Late in 2010, as I was writing Philanthropy and Social Investing: Blueprint 2011, I spent a lot of time talking about the importance of the U.S. Supreme Court’s decision in Citizens United vs. The FEC. In this decision, the Court ruled that corporations have free speech rights like individuals and therefore can fund political broadcasts in election campaigns.
I still think this decision is a harbinger of great change for the social sector. It calls into question established practice for nonprofits regarding their advocacy activities, opens the floodgates to hundreds of millions of dollars in contributions that will flow through nonprofits to political campaigns, and shifts the nonprofit landscape as significantly as the rise of market-based solutions to social problems.
Our old mental models of three sectors—public, private, and independent—simply doesn’t fit anymore.
But Citizens United is just one example of the shifting regulatory landscape for nonprofits in the United States. Here are some other issues to note:
- There will be new rules on donor disclosure and tax collection on gifts in reaction to Citizens United.
- The class action suit being considered by the State of Montana against Greg Mortensen and CAI raises whole new issues about donor power and control.
- We’ve had calls already for new nonprofit structures.
- Budget cutting recommendations that include complete revisions of the tax code and would do away with charitable deductions are getting real consideration in DC.
- B corporations and L3Cs have already changed the landscape for social good by revolutionizing the corporate code.
- Digital information and the open government movement present new opportunities for thinking about how nonprofits/foundations do and should share their information.
- Informal networks for change, such as CrisisCommons, present incredible opportunities for new governance mechanisms—at a very large scale.
- The role of crowds and the transparency movement raise new questions about how to hold organizations accountable. And to whom.
- Impact investing is gaining all kinds of traction. It brings a whole new set of regulatory actors, including the SEC, FINRA, and the SIPC into the social sector.
- The “sharing economy” is growing, and it is already actively considering new rules to guide businesses and enterprises that provide “access, not ownership.”
When I put that all in one list I see a potential set of “new rules for a new social economy.” Looking at what this means, and what a system might look like if we “started from scratch” will be the focus of a new project I’ll begin working on in the fall at Stanford’s Center on Philanthropy and Civil Society.
I hope you’ll join us. Then come back here, and we’ll continue the conversation.