OUTLOOK 2012
5 Challenges
for Nonprofit
Leaders
Philanthropy and the 99 percent
Economic inequality raises tricky issues for donors
The yawning gap between rich and poor came into sharper focus in 2011.
And philanthropy, increasingly a status symbol for America’s wealthy, is facing tough questions about the benefits it reaps for society. The issue seeped
into the debate over the once-sacrosanct charitable deduction, which mainly
benefits high-income Americans. Calls for the wealthiest people to focus
more of their big gifts on poverty—rather than on new buildings at their alma
maters—seem poised to intensify.
Pressure from shrinking government aid
Foundations and nonprofits may step up the fight against cuts
With no end in sight to budget woes in Washington and all but a handful of state
capitals, philanthropy will face new demands to fill the gaps created by dwindling
government aid. But private donors can never match government coffers. A new
study found that households in the hardest-hit states would have to increase their
giving by 60 percent in the 2012 fiscal year just to help nonprofits make up for
projected cuts in state spending. To help temper the budget fallout, nonprofits and
grant makers may have to boost their advocacy and lobbying activities.
Soothing Generational Tensions
Managers must make peace between boomers and twentysomethings
Nonprofit jobs for new graduates are scarce, and many older workers don’t
have the savings to retire soon. Friction between younger employees, with
their MBA’s, and baby-boomer executives, with their 70-hour workweeks, has
long been a fact of life at nonprofits. Will the tension boil over?
More demands to show results
Moving the conversation away from overhead costs
Charities continue to plod along on a quest for good ways to measure their effectiveness, with donors biting at their heels. The “overhead ratio”—the share of a
nonprofit’s money that it spends on administration—is under assault from non-profit experts, but it still holds sway with donors and charity regulators. No perfect
evaluation measure has come along to replace it, and perhaps it’s unrealistic to
think one could. Still, in 2012, all nonprofits should be prepared to answer this
question: “What impact are you having?”
Competition from social enterprises
Will new approaches help charities or get in the way?
Excitement about using for-profit business models to solve social and environmental problems showed no signs of abating in 2011. Several states
created new corporate structures that allow companies to incorporate social
purpose into their businesses and put social goals ahead of profits. Will hybrids give nonprofit groups a bold, new way to pursue their missions—or will
the new entities siphon off financial support for traditional charities?
COURTES Y OF THE GRAMEEN FOUNDATION
NONPROFITS: American Enterprise Institute n CForward
n Families International n Girl Scouts of the USA (below left)
n Grameen Bank (above) n Occupy Wall Street (below right)
n Opportunity Nation n Philadelphia Orchestra n Planned
Parenthood n Young Nonprofit Professionals Network
OUTLOOK 2012
OUTLOOK 2012
BRENDAN MCDERMID/REU TERS/LANDOV
COURTES Y OF THE BILL & MELINDA GATES FOUNDATION
ALEXANDRA W YMAN/GET T Y IMAGES
ARAYA DIAZ/GE TT Y IMAGES/ TECHCRUNCH
DONORS AND GRANTMAKERS:
Howard W. Buffett Jr. n Laurene
Powell Jobs (left) n Simon Greer,
OUTLOOK 2012
Christopher Oechsli, and Christopher
Stone n Dustin Moskovitz (bottom left)
OUTLOOK 2012
n Peter Thiel n Christopher Elias
and Trevor Mundel n William and
Flora Hewlett Foundation n William
E. Conway n William S. and Joyce M.
Cummings n Sylvia Mathews Burwell
(above)
