Fortune
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The most insightful statement about predicting the future comes from Nobel Prize-winning chemist Neils Bohr, who reportedly once said, “Prediction is very difficult, especially if it’s about the future.” New York Yankees catcher Yogi Berra once said roughly the same thing, though he also said, “The future ain’t what it used to be.”

Berra and Bohr seem to be describing the future that faces nonprofits and foundations in 2013, based on dozens of predictions we received from smart people in and around the Nonprofit Quarterly orbit. It would take several columns to reprint all of them, so this Cohen Report excerpts some telling commentaries that lay out thematic predictions for the coming year. In some cases, we hope that they are on the mark. In others, we hope that some of these Cassandras (the mythic Greek character who knew of the future but couldn’t change it) are mistaken.

Relationships with Government

Heading toward the precipice of the fiscal cliff, people with predictions for the sector were notably absorbed with what will happen to nonprofits at the hands of—or in bed with—government. With “organizations such as Robert Egger’s CForward endorsing candidates, and with other thought leaders calling for more political involvement, DePaul University professor John Ronquillo observed, “expect nonprofits and government to get even more intimate.”

The key word, as one would expect, is “partnership,” but our prognosticators didn’t always describe where partnerships with government might go in positive terms. Notwithstanding what he sees as “constrained public sector investment,” Ian Bautista, the president of the United Neighborhood Centers of America, foresees 2013 as “a breakthrough year for cross-sector collaboration (corporate, public, and nonprofit sectors), unlikely partnerships, and meaningful results for the people who can most appreciate them.” Delia Coleman, the public policy director for the Donors Forum of Illinois, sees government funding constraints as problematic:

“Public-private partnerships will face a crossroads—the desire for them will increase but, as government capacity continues to be privatized, the community-level impact of the partnership itself will diminish.”

A frequent Nonprofit Quarterly author, Nonprofits Assistance Fund Executive Director Kate Barr, based in Minneapolis, seemed to lean toward Coleman’s perspective:

“During 2013 nonprofit leaders will understand that the funding relationship between government at every level and nonprofit service providers has permanently changed. States and the federal government will tackle their budget deficits and the resulting reductions coupled with stringent and demanding contract terms will force many organizations to assess the viability of some of their programs.”

Despite statistical improvements in macro-economic indicators such as the unemployment rate and job creation, nearly everyone suggested that social and economic conditions would still result in increased service demands for nonprofits despite less in the way of governmental support. But Phil Cubeta and Sara Lowry foresee governmental actions that will exacerbate need. Cubeta, the well known philanthropic advisor at Gift Hub, predicted, “Deficits will lead to austerity. Those serving the disadvantaged will see cuts at the very moment when social needs are increasing.” Lowry, the grants and special projects coordinator for the Allegheny County Library Association in Pittsburgh, agreed with Cubeta and took his prediction a step further:

“With the current discussions regarding the ‘fiscal cliff’ compromises, and the suggested cuts to benefits for seniors (Medicare, Medicaid, Social Security), I predict that more older adults will become poor enough to require additional assistance from local governments and nonprofit organizations including food banks, adult day care, transportation, LIHEAP, and housing.”

As Lowry notes, the array of programs available to nonprofits for addressing socio-economic need is in peril. Ronquillo thinks 2013 will be a “make or break year” for the Social Innovation Fund, which is highly touted, though it’s not yet clear what it is producing for social change. Massachusetts Association of Community Development Corporations President Joe Kriesberg foresees “some sort of deal on the budget that will trim, but not devastate housing programs,” though Eva Wingren of Mercy Housing in Washington, D.C. is concerned that “2013 will see a referendum on the Low Income Housing Tax Credit, a public-private partnership that is the largest creator of affordable housing, and indeed multifamily rental housing in general.”

Which programs survive or fail may be disproportionately influenced by a small number of people. According to Robin Rogers, a professor of sociology at Queens College and the Graduate Center at the City University of New York, “Following Bill Gates, the Walton family, Eli Broad, and other members of the .01 percent, the super wealthy will shift their money away from politics and toward favored social policy programs through philanthropy, particularly in education and urban policy.”

Charitable Deductions on the Cliff

The cause célèbre of the moment is whether the grand (or not-so-grand) bargain that President Barack Obama reaches with Republicans will call for a reduction in the incentives for charitable giving, perhaps moving toward Obama’s recommended 28 percent itemized deduction limit. Of those prognosticators who talked about the charitable deduction, most thought that there would be some contraction in charitable giving incentives through the tax code. Cubeta clearly sees the current fiscal cliff focus on the tax code leading to lower tax benefits for charitable giving. Philanthropy Northwest CEO Carol Lewis of also guesses that the deduction will be changed.

But that hasn’t happened to date, despite four previous proposals from the president for that change. Jack Shakely, the former president and CEO of the California Community Foundation, has written for NPQ in support of a change in the charitable deduction, but he doesn’t predict it will happen. In fact, Shakely predicts charitable giving will increase sharply in 2013 because “the often-floated decrease in the charitable deduction to 28% will fail to materialize. Instead, the top tax rate for the wealthy will increase to 39.6%, making charitable giving more attractive to the country’s top givers.” Similarly, fundraising specialist Alice Ferris says:

“Individual giving will rebound, but people won’t necessarily increase the number of charities they support…As the economy recovers, individuals will start to have more disposable income and be able to increase their giving…they will likely increase their average gift but not the number of charities.”

Jeanie Morgan, executive director of the Havasu Community Health Foundation in Lake Havasu City, Ariz., tends to agree, but focuses on givers who are closer to the kinds of people served by her nonprofit health center:

“I predict that our donations will continue to grow as they have for the past several years. The greater part of our support comes from those closest to the need. They give because they appreciate and endorse what we do. I think donors like ours will continue to support us, whether their donations are deductible or not, as long as the services and support we offer are relevant to current needs in our community.”

Whether or not changes in the charitable deduction go through, Terri Lee Freeman, the president of the Community Foundation of the National Capital Region in Washington, D.C., disagrees and predicts that “we are looking at a significantly noticeable contraction in charitable giving in 2013…While I think people will continue to give, they will likely give less and be much choosier about who receives their charitable dollars.” Perhaps Ferris is talking about improved economic prospects for wealthier donors, but Jeff Cain, the publisher of Philanthropy Daily and the president of the Arthur N. Rupe Foundation, sees a different economic picture. He expresses concern about “the toll that high unemployment, stagnant and declining incomes, and recessionary malaise have had on less wealthy donors.” According to Cain:

“Donors who give less than 2 percent of their annual income to charity and who tend to make many small charitable gifts throughout the year are often the lifeblood of small, local nonprofit organizations: they form the little platoons that prop up civic life and that look after the most needy, the ones that ‘big philanthropy’ tends to overlook. The interests of these ‘small’ donors and the nonprofits they support are different in kind than those of foundations and high-net-worth givers and their beneficiaries. Although they make up the bulk of American donors, their decline in giving won’t dominate the nonprofit news in 2013. But voluntary associations in every city and county across America will struggle because of their lackluster giving.”

The Changing Nonprofit Sector

Doug Sauer, the CEO of the New York Council of Nonprofits, says, “My bold prediction is that 2013 will be the comeback year for nonprofits…[T]here will be a renewed spirit to giving and civic engagement, including nonprofit and public service.” The co-founder and chairman of Venture Philanthropy Partners, Mario Morino, also suggests changes are coming:

“The pending cuts in federal spending and tectonic shifts in the U.S. economy, workforce, and demographics will leave our society with less money for services at the very time we will have more demand for services from a broader swath of the population. These forces will hit home in 2013 with leaders in the nonprofit field, prompting them to do more to rethink, redesign, and reinvent their organizations and programs to meet these challenges.”

The question, though, is whether the renewed or changed nonprofits that some envision will be different kinds of organizations, whether there is an evolution in the social sector, and if the changes that may be in the offing are positive or not.

While there has been a lot of talk in recent years about hybrid organizations, the talk far outweighs their relatively minimal hybrid output. However, Robin Rogers of Queens College and CUNY foresees emerging financial and tax infrastructures such as Social Innovation Bonds (SIBs), B corps, and LC3s as “the sleeper in 2013” that will “restructure relationships among…public and private sectors.” Mark Fulop of Facilitation & Process LLC is very strong on this issue:

“We will see the first serious challenges of B corps into local and state government contracting processes that have historically been directed to community nonprofit[s]. If so, perhaps not this year but the next, there will be increased competition between the private (B corp) and public (nonprofit) agencies for contract revenues for services such as basic needs (such as healthcare, mental health services, low income housing).”

Carlo Cuesta of Creation in Common, LLC suggests pressures will emerge for “engag[ing] a wide variety of supporters through a wide variety of support and investment vehicles,” what he calls “overhead laden, bureaucratic, unimaginative nonprofits” which will eventually be challenged by “a fearless group of nonprofit leaders, synthesizing…[innovative] concepts into a new type of nonprofit institution.”

Attorney Gene Takagi, who publishes the Nonprofit Law Blog, sees the growth of L3Cs, B corporations, and still-to-be-created models hinted at by Cuesta as leading to regulatory and political challenges for nonprofits and hybrids:

“As the activities of nonprofit and for-profit organizations continue to blur with the commercialization of charities and the growth of socially purposed taxable entities, we’ll see stronger push back from regulators and critics. The IRS will place greater scrutiny on whether nonprofits are properly reporting unrelated business taxable income and paying unrelated business income tax. Nonprofits will respond with increased use of taxable subsidiaries. Critics of the ‘hybrid’ entities like the benefit corporation will be increasingly vocal, warning legislators not to give preferential treatment to such entities because of the ease of greenwashing and encouraging attorney general oversight.”

Some see the challenge for nonprofits in 2013 as a search for compelling metrics. Neal Denton, a senior vice president of the YMCA, summarizes, “Nonprofits will need to demonstrate measured metrics of success and provide hard evidence that a public dollar spent on their nonprofit program is good use of scarce resources.” Cubeta agrees, noting, “A growing interest in metrics and impact investing will favor organizations doing work whose outcome is easily counted, not organizations fighting a losing battle against injustice,” but he predicts—or perhaps hopes—that “in many a heart, roiling energies will provoke new directions in philanthropy and social organizing” that will be “as unpredictable as the path of a hurricane.”

Whose metrics and what kinds of outcomes? Dan Petegorsky, the former director of the Western States Center and now the national outreach manager at Campaign for a Fair Settlement, asks, “Unless as a sector we are able to refocus on fundamental issues of justice and inequality, the race to the bottom will intensify. Will we have the courage and stamina to call the question?”

Ultimately, the challenge is for nonprofits to explain what they do and why it is valuable, distinctive, and, in terms of social change, why it is not particularly open to replication or replacement by the L3Cs, B corporations, or plain old market players of the world. Who will come up with the answers for the nonprofit sector? The perspective of Karl Wilding, the head of policy, research and foresight at the National Council for Voluntary Organisations in the U.K., summarizes the challenge for nonprofits facing the predicted growth of the hybrid alternatives:

“Here in the UK, our assumptions include a hardening in social attitudes towards marginalized communities and the nonprofit organisations that represent them. Whether more questioning of nonprofits’ legitimacy, campaigning activities, tax treatment, effectiveness or even core values, hard times bring difficult, sometimes unfair questions. Defending the charity/nonprofit brand isn’t enough: in 2013 we will need nothing less than a restatement of why we are here and who we serve in the age of austerity and beyond.”

The More Things Change…

As much as change is all-encompassing, some of the challenges for 2013 remain distressingly familiar. David Thompson, the vice president of public policy for the National Council of Nonprofits, warns that “the trend and challenge for 2013 is for legislators to disregard nonprofit independence, unless and until nonprofits stand up for their rights.”

A former Los Angeles-area director for the Trust for Public Land and the former executive director of Workplace Hollywood, Larry Kaplan predicts—or hopes—that “traditional service providers are coming around to the realization that a key way to advance their missions is to influence public opinion and our political leadership.” He adds, “Funders are getting it, too, and are willing to support and encourage advocacy and public affairs activities.” CForward’s Robert Egger also predicts—or hopes—that nonprofits will “relentlessly utilize new media outlets like Twitter and Facebook to both educate and compel candidates…to detail how they will partner with them to create jobs and maintain the social fabric that sets the foundation for communities to prosper.”

The predictions here are a wake-up call for the nonprofit sector. Complacency is impossible. The challenges in the economy and in government are too deep and complex for complacency. It will require a dash of prose and a dose of poetry for the nonprofit sector to stay ahead of the game in 2013. Philanthropic advisor and former managing director of JPMorgan’s corporate philanthropy program Hildy Simmons provides a darkish view, in verse, of what complacency among us will produce:

Still seeking money from all the same places

and hoping that new donors somewhere appear,

Still trying to define impact and dance to funder tunes—

benchmarks, deliverables, scale are the items needed to be held most dear.

Aging (and tired) executive directors (and organizations) with boards not fully engaged,

Young (know it all?) program officers wanting to find and fund the next “new” thing...

Expectations of results in a hurry, with little sense of how long real change takes,

A field always playing “catch up”, does any of this have a familiar ring?

But Kath Schomaker, the executive director of Gray Is Green, has an entirely different view of how nonprofits will react to the intense period ahead:

“Non-profits will exit mission silos in extraordinary ways as dedicated professionals expand the boundaries of possibility in an environment of apparent scarcity. The wealth that will be revealed is remarkable synergies among health, work, ecology, political activism, and good ole fashioned taking care of those most in need. The truth that we are stronger together—as organizations—than we are alone will become real to many more of us in the social sector. And the scarcity of resources? That will be the chimera it always is when people work together for what matters most to them.”

The United Neighborhood Centers of America’s Ian Bautista summarizes the optimistic view, predicting, “2013 is going to be a dynamic year. Our society is on the verge of great change and this change will be for the better. Difficult challenges have always propelled our nation into important decisions that usually lead to progress.”

Michael Waychoff of the Titusville YMCA in Titusville, Pa. suggests that the changes we want to cause are changes that we may need to be:

“The nonprofit sector will find it increasingly more difficult to maintain a sustainable internal hierarchy. As the older upper-level management transitions to retirement or even part-time status, the disconnect between the generational groups will become even more fragmented. This will be a forced lesson learned for more effective communication, delegation, accountability and most importantly, succession planning. Proactive will replace reactive in how many nonprofits currently operate. Those who do not recognize and adapt to change will quickly find their organizations a fleeting memory.”