Innovation and Responsibility

by Bob Goldfarb

Whom does Jewish innovation serve? It’s a question that needs closer attention as the sector continues to grow. According to a recent report, The Jewish Innovation Economy, this sector “is more focused on Jewish identity and belonging, along with religious expression, than on social services and large-scale institutional action.” That’s markedly different from Federations, which typically have a primary commitment to caring for Jews in need.

Another difference, as we know from earlier studies, is that the leadership of startups is atypical of the North American Jewish population generally. “Fully 95% [of startup leaders] have been to Israel at least once, compared with 35% of American Jews overall,” confirms the new report. In addition, more than half of the founders and leaders have participated in at least one Jewish leadership development program, corroborating how exceptional they are.

Jewish startups collectively receive nearly $200 million in direct funds, not counting in-kind support or volunteer labor. Those funds reach nearly 600 organizations that are “in contact” with 630,000 people, of whom 115,000 are regular participants. That works out to an average of $324,000 per organization and $317 per person, $1739 per active participant. By comparison New York’s Federation has a budget of similar magnitude, around $230 million, and says that some 4,500,000 are “touched” by its work, which amounts to just $50. per person. Even allowing for the fact that attending an event is different from benefiting from a program, the contrast is startling.

These data confirm the emergence of a new class of Jews defined by disproportionate access to communal resources. As several attest in the study, they often use their advantages to pursue their own interests. One speaks of “the drive to create a Jewish community that I would want to participate in myself.”

Another explains, “I feel that doing the work I am doing – following my passions – allows me to live a fully integrated life.” This is reflected in the nature of the top five areas of focus for startups: Jewish education (53%), community building (31%), spirituality (28%), ritual (26%), and 20s/30s engagement/development (25%). In a great many cases these ventures create events and experiences intended for people like the founders, as distinct from contributing to the welfare of others; social service accounts for only 6% of them.

This might be explained as a market correction, filling needs and addressing interests neglected in the past by the traditional institutions of Jewish life. But the new report, invoking the economist Joseph Schumpeter, makes a more radical claim. It proposes that the current era in Jewish institutional life is akin to the dawn of the Enlightenment or the destruction of the Second Temple, a disruptive paradigm shift exemplifying what Schumpeter called “creative destruction.” It’s worth spending a moment to take a closer look at that claim.

In a literal sense it doesn’t really apply. Schumpeter was writing about macroeconomic dynamics predicated on variables like currency, interest rates, import duties, and taxes, which don’t obtain here. Even metaphorically, however, The Jewish Innovation Economy doesn’t document its thesis that “the current cycle of reinvention and creation within Jewish life is an adaptive response to a rapidly changing world.” Its data point to the opposite conclusion: that the vitality of today’s innovation sector is actually the outcome of directing enormous amounts of money to educate its leaders and to support their ventures, not the inevitable result of impersonal forces in technology and the economy.

If the innovation sector displaces older communal structures, the question of whom it serves becomes even more urgent. Here is a sector spending $200,000,000 a year on projects directed by a privileged group of leaders, yet with social services and human services glaringly underrepresented. This would have been a good time to correct that imbalance by recommending incentives to take care of the helpless and the needy among us.

Instead, the report advocates more power for startups (“a vote in communal decision-making”) more money (“capacity building”), and more connections (“networks”). All of us want more power, money, and connections, but the greater good of the community should surely be in our thinking too. As the innovation sector matures, perhaps it will widen its vision beyond its own interests and extend its concerns to those less fortunate than its leaders.

Bob Goldfarb is the president of the Center for Jewish Culture and Creativity, the fiscal sponsor for more than 20 innovative Jewish projects. He earned his MBA at Harvard Business School.

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Comments

  1. says

    Hi Bob,

    I think you’ve hit the nail on the head: a vital question for the Jewish Innovation Sector is not whether it is important and should we allocate resources to it — which it is and which we should — but rather its relationship and priority vis-a-vis the other important charitable sectors.

    To put the question in concrete terms, every dollar spent developing and encouraging a new program, is one less dollar spent on a hot meal for the needy or a warm winter coat for the homeless.

    An important consideration indeed.

    Regards,

    Shuey
    @nonprofitbanker

  2. says

    Bob makes some strong points.

    As the founder of JCorps ( http://jcorps.org ), a start-up that has thousands of young Jewish adults volunteering (often for the first time in their lives), I’ve got to toot our own horn here. We get young adults who have never entered a temple or shul, never eaten a falafel (really!), and can’t recognize their own name in Hebrew to identify themselves as Jewish and give hours of their week to feeding the hungry, visiting sick children and the elderly, beautifying their environments, working with special needs kids, etc.

    Over 80% of our members return, and many become Team Leaders and Chapter Directors. Many more become active in local Jewish organizations, religious and social, often joining the Jewish community for the first time in their lives. Almost ALL gain new Jewish friends and connections with every event, building their Jewish network. Oh, and we do it for about $7-to-$30 a head, far less than the costs quoted above.

    Yes, there is huge waste in the Jewish innovation sector with questionable returns on investment, but there are also bright spots, such as JCorps.

    So what can we learn from these bright spots?

    One: What is needed is not an overarching judgement on a sector — since we all realize the need for “innovation” — but a change in how we judge our investments.

    Many start-up programs are funded without clear, *measurable* outcomes stated at the beginning. Few start-ups are tracking their effect on the population and change in the strength of their members’ Jewish identity and size of their networks.

    We need to ask: Are the young Jews who participate more involved? Do they return? Do they bring in others? Are they more connected to each other and to Jewish activity?

    Two: We need to decide if “cultural” investments have any effect. Yes, the #1 issue is to strengthen Jewish identity, without which there would be no interest in Jewish values and history. However, do these cultural experiments increase Jewish identity sufficiently to launch kids onto a journey of exploration of Jewish values? More importantly: are these experiments reaching new kids or are they largely preaching to the choir? It often seems as if it’s the same people at all these “innovation” summits and events and festivals. So maybe they’re not converting anyone, just giving free housing and funding to people who’d be doing this stuff anyway.

    We need to ask: Are we making a change in young Jews’ viewpoints or is this an over-funded bake sale? (And does that bake sale help Jews in need or go to a non-Jewish cause, which is nice, but doesn’t teach young Jews to give back to the community.)

    Three: There is incredible redundancy in the Jewish sector. Venture Capitalists ask “Who else is doing this?” before they invest. I challenge you to find that question on any grant application form in the Jewish sector. “There is nothing new under the sun.” Competition is good, but we can cut-down on the also-rans.

    Ari
    founder, JCorps International : http://jcorps.org
    co-founder, NextGen:Charity, the conference on innovation in non-profit work : http://nextgencharity.com

  3. Avi says

    Thank you Bob Goldfarb for showing that the emporer has no clothes. The innovation sector goes where the dollars are. They are funded by trust fund babies who are more comfortable with creating feel good expressions of Judaism than the hard work of addressing the issues of pain and loneliness that is still prevalent in Jewish life. As evidence, has the Jewish Funders Network or superstar foundations like Steinhardt et al lifted a collective finger to address issues growing out of the current chronic recession?

  4. says

    Innovative Jewish start-ups have none of the advantages of economies-of-scale, deep professional teams, and generations of connections and relationships that Federations have. To make a cost-per-participant comparison of the work of 3-year old start-up with perhaps the greatest Federation in North America, and certainly the largest, is hardly fair or appropriate. And a “touched by” metric? Really? That’s an absurd comparison made to deliver a terrible charge: that young Jewish innovators are selfish, and diverting community resources for their own purposes.

    What worked in the past isn’t working. Federations are raising less money. Synagogues have fewer members, schools have fewer students. Jews are less Jewish in most of the ways that they were Jewish five decades ago. So what would you like to do Bob? Have Jewish innovators focus on how to stretch shrinking dollars? Or have Jewish innovators focus on how to revitalize and recreate a passionate Jewish community that cares about those in need?

    Isaac Shalev
    Executive Director
    Storahtelling, Inc.
    @rejewvenator

  5. says

    Hey Bob, the start ups you hate so much only make up 2% of the Jewish non-profit world’s annual spending…and our work impacts around 9%. That makes us about 4x more efficient than the rest of the Jewish world. And that’s with way less money and basic resources (like office equipment and health insurance).

    Patrick from PunkTorah.org
    @PunkTorah
    http://www.facebook.com/punktorah

  6. says

    There’s so much to write about this, but I’ll start with the statistics.

    When claiming the inefficiency of Jewish start-ups, Bob writes, “By comparison [to the cost of $317 per person] New York’s Federation has a budget of similar magnitude, around $230 million, and says that some 4,500,000 are “touched” by its work, which amounts to just $50. per person.”

    Then he writes, “These data confirm the emergence of a new class of Jews defined by disproportionate access to communal resources.”

    No.

    When one _compares_ to a population estimate of Jewish start-ups we compare it to the population estimate of establishment nonprofits, not cherry-pick an example that makes a point.

    Bob get’s his numbers regarding start-ups from The Jewish Innovation Economy report.

    The same report states Jewish start-ups, “engage more than 9% of the North American Jewish population with less than 2% of the roughly $10 billion spent annually in the Jewish nonprofit sector.”

    In other words, with 98% of the 10B spent annually in the Jewish nonprofit sector, the established Jewish non-profits engage… how many? and at what cost?

    No matter the percent you plug in there, the cost is more than for start-ups — that’s what that statistic above is stating: Jewish start-ups are disproportionately _efficient_.

    This isn’t obvious, obviously, so let me give an example. Let’s say, generously, establishment nonprofits engage 40% of the Am. Jewish population. That’s 2.4M Jews (assuming there are 6M Jews) at a cost of 4,083 per person. And if they engage 100% of Am. Jews, that’s $1,633 per person, compared to $317.

    There’s so much more to write about this post. But I figured we should start by clearing up misrepresented statistics.

Trackbacks

  1. […] Bob Goldfarb over at eJewishPhilanthropy, however, started a canard unfortunately picked up by others. We need to put this down quickly, before it spreads. Doing some deeply unscientific eyeballing, he asserted that the Jewish startup field as a whole is a waste of money. Here’s the straw man: Jewish startups collectively receive nearly $200 million in direct funds, not counting in-kind support or volunteer labor. Those funds reach nearly 600 organizations that are “in contact” with 630,000 people, of whom 115,000 are regular participants. That works out to an average of $324,000 per organization and $317 per person, $1739 per active participant. By comparison New York’s Federation has a budget of similar magnitude, around $230 million, and says that some 4,500,000 are “touched” by its work, which amounts to just $50. per person. Even allowing for the fact that attending an event is different from benefiting from a program, the contrast is startling. […]