Seven Predictions for Philanthropy in 2012

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Neils Bohr and Casey Stengel both uttered the Yogi Berra-ish statement that predictions are especially difficult concerning the future. They were only addressing quantum mechanics and the prospects of the Mets’ pennant chances, not philanthropy, amidst a persistent economic free-fall.

But the quote is apropos here given the possible twists and turns for philanthropy writ large in 2012, drawing from big themes in play during 2011. Here are some:

  1. The Occupy Wall Street movement has tapped an unfortunate wellspring of popular discontent with our economy, a distrust of wealth and power. While the Occupy movement might wane, the discontent it represents will deepen, as unemployment and underemployment remain high throughout the year. Unlike its politically conservative counterpart, the Tea Party movement (and said movement’s relationship with the Republican Party), the Occupy movement won’t move into the electoral arena, and may not become a wing of the Democratic Party. The combination of OWS and the Tea Party has revived concepts of social and political movements and emboldened advocacy on issues of wealth and power (such as the pressure on New York Governor Andrew Cuomo to preserve rather than terminate the state’s millionaire’s tax, discussed in the NPQ Newswire here and here, which may lead to more requests for foundation support from advocacy groups taking on policy issues of wealth and taxation.
  2. Without overstating what Occupy Wall Street protests and the Tea Party, probably, too, have accomplished, one impact of both has been a change in the political context or dialogue of American politics. Institutional philanthropy itself will face pressure that might be seen as OWS blowback. The protesters representing the “99 percent” may aim part of their critique at foundations as instruments created and largely controlled by the “1 percent.” It may be very uncomfortable for some foundation people to see themselves portrayed as part of the problem rather than the solution. It wouldn’t be surprising to see 2012 iterations of the Occupy movement looking at de-concentrating concentrations of wealth, potentially by aiming at establishing minimum payout rates for public foundations and donor advised funds, and raising the payout requirements on private foundations—and perhaps even adding some spend-down language on donor-advised funds. The stance of foundations against the populist critique is not helped by the Foundation Center’s observation that 60 percent of foundations accounting for roughly one-third of annual foundation grant dollars do not accept unsolicited proposals—that “you need an invitation” to apply.
  3. One movement that is destined to take off this coming year is foundations investing their assets with corporations that generate economically, socially, and environmentally positive impacts on communities and the nation.  The good work of campaigns such as More to Mission and the exemplary practices of foundations like the F.B. Heron Foundation have been paying off and will continue to do so in 2012 and beyond.
  4. The public programs that foundations may be counting on from their federal government partners may show some discretionary signs of federal appropriation life—programs with social innovation nomenclature being a hot ticket for both the White House and Congress to find spare cash for, regardless of the constrained federal budget. It is hard to see significant appropriations going to mainstay government programs at HUD, HHS, and Agriculture—though they should. But niche programs with social enterprise language might benefit from miraculously reprogrammed cash—particularly if both political parties try to tap unspent funds (such as lagging Community Development Block Grant dollars) or funding that has been paid back (such as TARP dollars).
  5. One area of great concern, however, is the nation’s humanitarian aid budget, the non-military foreign aid that goes through USAID, which many foundations count on as a necessary counterpart to their overseas giving. Humanitarian aid has been shrinking, and now a hostile, increasingly isolationist Congress has the USAID budget on the chopping block. The Global Fund for AIDS, Tuberculosis and Malaria recently announced that it won’t make new grants—at least until 2014—due to donor country cutbacks. Even if a debilitated USAID survives, the Global Fund won’t be alone among international NGOs facing serious retrenchment challenges—and likely looking to the foundation community to fill critical funding gaps.
  6. The collapse of the supercommittee was only the latest guarantor that the charitable deduction was not going to be capped, especially while the recession lingers. The charitable deduction debate has been political kabuki theater practiced by some of the nation’s nonprofit leadership organizations. If they really feared that President Obama or the supercommittee were going to sharply limit the deduction, they would have called for its separation from the mortgage interest deduction and then taken aim at that supremely regressive and, compared to the charitable deduction, expensive element of the tax system. Expert discussions, such as a recent convening at the Urban Institute, quickly reveal that the impact of capping the charitable deduction would be relatively small. The likelihood of a reduction, much less elimination, of the deduction is virtually nonexistent, but the fear lies in opening the door to a reconsideration of exactly what should count as charitable: It is impossible to believe that in 2012, some member of Congress won’t be attracted to convening a hearing or roundtable examining the extent to which the charitable deduction does or doesn’t adequately target the poor, or assists charities such as nonprofit hospitals that might be a little lacking in their nonprofit bona fides.
  7. Whether one believes that charitable giving has recovered or not, the Giving USA statistics reveal a class divide in the nonprofit sector.  The bigger, better-connected nonprofits—the members of the club, so to speak—have done much better than the bulk of nonprofits, which are becoming ever smaller. That class divide is actively promoted by many foundations as well as by the federal government, attracted as they are to the nonprofits of scale, equating scale with impact. That will continue in 2012, with deleterious effects on grassroots nonprofits.

Accept these predictions for exactly what they are—the musings of someone who was supremely confident that John Kerry couldn’t possibly lose to George W. Bush in 2004, and that the Boston Red Sox had sewn up the American League East this year roughly around the All-Star break. 

  • Henry A J Ramos

    Rick: I always appreciate your insights and perspecive. I think your seven predications for philanthropy in 2012 are very thoughtful. Sadly, after a quarter century spent in the philanthropic sector myself, I predict that nothing will change in 2012. Philanthropy has become so insular in relation to the realities playing out in the rest of the world that it seems increasingly immune to needed fundamental changes in focus and approach, except at the very outer margins of the field.

  • Joe Kriesberg

    Number 7 really resonates with me!