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2010 and the Future of the Social Sector

By Nell Edgington



Lucy Bernholz, head of Blueprint Research and Design, a philanthropy consulting firm, and thought-leader on trends in philanthropy is preparing a monograph on what 2010 will hold for the social sector. As a true adopter of social media, she is asking others to contribute, in essence crowd-sourcing answers, this year to her annual “what will next year bring” treatise. Last week, she asked her blog readers, Twitter followers, and all others the question: “What trend, change, entity, or idea will matter most to the social sector in 2010?”

She’s gotten a great set of responses, in blog, email, Tweet, and other forms, which she and others are collecting. It’s kind of an interesting experiment to ask a broad question to the universe and see what you get back, and whether it is intelligible and adds anything to what she may have already been planning to write. It is also interesting to navigate the very fine line between future-telling and wishful thinking. I probably tend to fall into the latter category, but if we don’t envision the future we want to see, we probably won’t get there.

I submitted my thoughts to Lucy via Twitter, but it is difficult to distill broad ideas into 140 characters, so I will elaborate on my thoughts here.

There are three things that I think will matter most to the social sector in 2010:

  1. Increased Philanthropic Dollars Will Go to Organization Building. Donors will increasingly realize that they can achieve a greater social return on their investment (more social impact) when they invest in the capacity, or growth of a successful nonprofit.  That is to say that donors will increasingly realize the power of BUILDING organizations rather than BUYING services.  I don’t think donors will move away from buying services, there will still be a majority of that.  But I think donors will start to understand the difference between a “donation” where they are simply supporting an organization’s current program, versus an “investment” that makes the organization stronger, healthier, better positioned to address the social problem head on.

  2. Nonprofits Will Move From Outputs to Outcomes. And in order to meet this trend of donors wanting to invest rather than donate, nonprofits will begin to understand that they will attract more capital if they can demonstrate a social return on investment, or a change in outcomes, not just outputs.  Outputs have been a favorite of the nonprofit sector, i.e. 500 kids went through our after-school program, 1,000 meals were served in our kitchen. But outputs don’t demonstrate social impact, or a change to a problem.  Outcomes do, which is what investors increasingly will want to see.  Outcomes are about changed lives, changed trajectories.  It is so much more powerful and compelling to be able to say that the 500 kids that went through our after-school program stayed in school and increased their academic achievement which was a marked difference from their cohorts that didn’t attend our program.  Then, if you can continue to track those children and demonstrate that they continued to stay in school at a higher rate than their contemporaries, you have a compelling change to a trajectory.  You begin to show how your organization is an intermediary between donors who want to invest in social change and a change you are making in the community.  I believe that philanthropic capital will begin to flow more readily to those nonprofit organizations that can demonstrate outcomes as opposed to outputs, and those nonprofits that can comply will be more successful at attracting capital.

  3. The Social Capital Market Will Increasingly Include Philanthropic Capital. The social capital market to date has focused mostly on investing in social businesses that provide both a social and financial return. Philanthropy and nonprofit organizations have been somewhat left behind. But this will change with a growing recognition of the benefits of broadening the definition of social capital markets to include nonprofits and philanthropy.  There is much to be gained when ALL organizations working towards social impact and ALL investors interested in social return can pool resources and work towards closer collaboration, creation of new financial vehicles, sharing of ideas and information.

Perhaps 2010 is too early for all three of these trends to really take hold, but I think the beginnings are there. It will be interesting to see what Lucy comes up with, and what actually starts evolving in a few short months when the new year begins.

But in the meantime, what are your thoughts?  Where do you see the social sector going in the coming year?


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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.

Tuesday, September 29th, 2009 Capacity Building, Nonprofits, Philanthropy

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5 Comments to 2010 and the Future of the Social Sector

[...] This post was mentioned on Twitter by Tony Wang and Dhaval Chadha. Dhaval Chadha said: trends in the social sector in 2010 @socialedge http://twurl.nl/vl48vv and http://twurl.nl/87ks73 [...]

[...] be given the risk capital to take a shot at these new, deeper issues, it’s Kiva. There are hopeful signs for change on the horizon, but if the foundations and investors of the world can’t or [...]

Graham Gardiner
April 9, 2010

Great Post. Very thought provoking. And timely. (I am writing from a UK perspective)

In regard to Increased Philanthropic Dollars Will Go to Organization Building, we can only hope so. Most funding (grants) are given to provide a service. Yet they are almost always short term. And they never cover the core costs of running an organisation. The ability for organisation’s to get funding to secure their ability to build capacity is very rare. AS you so eloquently pointed out, this is very short term thinking. I really hope you have got this right!! The sector is crying out for it.

In the UK there is a huge move to measuring outcomes through processes such as Social Return On Investment. We’re just completing a research project on the Economic Impact of the Third Sector (Charities, Community Groups, Social Enterprises etc) on the City of Nottingham, and it is clear that the sector needs to evidence its worth much more clearly than it does already.

The danger of all of this for me is that we end up doing the job of commissioners; especially local government. It is surely up to them to establish the social return of say, getting 20 long term unemployed into work. What social enterprises can do is ADD to that by saying not only will be get you your 20 long term unemployed into work, saving you £thousands, but we will do it by employing LT unemployed people as advisors, provide a creche out of the contract cost etc.

Social Enterprises, and other Third Sector organisations, can provide amazing additionality, that goes way beyond that of the private sector.

I hope that makes sense and is not too full of UK jargon!

Great site. Thanks for sharing your views.

Graham

Nell Edgington
April 9, 2010

Great insights into where the UK is with this, Graham. Thanks for your comments.

[...] be given the risk capital to take a shot at these new, deeper issues, it’s Kiva. There are hopeful signs for change on the horizon, but if the foundations and investors of the world can’t or [...]

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