This is my last SSIR post of 2007 - so it is time to ask some big questions – two of them, actually (though each has many subsections).
First, what really matters for philanthropy? I’ll list some six big issues for the sector – opportunities, trends, and challenges that we’ll face in the next year. My hope is that this will spark discussion (and perhaps even leadership) to move the whole sector forward.
Second, what will happen in 2008? Here are five predictions about philanthropy in the next 12 months, and hope you call me back this time next year to see how I did.
What matters to philanthropy in 2008?
1.The economy matters.
Almost all economic predictions for 2008 point to much slower growth, and even recession, in the US economy, which would matter domestically and globally. How do recessions, or even periods of slowed growth, matter to philanthropy? Let’s start with the big money – recessions matter to endowment growth and investment practices. There is a budding movement to foster greater use of foundation endowments for program or mission related investments, will this be stopped before it starts if the economy tanks? Or will larger investment losses actually catalyze more creative applications of foundation financial resources? Second, what about philanthropic spending rates? Warren Buffet recently took the stand calling for greater payout by large endowments – certainly funders interested in fair housing, lending practices, poverty alleviation, job creation, economic development should be getting ready now for the effects of a slowing (or receding) economy.
2. Health care finance will start down the same slope as subprime mortgages. This matters.
Hospitals that serve lots of uninsured patients have discovered how they can use the capital markets to collect their fees. The hospitals package up outstanding debt and sell it off to financial service firms. The good news – these hospitals get paid. The bad news? The finance companies impose double-digit interest rates and hire very aggressive collection firms to chase the poor people who couldn’t afford to pay for insurance, let alone usurious charges on top of the hospital bill. If this sounds familiar, it is because it’s the health care equivalent of mortgage-backed securities. Only when these loans fail, I guess the banks will have to take back the kidney that was transplanted or stop your diabetes treatment. Health focused philanthropy could make a major contribution to the well being of our entire nation if it began to deploy some of the “market organizing” savvy that Clinton and Gates and others have tested in developing countries to the dismal state of health access in the U.S.
3. Metrics matter – and the sector will finally make some real progress in developing them.
Check out the December issue of Alliance Magazine to see where we are now, and where we’re going. Institutional philanthropy – foundations, multi-family offices, donor advised fund purveyors – need to lead and inform, and perhaps, set realistic boundaries around these developments.
4. Markets matter
The lines between social entrepreneurship, double-bottom line businesses, nonprofits, and privatized public service providers are going to become ever more blended. Some of the many emergent social capital market mechanisms (social stock exchanges, equity products, indices) will take hold, and the discussion about revenue for public benefit work, and the awareness, acceptance and applications of organizational structures such as B Corporations and L3Cs, will expand significantly.
5. Bill Gates goes full time.
Given all that he has done as a part-timer, this ought to be very interesting. It is also somewhat unprecedented – to my knowledge, no other founder of a major foundation (Bertelsmann, Rockefeller, Carnegie, Ford, Kellogg, Packard, Hewlett, Sage, etc. ) ever devoted themselves exclusively – or even primarily – to their philanthropy.
6. Race and age matter
If Tom Friedman is right and the world is flat, than geography matters but in very different ways than it used to. Given the 24/7 nature of communications access, PDAs, Slingbox and Tivo and YouTube, we know that time matters in new ways. What we have not figured out yet (and probably won’t in 2008, but they still matter) is how the diversity of experience, culture, and age that mark our society can and will shape our institutions, expectations, and leadership roles. Next year will bring us some new, important lessons on this front, if only because we get one year closer to major institutions being created and led by anyone other than a white baby boomer.
What will happen in 2008? Five predictions about philanthropy for the next year
(I am not going to bother with easy ones, like a big scandal in the nonprofit sector or the jaw-dropping endowment that will be established for somebody’s dog).
2. At least one-third, and maybe as many as one-half of the world’s top ten largest gifts in 2008 will be made by non-Americans to non-American institutions.
3. The lines between giving, giving, and giving will continue to blur.
We will give gifts to family and friends that are charitable gifts in their names. We will make political contributions with a laser-like focus on supporting those in politics who care about the same social issues we support with our philanthropy. We will give more “embedded gifts,” and may even experience donor fatigue as the percentage of our basic financial transactions that include a “little bit extra” for charity become pervasive.
4. Half of the glossy magazines dedicated to giving that launched in 2006 or 2007 will fold in 2008.
5. Nothing significant will happen to the regulatory structure that shapes philanthropy in 2008 – there will be no new governance requirements, no new reporting requirements, no changes in tax deductions or exemptions. Even in the face of the big scandal that will occur, probably involving fraudulent use of online giving technologies or identity theft.
There you have it. Please be sure to let me know what you think matters, and feel free to add your predictions to the list. Just be ready to come back and defend your choices in December 2008.
Lucy Bernholz is the Founder and President of Blueprint Research & Design, Inc, a strategy consulting firm that helps philanthropic individuals and institutions achieve their missions. She is the publisher of Philanthropy2173, an award winning blog about the business of giving and serves as Executive Producer of The Giving Channel on Fora.tv.