On-Line Giving and Increased Activism: Predictions for a New Millennium

The rise of the Internet.

Demands for greater financial accountability. Expanding grassroots activism. The growth of international partnerships between charitable groups.

Such forces will help to reshape philanthropy in the 21st century, according to a Chronicle survey of 460 top executives in the non-profit world.

A decade from now, executives who responded to the survey said, one of every four dollars raised in private charitable contributions will be donated via the Internet.

Despite the non-profit world’s growing reliance on technology, however, more than a third of the executives expressed strong concern about the ability of non-profit groups to protect donor privacy in the high-technology age over the next 25 years.

Among the survey’s other key findings:

Sixty-five per cent of respondents said they want private foundations to be required to distribute a larger percentage of their assets each year. Currently, federal law requires foundations to distribute at least 5 per cent of their assets annually, on average, in the form of grants and administrative expenses. Community-foundation executives put the ideal payout rate at 10.3 per cent, while executives of other types of foundations put it at 7.3 per cent. Charity executives said the minimum payout rate should be 8.5 per cent.

Nearly eight in ten respondents said they expect salaries, bonuses, and other compensation paid to top non-profit executives to be tied more closely to performance goals in the next 25 years.

More than half of respondents said that over the next quarter century, their organizations will be more willing than they are today to enter into collaborations with non-profit groups in other countries to carry out programs that are international in nature.

Thirty-six per cent of respondents said their non-profit organizations spend money on lobbying. Of those, half said they expect their groups’ lobbying expenditures to increase over the next decade, by an average of 25 per cent.

The poll was mailed in early November to 2,000 Chronicle subscribers who are chief executives and other top-ranking officials of foundations, charities, non-profit consulting companies, and other groups that are involved in philanthropy. A total of 460 completed surveys were returned.

The survey has a margin of error of plus or minus five percentage points, according to Beta Research Corporation in Syosset, N.Y., the company that tabulated the results.

The survey’s questions on technology produced some of the most compelling clues about how executives in the non-profit world view the future and how the Internet already is changing the way charities and foundations are run.

Sixteen per cent of respondents said their organizations had used the Internet as the primary means of applying for a grant from a foundation or of responding to a charity’s grant request.

What’s more, about a third of respondents said they planned to make their organizations’ Form 990 informational tax returns available on the Internet within the next calendar year.

But for all its promise as a communication and disclosure tool, technology also emerged in the survey as a source of consternation for non-profit organizations.

Using a 10-point scale to indicate their level of concern about how technology may affect donor privacy, 37 per cent of respondents selected 8, 9, or 10, signifying the highest levels of concern. Only 16.5 per cent of respondents said that they had little or no concern about the privacy issue.

Concern about technology also arose repeatedly in answers to a question asking respondents what they thought would be the single most important issue facing non-profit executives over the next 25 to 50 years.

Typical of the responses was one from the executive director of a small economic-development charity in the Southeast. The official expressed concern about the “ability to use technology in a controlled and meaningful manner, so that missions and goals remain dominant.”

Other technology concerns focused on the need among non-profit groups to purchase computer equipment and to train employees to use it. “No matter what we do, there is never enough money, staff, and resources,” wrote the executive director of a small human-services charity in the Southeast.

Still other non-profit executives said they were worried about the ability of non-profit groups to find enough new employees who are qualified to work with computers — especially with the lure of the money that people can make at high-technology businesses.

“As more people increase their wealth due to Internet businesses, non-profits will have a much smaller work force to choose from,” wrote the executive director of a small environmental charity in the West.

While the survey shows that technology issues are a major focus of attention in the non-profit world, respondents indicated that they believe that other important changes will take place in philanthropy in coming years.

Respondents predicted that the sources of charitable donations will shift over the next 25 years, with donations from individuals declining as a proportion of the total and giving through bequests, foundation grants, and corporate donations rising.

Gifts from individuals accounted for 77 per cent of all charitable gifts in 1998, according to the latest data from Giving USA, a fund-raising almanac produced by the American Association of Fund-Raising Counsel. Survey respondents said they expect that total to fall, on average, to 68 per cent by 2025. But they expect bequests to rise from 8 per cent to 11 per cent of total giving.

The proportion of total contributions represented by foundation giving will also rise, from 10 per cent to 13.1 per cent in the next quarter century, respondents said. Corporate donations will increase from 5 per cent of the total to 8 per cent, respondents indicated.

In written responses that outline how non-profit executives view the coming 25 to 50 years, many respondents expressed concern about a variety of pressures, including efforts by wealthy donors to influence the operations of philanthropic groups.

“If organizations fail to respond to donors’ interests, donors will create their own organizations or foundations,” wrote the chief executive of a health-care charity in the Northeast.

Likewise, the head of a health-care foundation in the West expressed concern over the non-profit world’s ability to fulfill a “well-defined mission rather than following the directions of mega-gift philanthropists.”

Respondents expressed fears that some donors seem to be more interested in private financial gain than in the needs of charities. “I’m concerned that the impulse for giving is shifting from altruism to deal-making,” wrote the chief executive of an educational institution in the Midwest.

In other views on the challenges facing the non-profit world, many respondents expressed concerns about the ability of organizations to sustain their missions while acceding to pressure to adopt corporate-style accountability practices.

“Our tradition is distinct from — and in some cases better than — the business world’s that we are encouraged to emulate,” wrote the executive director of a mid-size health-care charity. “We will have to adopt more effective business tools” while also staying “true to our legacy.”

The executive director of a small Midwestern human-services charity worried that non-profit groups face increasing pressure to show “bottom-line results.”

“While in most instances this will result in program improvement with better service-delivery systems,” the executive added, “it may result in ‘creaming’ — serving only those who have the greatest potential to succeed.”

Despite the growing prominence of accountability measures in the non-profit world, however, some respondents indicated that they were in favor of non-profit groups’ adopting more-aggressive operating methods, styled after those in the business world.

“Non-profit executives need to become Silicon Valley entrepreneurs — fearless, risk-taking, and creative,” wrote the executive director of a foundation in the Southeast.

Added the managing partner of a small community-relations consulting group in the Midwest: “The new non-profit will have to throw out the non-profit organizational structure of the ‘30s, ‘40s, and ‘50s, which most operate under. There is a revolution out there, and non-profits are way behind the curve.”