2011 Year in Review: What to Expect in 2012

If you have a 401(k), you know that past performance is no guarantee of future results. As we look ahead to 2012, however, we can't help but think the next twelve months are going to look a lot like the last twelve.

As was the case in the latter part of 2011, uncertainty around the eurozone debt crisis and slowing economic growth globally will contribute to volatility in the markets, which is likely to keep a lid on charitable giving here at home. Although a majority of large nonprofits surveyed at different times during 2011 reported that gifts and donations were up, expect total giving for the year, as reported by Giving USA, to barely top the $290 billion registered in 2010. And in a "muddle through" economy like this one, don't expect the figure for 2012 (when it's reported in the summer of 2013) to show anything but modest growth.

In the category of known knowns, the political gridlock that characterized 2011 will be with us through Election Day, at least. That means no major changes to marginal tax rates or the deduction for charitable giving. The payroll tax holiday is likely to be extended through the end of the year, but there's little chance of additional stimulus spending, which means the unemployment rate will remain stuck north of 8 percent, while foreclosures will continue to weigh on home prices. As a result, nonprofits that deliver frontline services can expect more of the same: growing demand for their services with little or no increase in their revenues. Nonprofits of every kind will be pressed by their funders to work smarter, to collaborate more, and to devote more time and resources to measuring their performance and results.

Political gridlock also will ensure that American society continues to be organized for the benefit of the 1 percent. Emerging from its winter hibernation with renewed energy, the Occupy Wall Street movement is likely to add corruption and self-dealing in Washington to its list of grievances. But as income inequality in the U.S. grows, don't be surprised if the movement focuses its attention on philanthropy as well. In fact, we'd be surprised if there isn't at least one OSW-related protest at a high-profile philanthropic conference or event in 2012. (And the folks in Davos can pretty much count on it.)

Practitioners working in the field will continue to push for change in the year ahead. Open data, performance measurement, impact and mission-related investing, social impact bonds -- all will be debated, pushed, promoted. As Antony Bugg-Levine, recently named CEO of the Nonprofit Finance Fund, told the New York Times in November: "[Philanthropy boasts large pools] of money that have traditionally been invested solely to achieve a financial return. If just a fraction of those assets gets invested in this way, it can make a significant difference."

We don't disagree, though we wonder how big the difference is likely to be. Some of the most difficult problems we face -- climate change, growing inequality, the technology-driven loss of jobs -- are, like philanthropy itself, byproducts of a distinctly Anglo-American form of capitalism. But just as we're skeptical that more debt is the solution for too much debt, we doubt that any of these problems will be solved by philanthropy becoming more like business.

Instead, expect to see calls for greater accountability in philanthropy emerge as a movement in its own right in 2012. Adopting the slogan "private dollars for public good," a social media-empowered generation of young Americans will use the cheap and ubiquitous tools at their disposal to push for more diversity on foundation boards, more transparency in foundation decision-making, and more democracy in the allocation of tax-advantaged philanthropic resources.

We live, as the Chinese proverb would have it, in interesting times. The next twelve months are unlikely to disappoint.

Related Links:

Social Impact Investing in Small and Growing Businesses on the Rise, Report Finds (4/04/11)

IRS Reverses Course on Audits of Donors to Politically Active Nonprofits (7/11/11)

Charity Fundraising Saw No Change During First Half of 2011, Report Finds (9/29/11)

Donations to Largest Charities Still Below Pre-Recession Levels (10/18/11)

Nonprofits Optimistic Heading Into 2012, Survey Finds (10/24/11)

Foundations Increasingly Use Investment Assets to Achieve Their Missions, Report Finds (10/26/11)

SSIR@PND: Social Impact Markets (12/08/11)

Donations Are Up for 2011 Giving Season, Survey Finds (12/25/11)