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2009: A Few Predictions

January 05, 2009

Crystal_ballThe Economy: Those expecting a quick rebound will be disappointed. The Fed will use every tool in its arsenal to re-inflate the massive credit bubble it allowed to form over the past twenty-five years -- to no avail. Housing prices will continue to fall on their way to non-bubble levels of affordability, while credit to all but the most credit-worthy will remain constrained. Government-reported unemployment will jump to more than 9 percent, consumer confidence will fall further, and, after an early year bounce, equity markets will re-test their November '08 lows by the end of March. After falling by as much as 25 percent from where they opened the year, the Dow, S&P and Nasdaq will all end the year down 10 percent, with investors thankful it wasn't worse.

Politics: President Obama will sign legislation creating an Office of Volunteer Service within three months of his inauguration. After an initial burst of excitement, enthusiasm on Nonprofit Street will turn to disappointment as it becomes increasingly clear that there is no money to fund expanded nonprofit initiatives.

Congress will leave the payout rate for private foundations unchanged at 5 percent but will look closely at imposing new rules on tax-exempt nonprofit hospitals and higher education endowments. Any legislation intended to alter the status quo will be tabled as the economy deteriorates and Congress turns its attention to more pressing concerns.

Fundraising/Giving:  2009 will be a batten-down-the hatches kind of year for nonprofits. Giving (adjusted for inflation) will be flat, with individual giving up slightly (thanks to the intergenerational transfer of wealth), foundation giving flat, and corporate giving off 2 percent to 4 percent. The number of nonprofits will level off and fall slightly, while the number of foundations will increase (the intergenerational transfer of wealth again). Expect, as well, to see fewer dollars going to international causes/NGOs.

Environment: A series of extreme weather events around the globe will re-focus public attention on the issue of climate change. By the end of the year, the Obama administration will announce, in partnership with California, a dozen New England and Mid-Atlantic states, Google/Google.org, and half a dozen major foundations a comprehensive plan to address it.

Media: Revenues and readership for print newspapers will continue to fall. The New York Times will sell the Boston Globe, the Los Angeles Times will be sold to private investors, and bankruptcy court will take the Chicago Tribune from Sam Zell.

The mass audience will continue to fragment as social media platforms target ever-smaller niche audiences. Facebook will expand its dominance in the social media space among boomers, Gen Xers, and professionals, but cash-flow problems will force founder Mark Zuckerberg to sell a major stake to a mainstream media conglomerate by the end of the year. XM/Sirius Radio will file for bankruptcy. Yahoo will throw itself into the arms of Microsoft, Twitter will be bought by Google, and Apple will begin its search for a new CEO.

Blogs will become an increasingly important organizing/communications tool for nonprofits. For all their talk of transparency, major foundations will be slow to join the conversation.

Okay, nothing earth-shattering here, but then I'm new at this. What about you? What do you think 2009 has in store for nonprofits, foundations, and the country? Don't be shy.

-- Mitch Nauffts

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