With Bernard Madoff safely in jail, and the economy technically in recovery, Jewish not-for-profits should now be optimistic about the future. The losses created by the collapse of Madoff’s pyramid scheme, though brutal to a handful of major donors and foundations that had invested heavily in his funds, were one-time losses. A year later, one would expect to see the Jewish not-for-profit sector as a whole regroup.
If anything, however, the crisis for Jewish not-for-profits is just beginning. To recover, the Jewish charitable world will have to change its modus operandi. Relying on major donors, as most Jewish not-for-profits have done, has had two major consequences: a short-term failure to weather this recession, and, in the longer term, an unnecessary proliferation of organizations with overlapping missions.
While we need the energy of all the people who began not-for-profits in the past decade, we do not need all their organizations. When we stop asking “Where is the money?” and start asking “What is the mission?” and “Whom do we serve?” we will build a stronger Jewish community and a stronger not-for-profit infrastructure.
Economic recessions should not have a devastating impact on not-for-profit bottom lines. In tough economic times, giving usually increases for social service not-for-profits and, in the past, has stayed flat for religious, arts and public-benefit not-for-profits. Why, then, is charitable giving not holding steady for the Jewish world, where, according to The Chronicle of Philanthropy, “the average gift to Jewish federations is down by 4.3 percent.” The reason is that the Jewish community has a dangerous tendency to rely on major donors.
Gary Tobin and Aryeh Weinberg admit in a research report that “Jewish philanthropy is… built around major gifts. Capital campaigns for synagogues, Jewish community centers, museums, and senior housing developments design their fundraising goals around the biggest gifts. Capital campaigns do not even begin until the largest gifts have already been secured. Major gifts are the lifeblood of the Jewish communal infrastructure.”
In the boom of 2007, newly rich major donors looked like an opportunity — but all that changed with the stock market’s deep dive. Wealthy donors make gifts from stocks; foundations make gifts from the interest on their endowments, also usually invested in stocks. When the stock market plummets, so does their capacity to give. Small donors, however, always give directly out of their earned income. Unless those small donors become unemployed or lose their houses, their ability to give will be about the same in bad times as in good. That’s why the Grassroots Fundraising Journal suggests that organizations pay more attention to these smaller donors in recessionary times.
For evidence of the benefit of relying on small donors, we only have to look at the relative health of Jewish social justice organizations. These organizations were forced to develop a grass-roots funding strategy after being neglected for years by major donors. American Jewish World Service took in almost twice as much from individual donors in 2008 as it did in 2007, so that while the organization lost income on investments, it stayed within budget. This is exactly what one would expect from a public benefit not-for-profit during an economic downturn. It’s a model that more not-for-profits should adopt.
Reliance on major donors has also contributed to the over-proliferation of Jewish not-for-profits. During the past decade, more than 300 new Jewish non-profits were founded. A report by Jumpstart on these initiatives notes that most of the new not-for-profits were created by “foundations, giving circles, independent donors, and federations.” That is, they were created by a handful of wealthy individuals eager to serve the larger community.
As the Jumpstart authors point out, the proliferation of these many organizations signaled a positive change from the previous model of unitary federations dispensing community funds. The new not-for-profits are largely niche organizations representing a welcome decentralization of Jewish philanthropy, and many have succeeded in identifying areas of Jewish life that had been underserved.
But what those organizations have not succeeded in doing, by and large, is finding grass-roots support for their missions. As Jumpstart notes, “few organizations have large numbers of participants and constituents.” One reason for this may be that many of these organizations duplicated each others’ work. So why were they founded? The answer, I’m afraid, is what Keith Gessen said in the December 2008 issue of n+1 about the increasing number of Jewish magazines: “their proximate cause is the easy availability of gobs of money from wealthy men who decided, in their declining years, to do something for the Jews after betraying tikkun olam for their whole working careers.”
Gessen is perhaps overly cynical, but anyone working in fund development knows that a donor giving $20 million or even a “mere” $2 million has a tendency to prefer that he or she be the lead player in an organization rather than just one of many givers. In a booming economy, it was easy for ambitious big-idea people to find donors willing to start them up, even if the proposed new organization duplicated older organizations. The result was the proliferation of hundreds of new Jewish not-for-profits entering an arena already populated with more than 9,000 Jewish religious, educational and public benefit institutions. The most hopeful sign for the recovery of the Jewish not-for-profit world is the increasing willingness of both old and new organizations to rethink their identity, and even their existence, based on their mission. My own overpopulated world of progressive religious/cultural Jewish magazines has seen magazines close (American Jewish Life) or drop issues (Guilt & Pleasure), merge (JVibe with Jvillage, Jewcy with JDub) or form partnerships (Sh’ma with a collective of seminaries, my own magazine, Zeek, with the Forward). While we want to keep a multi-vocal, vibrant Jewish publishing world, it is not a terrible thing for publishers who recognize a common mission to work toward it together.
Increasingly, Jewish not-for-profits will have no choice: They will either have to merge, partner or shut down. As leaders of the not-for-profit world debate these decisions, they should be driven by their mission, not by their donors. A recognition that not-for-profits can best adhere to their mission when constituents and donors are one and the same would surely preserve the not-for-profit world from future economic crises. Perhaps it is not too idealistic to believe that such a bottom-up strategy could usher in an even richer era of communal activity.
Jo Ellen Green Kaiser is the editor-in-chief of Zeek.