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How-to Library • Featuring articles from past issues of Contributions

A Look at Trends Likely to Affect Your Organization this Year

by James Gelatt

It’s a new year and an appropriate time to examine emerging trends likely to impact your nonprofit either positively or negatively.
           
Trend #1: The economy will improve, but at a slower pace for nonprofits.
             
By definition, nonprofits are the third sector, and unfortunately, that is how they tend to be viewed by some – perhaps many – in tight economic times. Unfortunately, the trend is not limited to individual, corporate or foundation donors.

According to The Chronicle of Philanthropy, over 40 states have reduced their spending on services including education, services for the elderly and those who are disabled, and healthcare.

An example: New York State has sought to reduce its budget deficit in part by delaying payment to nonprofit service deliverers and reducing payments to county governments, which in turn reduces payments to service providers. Wyoming County indicated in late 2009 that it was prepared to discontinue programs such as human services and programs for senior citizens if the state funding delay was prolonged.
           
At the local level, tight funding in schools tends to result in cutbacks in “expendable” programs – such as music and arts.
           
When will the situation turn around? According to Philanthropy Matters: “The correlation between stock market changes and giving has only grown stronger.” In short, individual giving is not likely to recover until the stock market itself recovers.
           
At the same time, there is some surprising good news: anecdotal evidence indicates that local charities such as those serving the most needy fared quite well in the last quarter of 2009.
           
Trend #2: Governments are seeing nonprofits as a drain on their financial resources – and a source of funds.
           
The tuition tax proposal pushed by Pittsburgh’s mayor may be temporarily tabled, but the idea is not going to go away. By whatever name, Payments in Lieu of Taxes are going to be seen by state and local governments as a logical source of revenue.

Why let colleges and other nonprofits enjoy tax free real estate, especially given the size of the some nonprofit endowments? Sure, Harvard’s endowment has gone down enormously – but can you name one local or state government that has that kind of reserves?
           
This trend has been playing out in nonprofits for at least the last two decades. College bookstores were once owned and run as nonprofits, with the income accruing to the university. Nonprofit hospitals have come under scrutiny for enjoying the benefits of being “charitable” without always living up to that commitment.

Trend #3: Healthcare will continue to dominate the news – and not just because of the federal healthcare initiative.
           
Healthcare costs will continue to rise due to three trends:

1) An aging population
2) Improved technology; and
3) Unhealthy lifestyles. 

One of the challenges facing nearly every industrialized country is an aging population – meaning that an increasing proportion of persons are withdrawing funds and tasking the Medicare, while proportionately fewer are adding to the “pot.”

Sarah Palin notwithstanding, we are not at risk of death squads determining who has the right to live. But it may be inevitable for governments and third party payers to institute triage. It’s already happening: Oregon has for years had a healthcare system that considers age, wellness, and likelihood of improvement in approving healthcare expenditures. It may be telling that the Oregon plan was fostered by a lawmaker who was also a small town doctor.
           
Trend #4: Foundation grantmaking will be affected over the long term by the economic challenge now being faced.

Foundations are facing a paradox: Their assets have been dramatically reduced, while at the same time public pressure for them to address pressing needs has increased.

According to The Chronicle of Philanthropy: “Some foundations have said they may close at a point in the near future and spend the entirety of their assets” in response to growing social needs.
           
Trend #5: The concept of “philanthropy” continues to undergo rethinking.
           
Three indicators:
           
1) Corporate Partnership. Steve Worth of the Plexus Consulting Group, observed: “Nonprofit and for-profit organizations have long been considered uncomfortable bed fellows … “ But the “traditional lines between for-profits and nonprofits are blurring … Corporations increasingly are seeing the value of ‘doing well by doing good.’”
           
2) Catalytic Philanthropy. A small cadre of philanthropists has been looking at ways to restructure – okay, reinvent – philanthropy in order to make it more effective.

Catalytic Philanthropy, as it has been dubbed, is based on four principles for philanthropists:

1) Take responsibility for achieving results. Donors need to become involved in the causes that they support. It’s more than money; it’s commitment and involvement.

2) Mobilize a campaign for change. For real change to occur, it needs to cut across sectors – it needs to be systemic.

3) Use all tools available. Philanthropy is important, but it is not the only source available. Successful philanthropy uses advocacy, legislation, partnerships, etc. Here again: it’s needs to be systemic.

4) Create “actionable knowledge.” If information on successful grant programs remains within the corporate or foundation sponsor, only the donor and nonprofit benefit. Share what is learned about best practices.

Trend #6: Online giving will continue to grow. For direct mail and telephone solicitation, the end time may be coming.
           
The Omnibus Online Survey found that more than 60 percent of online consumers in the U.S. said they would be donating, online, to a charity of their choice between November 1st and December 31st of 2009.

According to the Convio, which conducted the survey: “American consumers will be going online in record numbers to support charitable causes.”
           
Data on direct mail and telephone solicitation are hard to evaluate. But both are working against two growing trends:

1) Use of online vs. “snail mail.” Snail mail is just that for Millenials, Gen Xers, and many Baby Boomers. 

2) Reluctance to respond – much less give – to telemarketers, whose approach still tends to be formulaic and intrusive.
           
Trend #7: Voluntarism continues to be a vibrant force in American philanthropy.
           
Harvard Business Review recently observed: “Studies have shown that more employees are looking for ways to give back to their communities … don’t think of it as a loss of productivity; instead, think of it as a way to keep employees loyal and engaged.”
           
An accidental benefit of the economic downsizing has been an increase in volunteering. Having more time on their hands, some American have been opting to invest their hours in helping others.

There are many more trends at work. I’ve just tried to indicate what I have believe are those that may impact what we do and how we do it in our nonprofits.
           
Trends are just that. They are indicators, suggestions on which way the wind is blowing. The future is not fixed. In the toughest of times – and especially in the toughest of times – we can create the future that we want for our nonprofits, for those we serve, for society.

 

 

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