for this style of development in general. Don’t get me wrong: I think crowdfunding is here to stay, and that networked technology will actually improve ease of use and accessibility for those seeking funding.
“Right now there are hundreds of platforms active in the space,” writes Charles Luzar in a generally optimistic and hype-free post in Crowdfund Insider. “I think those numbers will shrink as some early market entrants fizzle out for a lack of deal throughput or backer interest. Expect more experienced market entrants in the future, too… refugees from Wall Street and the banking industry looking to create a more meaningful impact with their businesses.”
Journalist and changemaker Marcia Stepanek, my colleague at the Heyman Center for Philanthropy and Fundraising at New York University, also resists the pull of crowdfunding hype. “ Crowdfunding is still a relatively new concept in the nonprofit arena, and is attractive for organizations who seek to engage supporters and potential supporters around their causes,” she said. “There’s no question that, done well, crowd funding can raise awareness for a cause and bring new donors to the table. But it’s still way too early to tell if crowdfunding is adding vast new sums to the total intake of most social good organizations. At present, crowd funding is more of a marketing play than a way to sustainably increase support over time for an organization.”
I think there are two ways to view the crowdfunding phenomenon – one, as the natural extension of traditional fundraising (people asking people to support causes) and as a super-heated flavor of the moment based on some initial success stories, and new platforms. No wonder nonprofit technologist Steve MacLaughlin of Blackbaud made this one of his 2014 predictions: “Some new online social media service appears and swarms of guru consultants tell nonprofits they absolutely must use it.” And here’s Bernholz’s tough-minded prognostication: “We will experience a major scandal in the crowdfunding marketplace.”
3. Philanthropic Flat Line vs. Increased Resources
Steve also predicted that nonprofit giving will continue to grow, “but at less than 10 percent.” That means that philanthropy will remain at its historically flat level – roughly two percent of U.S. GDP, in good times and bad.
Over at the Social Velocity blog, Nell Edgington predicts a renewed effort to increase this percentage – a goal many in the philanthropic sector have embraced for years: “…the big question whenever a new funding vehicle enters the space (like crowdfunding most recently) is whether it will be the magic bullet to shatter that glass ceiling. But we are not there yet. As social challenges continue to grow, the wealth gap continues to widen, and a new generation of donors comes of age, there will be increasing pressure to channel more money (not just the same money through a new vehicle) toward social change.”
Edgington also echoes my thoughts earlier this year about the increased demand for nonprofit services: “Evidence increasingly reveals that despite our best efforts the gap between the rich and the poor is widening, not shrinking. This growing disparity means that the work nonprofits do to address the ramifications of these inequities is in growing demand. The problems are simply too big and getting bigger every minute. At the same time government resources are shrinking so the greater burden for solutions is increasingly placed on the shoulders of the nonprofit sector.”
I think this tension will continue to grow during the year, occasionally exacerbated by funders’ growing insistence on tightly measured impact and carefully directed commitments – general operating funds becoming still harder to attract for existing nonprofits. This tension may be mitigated by a new, more muscular outlook by nonprofit leaders, who are beginning to argue that their work – and the work of their organizations – should be valued at least as highly as that of for-profit enterprises. Call it the Dan Palotta school of nonprofit management, but I think it’s catching.
4. Other Trends To Watch
At the Toolbox, journalist Melissa Jun Rowley identifies a couple of other areas to watch:
- More support for social impact bonds, ”to fund social interventions in exchange for a return on investment if the programs are successful” (still in the experimental stage in the U.S.)
- Growth in social enterprise incubators and fellowships, which encourage more startups and “are sprouting up like dandelions.” (I worry about the over-heating of this area when considering the paucity of actual funding for the ventures).
And here are two more from Steve MacLaughlin, also related to new structures and social enterprise:
- Social good ventures that aren’t 401c3 orgs reach a tipping point and get significant media coverage in 2014.
- Better Together: Two large and well known nonprofit organizations will merge in 2014 to reduce costs and do more good.
Finally, here’s one last crystal ball nugget from Lucy Bernholz that caught my eye – mainly because I hope it comes true:
- American foundations will launch several new programmatic initiatives rooted in concerns about the polarized and paralyzed state of American democracy.
Considering that U.S. philanthropy is a direct outgrowth of a strong liberal democracy – and one of its greatest achievements – I think that one’s a keeper.