Top Ten Things to Look Forward To in 2008
#10 The torrid pace of nonprofit formation will slow. Both attorneys general and the IRS are casting a more careful eye on the definition of “nonprofit” and the taxes foregone. Time-to-approval will grow and the narrowing of the entry gate will slow annual growth.
#9 Congressional heat will abate. Too many other issues will dominate political posturing and positioning in the 2008 election year. Nonprofits and philanthropy may be a tempting target when times are quiet, but 2008 will not be a quiet year. Only fools will take comfort, however. The high probability of #7 below will re-ignite Congressional fires in 2009. This will be compounded by a growing body of economic research which is likening nonprofits in many service industries to for-profit entities and raising questions about the economic function of the nonprofit as traditionally defined.
#8 The news will be rising philanthropy outside the borders of the U.S. American philanthropy will be yesterday’s headlines; tomorrow’s headlines will be philanthropy in the emerging economies of the world.
#7 The economy will continue to be soft through the election. The mortgage fallout will get worse before it gets better. Endowments will struggle, nonprofit belt-tightening will ensue. But, Harvard will sail on.
#6 The nonprofit and/or philanthropic sector will see at least one financial scandal. For some reason, humans learn slowly. And, amazingly enough, there is almost certainly a human somewhere in the nonprofit sector who thinks he or she can actually get away with it this time. The human condition is unlikely to change in 2008.
#5 The trend toward innovation in finance will pick up steam and get even more complex. New finance leaders will bring new ways of thinking about finance to the nonprofit sector. Equity strategies, new definitions of capital, social enterprise models based on market definitions on the social commons will become as important to long-term nonprofit strategy as traditional fundraising. Those nonprofits who can master the innovation will thrive, those who do not would do well to pay attention to #3 below.
#4 Past growth in the numbers of nonprofits, which has outpaced growth in philanthropy, will begin to exact a price. Nonprofit mergers will spread in order to maintain organizational viability. The pain will be palpable unless small and medium-sized nonprofit leaders can begin to look at their organizations as service-providing entities whose measure is sustained quality and efficiency.
#3 – We will begin to see the first unraveling of mega-philanthropy strategies. You simply cannot push hundreds of millions of dollars from philanthropies separately through the current capacity of most nonprofits and see results come out the other end. Evaluations will start to raise concerns about strategy. Which will lead to #2 below.
#2 Philanthropies and philanthropists will be driven (willingly or not) into the arms of collaboration. There will be a quickening of interest in identifying problems for which solutions can, theoretically, get to scale under conditions of system-wide collaboration among funders and nonprofits. The corollary is that collaboration will drive philanthropies to think of themselves as investors and not donors. The challenge for nonprofits will loop back to #4 above.
#1 Health care, health care, health care. This will be the dominant domestic issue in the election. How it plays out will have huge implications for this driver of the nonprofit world, but especially for its funding, its regulation, and perhaps declining role of philanthropy in determining its future.
Yogi, forgive me, but here they are. The Top Ten for 2008.