Three Shifts Seen as Shaping Nonprofit Sector’s Future

March 6, 2012; Source: Northern California Grantmakers

At the recent annual meeting of Northern California Grantmakers, keynoters Lucy Bernholz of Philanthropy 2173 and Stanford University’s Rob Reich discussed three forces of change—what they call (and what Nonprofit Quarterly has previously referred to as) “tectonic shifts”—affecting the U.S. nonprofit sector. What’s particularly interesting is that two of the most dominant trends of the past decade, technological change and social networking, are apparently so embedded in our culture that they don’t bear special mention anymore. The three featured shifts all center on the redefinition of the fundamental role of nonprofits and philanthropy in our society.

One shift that was presented is the continued blurring of the boundaries between sectors, and there’s a new wrinkle. The blurring of boundaries shapes not only how organizations work together across sectors, but also how individuals see the best platform for their own aspirations to “do good.” In turn, this affects how the nonprofit sector can attract its next generation of leaders and donors.

A second shift, Bernholz and Reich say, is the role of private resources in reshaping the social contract that defines what we hold as key social benefits, rights and responsibilities. On the one hand, the “public” nature of the public sector is being eroded by such forces as sustained structural budget deficits at all levels of government, the expanded and increasingly opaque role of corporate influence (as enabled by the Citizens United court decision regarding campaign contributions) in politics, and the overall dysfunctional partisanship that has paralyzed policymaking. On the other hand, technology and tax reform are enabling a new “social economy” to mobilize private resources in new ways for social benefit.

Finally, the third shift presented is the pressure for tax policy reform that directly affects nonprofit operating costs and the incentive structure for charitable contributions. While potential elimination of personal federal tax deductions for charitable contributions is the most publicized example, other examples include localized challenges to nonprofit exemption from property taxes and fees, often in the form of payments in lieu of taxes. The last major change to related tax laws happened over a half-century ago with the Tax Reform Act of 1969, according to Bernholz, who believes new tax reforms offer an opportunity to align tax policy with financial tools and incentives that better fit today’s nonprofit sector.

Whether all these shifts create more opportunities or challenges, nonprofit leaders will need to be active in the political arena not only to address mission-specific issues, but also to shape our sector’s fundamental future role for society. Are you ready? –Kathi Jaworski