By the Numbers
By Debra Nussbaum Cohen November 11, 2009
As anyone who follows the news can tell you, America?s economy is on a roller coaster ride of purported recovery from the past year, which saw the deepest recession in decades. And as the economy goes, so goes American ? and American Jewish ?philanthropy.
Giving to not-for-profit organizations has suffered, and is being made worse by high unemployment rates and seesawing stock market numbers. And on the heels of unprecedented growth in giving to not-for-profit causes over the past decade, the drop seems all the more difficult.
In 2008, giving in the United States declined by nearly 6%, according to a report conducted by the consulting firm the Giving Institute. That was the steepest decline since the organization began measuring charitable donations in 1956.
The downward trend shows no signs of abating. At a roundtable discussion convened last summer by United Jewish Communities (now known as the Jewish Federations of North America), Lucy Bernholz, an expert on the business of philanthropy, projected a further drop of between 9% and 13% in 2009, and the same drop in 2010.
Worse news is, American foundations will not return to the level of giving they had in 2007 until 2017, according to the Council on Foundations.
?The recession may be abating or even over, but it will take quite a while for the economy and jobs and disposable income to return,? said Richard Marker, partner in the firm Marker Goldsmith Philanthropy Advisors and author of a new book, ?Saying ?Yes? Wisely: Insights for the Thoughtful Philanthropist? (Blooming Twig Books).
Marker says there is little reason to believe that things will improve in the coming year, noting that ?in general, philanthropic giving trails the economy by at least a year.?
And where the bottom lies, no one can say.
?Tell me what the market?s going to do, and I?ll tell you how things will play out in American Jewish philanthropy,? said Jeffrey Solomon, president of the Andrea and Charles Bronfman Philanthropies and co-author, with Charles Bronfman, of a new book, ?The Art of Giving: Where the Soul Meets a Business Plan? (Jossey Bass).
While no one knows precisely how far the total fall has been for American Jewish not-for-profit organizations, there are some current indicators illuminating their troubles.
Jewish federations ? historically the powerhouses of American Jewish philanthropy, raising and funding some $3 billion each year ? faced some of the steepest declines last year of any of the country?s top 400 not-for-profits, according to The Chronicle of Philanthropy.
Money raised by the Jewish Federations of North America fell by more than 25%. UJA-Federation of New York?s donations dove more than 21%. And the Jewish Community Federation of San Francisco and surrounding areas saw donations drop nearly 29%.
But there have been exceptions. Boston?s Combined Jewish Philanthropies? income was up 5%, and some other Jewish not-for-profits on the ?Top 400? list also saw increases in 2008. The American Jewish Joint Distribution Committee?s income was up 1.3%, and Yeshiva University?s was up almost 24%.
Most Jewish organizations, however, did see a significant downturn. The Jewish Communal Fund, which is based in New York, took in 27% less income, according to The Chronicle.
Overall, the foundation field has lost $200 billion of its corpus, according to Solomon. In the case of his foundation, it is decreasing its current grant making by 35%, to about $11 million, as a result of the recession.
The collapse of Bernard Madoff?s Ponzi scheme, which was marked by Madoff?s arrest last December, also led directly to the collapse of 43 separate foundations, most of which were focused on Jewish issues, and hurt 151 more. There was also the substantial collateral damage, of course, to the individual donors who had invested with Madoff and now have little or nothing left to donate.
Currently ?the community is holding its breath, maybe letting out a little sigh of relief for hopefully having survived the worst of it,? said Gail Hyman, a fundraising and communications consultant to not-for-profits.
?It?s going to unfold for the next year or so, as we continue to figure out where we are and what the repercussions have been,? Hyman said.
The economic crisis is happening at a time when Jewish not-for-profits are facing a major generational shift.
Jewish federations and other ?establishment? organizations, by and large, have not attracted the interest of donors under age 45.
?Most organizations rely on the loyalty of long-term donors to hold them stable during tough times; however, younger donors don?t have the same concept of long-term loyalty,? Marker said. ?There is a limit to how much organizations can depend on the long-term loyalty of an aging donor base. [That]? will have a great impact on many well-established organizations.?
Instead, their focus has been on the innovative, the creative and the new ? all of which were blossoming in the Jewish community when Madoff was arrested and the stock market took a dive.
The most vulnerable Jewish not-for-profits may be the more than 300 small independent Jewish organizations born in the past decade that were counted by Los Angeles-based Jumpstart, one of these small Jewish organizations. Jumpstart describes itself as a ?thinkubator of sustainable Jewish innovation.?
Today?s economic uncertainty may signal the end for some of these organizations. A few, like Jewish Family & Life (JFL Media), have already dissolved.
The climate ?could signal that it will be harder than ever to get people to be risk takers again,? Hyman said.
But others say that the world of Jewish not-for-profits has already reached a tipping point in a shift toward innovation, and that the current climate may foster continued change.
Marker, for one, thinks there may be a continued blossoming of innovative start-ups.
?Since their overhead is smaller, their dependence on a broad range of support is less, they are often exciting and can show immediate success or failure, many funders who see the difficulties of established organizations may choose to support these alternatives.
?A funder?s money goes further, the buy-in is less and the projects are often higher energy.? He continued, saying when ?most organizations are wringing their hands about the past, the innovators are envisioning a different future.
?This process had begun before the recession, but this may be a case when the economic cutbacks accelerate a process of innovation and change rather than inhibit it.? build her own legacy.
Contact Debra Nussbaum Cohen at [email protected]
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