Episode 112: Review of the 2022 and Predictions Made 12 Months Ago

Welcome to another edition of "Around with Randall" your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.

Thank you so very much for joining me, Randall, right here on "Around with Randall." Year-end tradition, tried and true, we're talking about predictions. But you're gonna have to come into the next podcast for the predictions of 2023 because today we review the predictions of what I said in December of 2021 about this year, and doing a little bit of review and some data collection. I'm kind of surprised and impressed. I think we got some things right.

So let's start at the top. We're going to review nine different recommendations, talk about what the outcomes were, and see kind of what kind of grade I'd give myself. And depending on the afternoon I might be good to myself.

Number one. The prediction was, is, that we would see an increase in GDP for giving, and remember in 2020 it was coming out with about 2.4 and the real number we're looking at is when Giving USA does. It's fantastic work. For 2021 when it comes out in August or September is, it turned out to be 2.11 so it actually went down. So I don't get very good grade on this particular one. I think in part a lot of this had to do with inflation. we're talking more and more about the inflationary pressures in homes and in particular with those who are dealing with limited, more limited incomes or limited resources. We'll talk about this more specifically in the predictions for 2023. I think this will have a major effect, but for 2021 in terms of the release of 2.11 I think inflation actually played a pretty big part in that. In fact, if you look at the Giving USA numbers what we know is that although philanthropy, dollar for dollar, went up when you include inflation into the calculation, it went down by 0.7 percent across the United States. Not far off. I thought there'd be a little more juice in terms of coming out of covid. Turned out that we normalized, in whatever normal actually is, at post pandemic a little more quickly than I thought. And as a result, probably saw a regression back to the norm a little bit.

Number two was dealing with staffing, and I'm gonna get an A plus on this one. This in part comes from the study that Hallett Philanthropy and I did in the fall of 2021 about what's going on in the nonprofit foundations and fundraisers. Really, short of 1500 participants, it was written about in several places, published in articles which I always appreciate. But I think it was good for the industry as a whole to kind of think about. I broke this down into two areas. Number one was that we're going to struggle on the front lines of what I called at the time basic services employees. These are the non-fundraisers. These are the people in the soup kitchen who are doing all the amazing work, or in Social Service. They're the front line caseworkers ,or in healthcare it's nursing that they were going to see some really tough times when it came not to the employees. But to the nonprofits in terms of staffing, employees have been true. This is part of what has been the inflationary push inside our organizations. I did a podcast a couple weeks ago about do we need to re-address the issue of overhead and the fact that because we've seen such in particular with personnel increases in average wages and things of that nature. Would we have to readjust what we thought of as a basic percentage of our total operations being overhead and going up. That's in part because of this.

The second piece of the employment puzzle was about fundraisers, and I broke this out kind of into two pieces, and number one was, is that there would be remarkable increase in pressure on frontline fundraisers to deliver more dollars because of the inflationary pressures, because of trying times. We're coming out of the pandemic. I think that's really true. I'm hearing more and more conversations amongst CFOs, amongst CEOs, amongst Foundation leaders saying you just upped my, you know, dollar figure in the budget by 15% but there's no conversation about that. And by the way you also want me to cut my expenses at the same time. So I think that one I hit as kind of a part of the employment, on the head. I think the other thing that I mentioned, I know I mentioned last year was, is that we would see a great shuffling. And in part my concern was really about people leaving philanthropy. Gift officers to go into the for-profit world because there would be more opportunity, monetarily, and I think that also proved out to be true. I know that there's an immense reshuffling of gift officers across the United States, that's number one. But number two, I'm seeing people leave the profession in record numbers to go into business development, whether it's a construction firm or I.T or things of that nature, sales, and the skill sets that we have in building relationships are directly related to many of the best sales people that you might think of. Or no, and you get paid more and as we have inflation that's pushed some people to make some hard decisions about what their career is and should be, so I on that one staffing that's an A plus. And actually I'm sad by that. it's not a positive because it means our nonprofits aren't able to serve the communities in the ways that we want.

The next in terms of, and that was kind of two and three in the of the nine in terms of staffing. Number four, next, was is that there'll be an increase in corporate giving because of profits, and unfortunately I can't document this, but I think I'm going to be right that we've seen unbelievable profit margins, particularly the last six months of the year. The stock market, which is always an indicator of corporate health, has been up the last six months. And in fact, if you look at corporate gains over this year they've been pretty dramatic in terms of return, which means they have more resources to give. Remember sometimes it's our memory and the things that happen the most often or the most recent or that are the most prevalent. In the last three weeks or four weeks of 2022 we've seen a decrease in some profits in some corporations that have reported, but across the whole of the year, profit's been up. Stock market's been up. And I think giving will be up for 2022.

Fifth is I talked about the concept that Warren Buffett certainly talks about, about social capital. RIS or risk capital. And that's really into what I classify as justice, giving whether it's for people and the philanthropy that's driving changes to our diversity and equity and inclusion to climate. this is becoming a dramatic piece of our philanthropic environment. We're seeing more and more and more of giving going towards this idea of Justice in various ways. DEI and climate are driving those two particular areas. Interestingly enough, it's coming from corporations. It's coming from the issues involving the way in which we have probably not allowed the same opportunities to those who don't look like me. And as a result, philanthropy is beginning to really become an economic engine for change. So I think that one actually turned out again as kind of an A plus, hit that one out of the park in terms of prediction. And in this case it's a positive because we need to make changes across various platforms.

Number six was the political politicalization of philanthropy. Particular with the 2022 election there were comparisons about certain races in kind of the juxtaposition of races ran in 2000. In the number of dollars put forth for political candidates it's not an increase, it's an exponential increase. And much of those dollars are put through the idea of political philanthropy and it's increasing exponentially. It's just unbelievable how much money goes into Political campaigning and through philanthropic means, what's interesting, and you notice this is that you can't turn on the television locally without six ads being run in your local news, campaign ads, and it's just unbelievable to a point where you almost just turn it off. I don't think we have final numbers, but I will tell you from the initial, in initial things I've read or indications that we spent more in an off-presidential cycle election 2022 than we ever have in our history. And that is exactly what I was speaking about back in December of 2021. It's unfortunate because I think those dollars could have been used in some other ways that could have made huge differences, particularly with Frontline philanthropy services, Social Services. I hope we haven't missed out on that opportunity.

Number seven was the acceptance, or greater acceptance, of artificial intelligence. A year and a half ago I'm not sure many nonprofits at all would have classified artificial intelligence as a priority. Now I can't have a conversation with an infrastructure team, data, internal operations, Finance, database, however you want to classify. I look at it as infrastructure because they're so critical to philanthropic success. You can't have a conversation with our artificial intelligence at some level being a part of it. The interesting thing is that there are a lot of people who say they do artificial intelligence that I don't think are actually doing it. I think part of the pushback we're going to see in the future, and you might hear this in the 2023 predictions is is that the pretenders are going to be outed. We, if we're going to use artificial intelligence like the for-profit world, need to be careful that the vendors and the people that do it actually are legitimate. And I think that this is a critical function of what we need to be and what we need to do in terms of becoming more efficient and more effective.

Number eight was the ascent of social media philanthropy. The numbers all say the same thing. It's becoming more and more prevalent from crowds funding more and more. You see about GoFundMe Pages particularly on the news, so it's kind of reaching the media where somebody has a usually a unfortunately a tragic event or something happened and people are raising money for them. One that caught my attention recently on our local news here in Omaha, Nebraska was a teacher maybe second, third grade something of that nature locally here and she lost her child and one of her students started a GoFundMe page to raise money to support her teacher. Talk about philanthropy in its truest sense. Love of mankind, love of teacher, kind to steal a phrase. That's the norm. Think about it a second or third grader thinks hey let's do something for our teacher and let's do GoFundMe. It's becoming so prevalent that even our children are beginning to think of it as a normalized activity. How do we help others? So the socialization of the social media Empire in this is fascinating. I think there's going to be some turbulent times with social media in the next year or two, which made me talk about on 2023, but we'll save that for the next show but certainly for 2022 I think that that it did reach that level of great increase.

The last is, and actually I think this is the one I'm most proud of and I think we're just beginning the conversation, is I talked about that there would be increased pressure on larger foundations. In particular Community foundations, donor advised funds, and others to give immense amount, more money, away than they're traditionally used to. And I hit this one right on the screws so much so that there's actually been, in a couple States as well as federally proposed legislation to limit the time frame of Donor-advised funds and how long funds can sit idly to the percentage in which Foundations at certain levels give out resources. It's always been like five percent. There have been conversations about seven to ten percent. It's reached such a a favored pitch that now there's this anti-change group who's writing more and more about well then you're cutting off our flexibility, you're not giving us the opportunity to meet the needs that we don't know about in the future. Meet them tomorrow when we realize them because we'll be having to push more money out of the system. It's fascinating what's going to happen. I'm not sure that from a national perspective that the Democrats and the Republicans now that you have a republican house and a Democratic Senate and certainly the Democratic presidency that there's going to be anything that comes to consensus. But I don't think this conversation is over. I think that there's going to be a really renewed pitch about, we've got to get more money.

The last number I saw was something like 240 billion dollars sitting in Donor-advised funds, and I did a podcast recently on donor-advised funds and Community foundations and some of the challenges with this particular issue. We don't figure out how to get money out of there then it's just going to sit, and I just don't think socially that's going to be acceptable at the particular levels. I think what's more interesting is that if you were to ask or maybe force more resources to come out of these large foundations, also out of donor-advised funds, Community foundations, things of that nature, it may not go to where the people who are trying to force it wanted to go. And so it will become very interesting, not only about the push to increase assets being given out into the local communities. But is there an emphasis of trying to help them figure out where it should go. That's a wholly different conversation because donors may say that's not where I want it to go, I wanted to go to X rather than a Y. Think that this will be an ongoing conversation for the next couple of years.

So overall, nine predictions kind of two buried in employment, starting with GDP and then Employment and Staffing. Certainly corporate giving, Justice, giving overall the politicalization of philanthropy particularly with the election, the acceptance of artificial intelligence, certainly the impact of social media on philanthropy, and finally on increased pressure for allocation of resources out of donor advised funds, Community foundations, and larger foundations. Overall I'm stunned because frankly I wasn't that far off on any of them. In some regards that's great. Some regards it's not what we want. Societally, we have to figure out how to get better but the great thing about nonprofit work is that it fills the holes. It's as Warren Buffett and I mentioned earlier is society's risk Capital. It's the ability to do things that corporations, government, and others can't do when nonprofit steps into that breach. That's pretty cool. You're a part of that.

I hope you know that and I hope you feel that you're making a difference for the various missions that we all represent, who make a contribution to our greater communities. Next time we'll take a look at 2023 and some of the predictions there. Two years in a row, better than average, so maybe I'm on to something. And maybe you pick up something that helps you get ready for 2023. I always end, don't forget my favorite saying, some people make things happen, some people watch things happen, then there are those who wondered what happened. We're people partnering with others, to of people and by people, that make things happen for the people and things in our community that are wondering what happened. And that should have value. And I hope you feel good about it. I appreciate you joining me here on retrospective of predictions from a year ago, what happened and a little bit more correct than incorrect. We'll take a look next time at the future in 2023. Until then, thanks for joining me, Randall, on "Around with Randall." Don't forget make it a great day.