Over the holidays, I read about the history of the nonprofit sector in the United States. I did it because I believe that to predict the future, you must understand the past. It is a fascinating study on how organizations adapt to the times. In colonial days, Americans were suspicious of private institutions, such as charities, and favored public efforts. Later, with influences from Europe, voluntary associations, especially in New England, flourished to fill voids that the government left. Then, as the country entered the Industrial Revolution, charities became the dominant means of addressing social issues, such as slavery, alcoholism and other social reforms. Churches also played a key role in many of these reforms and started many orphanages, schools and social welfare organizations. In the late 19th century, we also saw business magnates like Andrew Carnegie, arguing that the “best means of benefiting the community is to place within its reach ladders upon which the aspiring can rise,” and building libraries, parks and museums. But, the sector as we know it was really ignited in the 20th century. Fueled by government subsidies and contracts to support social needs, 90 percent of nonprofits have been created since 1950.
In the 21st century, the social sector continues to grow. For example, the state of Colorado recently reported that the number of nonprofits in Colorado tripled in the past 10 years. To add to this disruption, we have also entered a new global economy – powered by technology, fueled by data and driven by knowledge. How will nonprofits adapt to the 21st century?
Each year, we predict trends in the social sector, and in 2017, we believe the strongest trend will be changing the mindset of the sector at an organizational level. To change means letting go of old ways of operating and welcoming new ways. Native Americans have called this concept survivance. It means redefining ourselves by holding onto our principles, while still embracing change. This year, we dedicate our 2017 word shifts to ways nonprofits as organizations can practice survivance in the 21st century:
- Impact-Focused vs. Mission-Focused: Impact is the bottom line of the social sector. It answers the question: What difference are you making? Mission, on the other hand, is more about the individual organization. Impact focuses squarely on the why, and mission narrowly focuses on the who. Impact is realized by many and mission is achieved by one. While mission statements still serve an important role, vision and impact statements help us to focus on solving our social problems collectively.
- Investor Model vs. Donor Model: Now that entrepreneurs have donated not only their money, but also their time and energy to social issues, their words and ethos have seeped into the social sector’s vocabulary. Donors want a one-time, feel-good transaction while investors want to play the long-game with nonprofits. This has led many social sector organizations to shift to fully embracing relationship fundraising.
- Results-Driven vs. Program-Driven: In the 20th century, nonprofits sold programs to public and private funders. Now, with the shift to impact-focused investor models, funders – including the government – prefer to buy results. In order to move the needle, the social sector is thinking beyond just traditional programs toward social marketing, social enterprise, advocacy and collaborations. We are also looking at more layered approaches, such as 2-Gen and the socio-ecologic model, to drive system change.
- Sustainable vs. Bootstrapped: For years, nonprofits have been thrifty to the detriment of their causes. We have seen countless examples of slow computers, bootstrapped strategic plans and lack of investment in professional development – all to save money. Yet, capital investments make nonprofits stronger, more efficient and better able to attract and keep talent. We applaud the trend toward sustainability, which focuses on building well-run, well-equipped organizations that allocate resources to their most efficient use.
- Entrepreneurial vs. Risk-Averse: Daring greatly is easier to do as an individual, because if he or she fails, that failure is owned by one person only. Daring greatly in the social sector is more difficult. If we fail, we are also failing others and, in many cases, they are the ones most at risk. This means that often in the social sector, we play it safe to avoid risk. Recently, there has been a shift led by social entrepreneurs to take on more risk and try bold, innovative ideas, such as impact investing, social enterprise and social impact bonds/pay for success. Funders are also allocating more dollars toward risk capital for gamechanging ideas.
History has shown us that the social sector is flexible and will rise to the challenges set forth by the times. We believe that the principle of survivance sets a promising course forward in the 21st century. By holding strong to our values and principles yet preparing for and welcoming change, nonprofits will better meet the needs of our most vulnerable citizens. If you missed our word shifts from 2013, 2014, 2015, or 2016, please check them out! We welcome your feedback on these or other word shifts. Future blogs will delve further into each of these topics, and, as always, we welcome your help as a TrendSpotter.