Necessity is the mother of social innovation

Reposted (with edits and additions) from SSIR

Ah, December. The anticipation of snow, unless you’re already several feet under. The warmth of a fire, unless you live in the south. The excitement of winter holidays, unless you’re a grouch. Don’t forget the thrill of reviewing the year gone by and the accuracy of previous prognostications, while also prepping for the foolhardiness of sticking your neck out yet again and claiming trends, key changes, and buzzwords for the year to come. Ah, December.

Last year at this time I made several rather rash predictions. Briefly, they were:

1. One of the many philanthropic prizes launched in 2007 will succeed in motivating the solution it seeks;
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 political giving, embedded giving, and giving will continue to blur;
4. Half of the glossy magazines dedicated to giving that launched in 2006 or 2007 will fold in 2008; and
5. Nothing significant will happen to the regulatory structure that shapes philanthropy in 2008.

My full accounting of these predictions can be found here in this article, “Back to the Future” written for Alliance Magazine. You can find additional discussion of it here and here.

In brief, I was right on numbers 3 and 4, wrong on number 1, and we don’t have the data yet to assess number 2. Number 5 was so poorly worded (my fault) that I can claim to be correct simply by being selective about which regulatory frames I meant. Apologies – I’ll do better next time. In that same post I also identified six trends or events that would matter to philanthropy in 2008 – they were:

1.The economy.
2. Health care finance will start down the same slope as subprime mortgages.
3. Metrics
4. Markets
5. Bill Gates will go full time.
6. Race and age will matter

It is pretty clear in December 2008 that the economy and health care finance have profoundly shaped the direction of philanthropy in the last year – to say nothing of their effect on the U.S. Presidential election. Discussions of metrics and markets were plentiful and some progress has been made – from the Acumen Fund’s Portfolio Data Management System and mainstream media’s attention to metrics to conferences on Social Capital Markets and the buzz around philanthrocapitalism. Bill Gates as philanthropist has garnered attention from his speech on creative capitalism to his retirement in June to his launch of a new company to the rapt attention paid to the Foundation’s investment policies and grants budgets. And, finally, the sector is beginning to pay real attention to racial diversity of leadership, grant making, encore careers, and next generation leadership issues – plenty more to be done, but I’d argue these issues have moved out of the wings and into the center of the room.

So what about 2009? Here are some thoughts, semi-organized into the various kinds of capital we need to make change happen.

Financial Capital
I’m going to recycle prediction number 2 from 2008 – big giving is going to come from off America’s shores in 2009 – we’ll see at least 30% of the year’s biggest gifts coming from/going to non-Americans. And we’ll have data to show this.

Overall giving in the U.S.A. from all sources (foundations, individuals and corporations) will drop in real dollars in 2009 compared to 2008. (There I go again, sticking my neck out).

U.S. public expenditures on domestic programs will dramatically increase - causing a reconfiguration of the sectoral relationships (public, commercial, philanthropic) that have developed over the last decade. This is a change for which all nonprofits and philanthropists should be planning.

Human Capital
Social action by young people and elders will keep us hopeful and engaged.

We will have two huge bubbles of people available to work for (or in need of services from) the social sector. At one end are the "un-retireds." These folks will change the nature of our communities as more and more elderly people have to stay in or return to the workforce. At the other end of the age spectrum, we will have a bubble of younger people who planned to enroll in college but become unable to do because of increased costs, limited access to loans, and less financial aid from endowment-challenged colleges.

Real brainpower from young people, new college graduates and all those business schools teaching social entrepreneurship will energize social and community organizations. The millions of first-time voters from the 2008 election and the boundless energy of teenagers will bring a mass of lowest-cost, tech-dependent, temporary, "get something done"-oriented actions. These are actions, not organizations (influencing the next category, institutional capital)

Given the changes in political leadership in DC we will see a wholesale shift of "insiders" and "outsiders." Huge numbers of leaders from liberal/progressive nonprofits, think tanks and activist organizations will move into government positions - leaving their organizations to find new leaders as well as reconsider their roles now that they have allies in the public sector. The opposite is true for politically conservative organizations.

Institutional Capital
The number of nonprofit organizations in America will shrink through mergers and organizations going out of business. Paul Light has pegged this decline at 100,000 organizations or just fewer than 10% of the whole. Others I know are predicting shrinkage in numbers of up to 25%.

On the other hand, social enterprises will increase. President-elect Obama is promising investment in them and has already established a working group on social innovation. Necessity is the mother of social innovation. One problem – we don’t have any accurate or longitudinal counts (or even definitions) of social enterprises – so I can’t be wrong on this, because we don’t have data. (What an opportunity….)

New corporate structures, such as B Corporations and L3Cs will significantly expand in 2009 – B Corps will double in number and market reach.

The market of online giving marketplaces will mature – we’ll see this in shrinkage and consolidation (there are more than 120 of these now, they’ll be fewer than 100 this time next year) and the solidification of market leaders.

Regulatory Framework
A federal office supporting social investment will launch and begin work (drawing from what exists) on metrics and definitions.

The B Corporation will be writ into corporate law in at least one state.

Advocacy organizations will be shifting tactics as the new Congress and new Presidential administration take office. From those who now have access to those who are now political outsiders we will see regulatory consideration over philanthropic support, public support to faith-based organizations, and/or advocacy itself.

What do you think? What do you predict? How can you and your enterprise take advantage of these trends or changes? What will you stick your neck out about?

Tags: philanthropy, socialchange, socialentrepreneurs, predictions, 2009, technology, buzzwords