Tuesday, January 12, 2010

A decade of predictions

(Scorecard from Game 3, 1955 World Series, Photo by Wallyg, Flickr, Creative Commons)

Nothing like the turn of a calendar page to get everyone focused on the new. But what really distinguished January 1, 2010 from December 31, 2009? Perhaps the new year/new decade is not much more than a trick of the calendar, the power of ever-present human hope for a better tomorrow, and a whole lot of marketing.

Or maybe I'm feeling a bit cynical since it is now January 12 and I'm just getting time to write my promised review of last year's predictions. And not just for last year - but for the last 10 years.

As I had said at the end of 2009 I wrote a paper in 1999 called Foundations for the Future (published by USC). In 2006 I had a chance to revisit it, and was asked to do so again on its 10th anniversary. Because of a calendar commitment I cannot personally join the USC Forum to discuss what has happened since 1999 - so I thought I'd do so here. That meant I had to review a few things, like The Foundations for the Future (FfF) paper, my book, and 1350+ blog postings.

So here's a scorecard for the decade gone by.

Back in 1999 what did I think was going to matter in the decade ahead? In the trends section on pages iv-v of the FfF paper I say these trends will matter:
  1. New ways of organizing philanthropy that rely on information and technology.
  2. The involvement of the financial services sector as vendor.
  3. New access to information by the general public, nonprofits and change agents.
  4. Demographics (especially an aging population, the role of women, and growth and political power of communities of color).
  5. Global giving.
  6. Leveraging other people's expertise.
  7. Business models and a culture of entrepreneurship.
  8. Changes in the public sector's funding practices and expectations of philanthropy.
How did I do?

Let's start with #2. Fidelity Charitable Gift Fund just finished the decade as the 3rd biggest fundraising nonprofit in the country. Financial service firms matter to philanthropy.

#3 - The information/technology landscape today is totally different than it was in 1999. Google. Twitter. iPhone. Remember newspapers?

#4 - Recent research on giving emphasizes the roles that women play. The Baby Boomers are now being described as makers of a "purpose bubble." We've got plenty of work yet to do toward eliminating structural racism. And the U.S. has an African American President. Demographics matter.

#5 International giving trended up all decade long.

#6 - see below on Buffett and Gates.

#7 - I think its fair to say American's were somewhat obsessed with entrepreneurship (social and otherwise) all decade. My newest indicator of a trend? When Malcolm Gladwell publishes a piece in The New Yorker to show its faults. See this article in January 18, 2010 issue.

#8 Public funding - The USA started the decade with a budget surplus. Not the case today - public funding for domestic programs has changed accordingly. The Obama administration's approach to funding domestic programs and social programs are their own twist on that of the Bush administration's. Health care reform (if passed) will shift this again.

So I did pretty well on seeing the drivers of change. But not so well on calling out the extent of their impact. As far as change in how philanthropy itself would operate (#1) the information foundations that I hypothesized about in 1999 barely exist today - most foundations today do not operate all that differently from the pre-Google, pre-mobile, pre-crowdsourced, pre-citizen journalism days. Ironically, re-reading the 1999 paper it becomes clear that everything I said might happen could have happened. And did happen - at the edges. Why they didn't happen universally - or even on a broad scale - is well worth thinking about.

Sure there are lots of great new funders and experiments. Prize competitions, online applications, videos, crowdsourced donor advised funds, online data markets, lots of giving circles. Leveraged giving and the use of other's expertise catapulted into common parlance when Warren Buffett put Bill and Melinda Gates in charge of his philanthropy - an idea predicated on the trends already visible in 1999. And foundations share a LOT more information than ever before (thanks to pdfs), more have websites, more have searchable grants databases, and a few hundred are on twitter - which, of course, was not possible (or probably even imaginable) in 1999.

Some important information tools (In 1999 I wrote "Guidestar...is working to provide online access to the financial records of all 501 c 3 corporations" - It had just launched) have become standard practice, and today new players are innovating off of those early pioneers. Many of the e-philanthropy sites (doesn't that term look quaint, now?) catalogued in the FfF don't exist any longer - in fact, many of them failed between the time the paper was written in the Fall of 1999 and when it was first discussed in January 2000. The same kind of snapshot of online philanthropy sites today generates an equal number and similar typology - but the names have changed. We're likely facing a similar "death rate" for these enterprises now as we did then. Lots of churn (which is good) and a few will stick.

Most important, the slow adaptation of technology to the core practices of foundation philanthropy is powerfully visible when re-reading the FfF paper now. This is part of the point that is made in my recently -released Disrupting Philanthropy (DP) paper. The adoption cycle for new technologies and behavioral changes in market or electoral driven organizations is far faster than for philanthropy. In fact, the adoption cycle for philanthropy - of real behavior changing tools - has been so slow we ought to be able to accurately predict what will happen when the tools do finally get used, because we have so much evidence from elsewhere. As the DP paper notes, the technology that matters in today's philanthropy is not the "new new" stuff but the "old new" (databases, websites) stuff - because that is what is widely used.

The disruptions noted in the DP paper are happening outside of - and all around - foundations. The cost of technological innovation is so low - and the access to mobile tools and on-demand data have become pervasive across cultures - that foundations aren't such powerful gatekeepers to these resources anymore. The entire knowledge/information ecosystem around foundations has changed. Where change comes from (B corp anyone?), how it is organized (flash mob, anyone?), how it is reported (tweeting the Prop 8 court case, anyone?), are all different. Whereas in 1999 foundations were a gatekeeper to resources for the technology to make change happen, their hold on that lock doesn't matter as much anymore. Access is available at much lower cost (when was the last time you paid Google for anything?) and the expectations are that data can and will be available.

Looking back at just foundations over the last ten years I'll say I was wrong about the timeline on which they would change - unless you focus on the exceptions that show what is possible (and not the thousands who look just like their brethren of 100 years ago). I was right about what was possible and many of the ways it would matter. This reminds me that I can look for patterns in the present and the past but then must factor in the innate irrationality of philanthropy when I project their impact.

2009 Predictions Review
This time last year I wasn't going too far out on any limbs (partly because I took January off after my mother died). Here's what I was planning to see in 2009:
  1. Lower overall giving in 2009 than 2008 (We don't know yet. There was some good news for gifts to donor advised funds in 2009 but big gifts fell)
  2. Lots of mergers, both between nonprofits and among small funders. (Thank to Ellen Friedman for the comment on small funds). Again, we don't know yet.
  3. Madoff scandal + Clinton nomination to Secretary of State would catalyze calls for greater scrutiny of nonprofits. I'd say "increased scrutiny" was a yes.
  4. Calls for adjusting to a "new normal," more than a recession, new ways of doing business. I'd say we had a whole year of that - and may be more to come.
So my predictions for the year just gone by were at least half right (3 +4). More data needed to see how I did on numbers 1 and 2. My track record for the decade as a whole - I'd say the trends were right but I was overambitious on the extent of their reach. What do you think? Use the comments to tell me how you would score my work last decade.


Archana said...

Too soon to know on the 2009 predictions - not sure about the scrutiny (did you see the article in Nonprofit Law Prof blog about how the IRS approves virtually every tax-exempt application?).

But very good job on the decade predictions. I think there will be more of a sea change on the same issues in the year/decade to come - the change we saw at the edges was important to test things out and actually pretty revolutionary for just 10 years.

And I would echo the point about communities of color coming into their own and becoming forces in philanthropy - we founded South Asian Philanthropy Project and track a lot of resources about this theme at our site.

Lucy Bernholz said...

An exclamation point for my opening sentence - "the packaging of time is a journalistic convenience" Thanks Kyle!


Time is an enormous, long river.

Lucy Bernholz said...

re: Scrutiny - we had a good discussion about this research on the IRS and nonprofit approval here on this on the blog. Difference in scrutiny at establishment and over time - the whole regulatory review system of nonprofits in USA may be as fragmented as, well, that of the financial industry.
Thanks for writing in. Lucy