*NOTE: I borrowed this post from the Northern California Grantmakers blog. This March NCG Member Newsletter article summarizing NCG’s recent 2012 Annual Meeting has been republished on their blog to share with the wider philanthropic community. I’m now republishing it on mine to do the same. They have a great blog and I urge you to show your support by visiting it.
“It’s not coming, it’s here.” —Lucy Bernholz
It’s very fitting that NCG is undergoing a strategic planning process to evolve our practice because the entire field is now facing what NCG 2012 Annual Meeting keynote speakers Lucy Bernholz and Rob Reich call “tectonic shifts.”
It’s not just the field of philanthropy that’s undergoing these shifts, it’s our entire society. And these tectonic movements create some peril for organizations, for what they do and how society as a whole relies on them. These shifts, explained Rob, are reforming the social contract that binds us together in our society.
But wait, what do we mean by tectonic shifts and what’s causing them?
The New Social Economy
“Our grant dollars are just a tiny slice in what is working to create change.” —Lucy Bernholz
Causing these tectonic shifts is the “new social economy,” a term which describe all the ways that private resources are used for social benefit.
In the past 10 years technological innovations have created platforms for giving and fundraising that are outside the traditional philanthropy model. Individuals do not have to have access to larges amounts of wealth to participate in giving or to see a big-budget project funded. Platforms like Kickstarter allow entrepreneurs and artists, who otherwise would not have been eligible for grants from foundations, fundraise capital through social networks. For example, 14 of the films at Sundance this year were Kickstarter projects.
Rob identified 5 trends that amount to the forces that are slowly reshaping the landscape and reforming the social contract:
- Deep budget deficits at local, state and federal levels. These deficits beg the question: how will public institutions deliver services that many people rely upon?
- Fundamental tax reform at the federal level will reconfigure the manner in which the federal government collects tax revenue for what it does. This threatens the manner in which the incentive structure works for how charity in philanthropy operates.
- A deeply dysfunctional political system at the federal level where polarized politics routinely wins out over the elected representatives doing something for the common good.
- The idea that the 2010 Citizens United Supreme Court ruling has dramatically changed campaign finance in the U.S. and introduced a new way that the deployment of private resources can enter into the direct political arena.
- Boundary blurring going on across all sectors: nonprofit, for-profit and government.
Blurring of Boundaries
A well-functioning society, Rob explained, has three sectors:
- Public: for-profit marketplace, is where private action produces private benefit.
- Private: state institutions act as citizens so that public action produces public benefit.
- Philanthropic/Civil Society. private individuals act alone on in groups to create public good.
In the past these sectors were distinct. However we’re now seeing partnering between sectors develop such as the 12 foundations that have agreed to commit funds to the US Department of Education’s “Investing in Education Fund.”
But it’s not just organizations that are blurring boundaries, so are individuals. Rob and Lucy explain that we’re seeing more and more individuals who are “sector agnostic.” In the past people who wanted to do good in the society entered the nonprofit sector, but now individuals with the desire to do good are entering all the sectors and finding ways to create social change and benefit from whatever sector they end up in.
Can The Rules Catch Up?
“The world has changed but rules haven’t. What are the rules we need in 21st century for social cohesion & public benefit?” —Lucy Bernholz
Lucy reminded the audience of grantmakers that the rules that govern our giving were created some time ago. The last major change to the rules that governs the field was the Tax Reform Act of 1969. Ergo, the philanthropic field is operating under a set of rules that were established over half a century ago. As for the new tools being used to deploy private resources, there are no new rules to apply to that giving.
Lucy encouraged us to recognize that we’re living with a more diverse, dynamic set of possibilities when it comes to creating social change through giving. This new diverse and dynamic landscape requires that we all adjust our footing, realign our work to leverage resources and evolve our practice as grantmakers.
“The tools of social change have changed. And the rules will change whether you are part of it or not.” —Lucy Bernholz
About the author
Northern California Grantmakers is an association of foundations, corporate contributions programs and other private grantmakers. Its mission is to promote the well-being of people and their communities in balance with a healthy environment by the thoughtful and creative use of private wealth and resources for public benefit. To this end, NCG works to enhance the effectiveness of philanthropy, and to strengthen the ties between philanthropy and its many stakeholders; including nonprofit organizations, government, business, media, academia, and the public at large.