[This posting was written, but not posted, a few weeks ago; with the recent announcement of Jumo, it is particularly timely.]
Welcome to Jumo: The time of the intermediary is past; long live the [new] intermediary
by Richard Marker
There are few luddites who still argue for the centrality of the classic intermediary funding organizations such as United Way, Jewish Federations, Catholic Charities and many others. Most, though, acknowledge the data of funding patterns and the demographics of funders that show consistently and indisputably that these were yesterday’s – read 20th Century – funding app.
Now let us be clear: these umbrella charities continue to play an important niche role. They are large enough, even if proportionately much reduced, to be able to provide infrastructure support to significant strata of the nfp/ngo sector. When well run, they can balance faddish trends with stability, monitor emerging population and demographic patterns and provide a useful convening role. Tales of their demise are premature, even if it is inconceivable that they will ever again become THE central players that they were.
The reasons for the diminution of their role are evident and much told: funders have little patience for the consensus process when they can respond more quickly and directly to causes they believe in. The inevitable bureaucracy of umbrella charities, invaluable in vetting long-term performance, inevitably appears to add a level of inefficiency to the funding process – at a time when funders are advised to question every penny of overhead. Even the underlying vision for intermediaries has lost sway – that those who have a noblesse oblige to “give back.” [Where it went mattered less than the responsibility to give] has been replaced by a mantra of “making a difference” – requiring accountability for every dollar spent and being able to identify the returns on a philanthropic investment.
None of these, however, are sufficient to explain why umbrella/intermediary charities were so central. After all, challenges to bureaucracy are not new; frustrations with consensus have a long history. The ability to give directly has always been there, and always been done. So, the question, then, is not why they are diminished in their role but why were they so central?
The real reason that they worked, and the real reason they seem so yesterday is that they had access to knowledge not readily available to the average funder. How many funders wanted to review proposals, check audited financials, verify the claimed results as presented in self promoting annual reports, weigh the relative effectiveness of one or another apparently deserving group, measure populations, evaluate staff and boards, and so on? The professionals at United Way and their fellow intermediaries did exactly that. The committee consensus process may be unwieldy, but it guaranteed that there was a distillation of a lot of information which could inform decisions. [Whether or not it leads to better funding is an entirely different question.]
But today, who needs to do that? We all can look at Guidestar, log onto GiveWell, be attracted to specific projects at Donors Choose or Kiva, accept the shorthand of the BBB ratings, Data, an overwhelming amount of data, is available at a moment’s notice to anyone who wishes. Intermediary and umbrella charities no longer control knowledge or even smooth access to knowledge so, for many, there is no longer the need to have patience for the unsatisfactory and time-consuming committee process. Why not simply go on line to give directly and avoid the questions of obligation, loyalty, and solicitations?
There is an immediacy that is gratifying and a sense that ones own values and priorities can be addressed directly to causes and organizations that are single purpose.
But actually what we are seeing is the rise of a new type of intermediary – one that exists only for the purpose of giving information – raw or distilled, depending. If one looks at the very small token list above, one sees that they are indeed on line intermediaries which have done so much of the work which the big umbrella charities used to do. Funders use them not because they are sexy or new [at least not for long] but because they give information in an efficient way. Kiva is by definition a programmatic intermediary. Donors Choose is as well. Guidestar is a knowledge intermediary – giving primary data in an easy to find and accessible format. Funders may be pulling back from the umbrellas of yesteryear, but they are active users of todays. They may choose to give on line, but sophisticated ones check out available rating information first.
What these new intermediaries allow is immediacy, directness, and a democratization of the process. Now a donor of $25 has essentially the same information that a $25m donor can acquire, and can make a private decision more quickly and in a focused way.
Now, let us be clear: there are costs to this new system and for those of us in the field there are responsibilities: there is a need for more effective education about what is real and what is hype. There is a need to educate what the data really means. There is a need to not allow the rating systems to be simplistic. There is a responsibility to find way to counter fads and popularity as the sole basis for philanthropic decisions. And w have to do this in the most decentralized system that one could ever conceive where few even know that folks like us exist.
We are not likely to ever go back to the United Way ways of the past, but their lesson is ours. Knowledge matters. These new intermediaries able to get information and distilled knowledge out most effectively and persuasively are defining the philanthropic landscape and informing the charitable behavior of this and, and most assuredly, the next era.
Richard Marker serves as an advisor to foundations, independent funders, and not-for-profit organizations; he is a Senior Fellow in Philanthropy at NYU’s George Heyman Jr. Center for Philanthropy. Richard specializes in strategic philanthropy and planning and blogs at Wise Philanthropy.
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Dear Richard,
I agree with your analysis that the traditional intermediary funding organizations no longer fulfill funders’ needs and that many funders are instead utilizing these new web-based information sites. But while I agree with your conclusion that knowledge matters and basic information can easily be found online, there are organizations that fill the need for information and still allow ample room for the funder to fund with immediacy, directly and democratically.
Community foundations, Jewish or secular, are growing steadily BECAUSE they offer the combination of both the ability to donate directly and the knowledge of the local community — which is still where most funders give. This is not to imply that all these organizations do this well, but — as you point out — it is our responsibility to provide compelling education about how to use the sometimes simplistic information provided online in order for funders to make effective and strategic philanthropic choices
In addition, the philanthropic world is changing in other ways that will begin to impact funders choices in the next few years. As economic conditions (and funders concerns) call for more nonprofit consolidation and collaboration, new models of service provision and funding will be necessary. Much of this movement is being driven by the younger funders who are less concerned with long term support of a specific organization as they are providing a solution to an identified community problem.
I recommend the Winter 2011 Stanford Social Innovation Review article by Mark Kramer and John Kania on “Collective Impact.” The Community Foundation for Southern Arizona has begun to fund only collaborative projects with its discretionary funds, and we are developing a model to engage and educate funders in this new way to “make a difference.”
The behemoth umbrellas of the past are probably not long for this world, but there are alternatives to JUST information. Long live the new intermediaries. May they be judged by their effectiveness — their ability to make a difference.
Warm regards,
Evan Mendelson
VP, Donor Relations and Program Services
Community Foundation for Southern Arizona
With all due respect, both Richard and Evan fail to understand that the core of the federation system is collective action, not the annual campaign or reliance on a monopoly on information. So long as two or more people want to join together to get something done, our product — Jewish collective action — will hold its value.
The federations’ annual campaign is but one instrument in developing the financial resources needed to accomplish collective priorities. Additionally, a more informed donor is even more likely to connect with the power of leveraging a donation to achieve impact on a wide scale. So the idea that donor ignorance is or was a strength of the system is mistaken. (This is not to say the information was widely available. But an enterprising donor could obtain it. The power of the annual campaign was never donor ignorance but rather donor confidence in the federation’s expertise in identifying needs and meeting them — an expertise not met these days by Guidestar and the like that provide 990s and make an attempt to discern effectiveness from tax filings.)
The annual campaign is a mechanism. A very successful mechanism == probably one of the the most successful fundraising enterprise in the North American Jewish community (I don’t have command of all the statistics, but I’d venture that it still is a top performer). We in the federations have other instruments — planned giving, various forms of direct and/or supplemental gifts, corporate etc.
Financial resource development is not in and of itself impact. How the money is spent is what creates the impact — and at the end of the day it’s the impact, and the confidence of the donors in the organization to achieve the impact, that has been and will continue to be the core of federations’ incredible success.
The community foundation system Evan represents closely resembles the federation model in that it represents itself as a form of collective action. It just rests on planned, endowed and donor advised gifts, whereas federations have all of those tools plus various tools for annual giving. Moreover, most community foundations would far prefer unrestricted donations to donor advised funds or other directed gifts. Why? Because the community foundations believe that they have the best grasp of community priorities and needs. It seems Evan sees unrestricted gifts as somehow less direct. I respectfully disagree. But I do agree that young donors are outcome oriented rather than committed to a particular agency. This is another reason why federations are well positioned. We are all about outcomes and impact. The service or program provider is a lesser priority to achieving impact.
One last point — if Richard and Evan are referring to federation annual campaigns (and/or any giving to the federations) as “umbrella giving,” they are unwittingly perpetuating a false proposition. Candidly, I’m not sure what umbrella giving even means. I do know that a gift to the federation annual campaign, and there’s about a billion dollars worth a year, gets allocated to meet identified and prioritized community needs. We know where every dollar goes, what every dollar achieves, and how each dollar is leveraged to achieve impact.
Yes, by putting our dollars into a Jewish community chest we are leveraging them to meet community needs and I guess metaphorically that means the federations are an umbrella keeping our communities safe from the elements. But to the degree Richard and Even imply that umbrella giving means less direct giving, less impactful results, that is simply nonsense. (This is not to say that we’ve marketed effectively. We have a ways to go.)
I know it’s in vogue to take shots at federation and predict our demise. Slow moving targets take more flak. Some shots have been well deserved as the system has been slow to understand and embrace change. And as has been suggested, we have seen a drop in total donors and flat annual campaign and that certainly suggests changes in the marketplace. We’re still formidable, and we’re emerging from a (painfully) long period of self examination committed and determined to meaningfully and creatively express our enduring value as a major Jewish enterprise for Jewish collective action.
This is an important article – and if I may, I would propose that we port over two additional types of intermediaries from the broader philanthropic/nonprofit world.
One is the shared services intermediary (space, fiscal sponsorship). This type mainly helps funders achieve goals around efficiency and economy of scale; however, some fiscal sponsors, like Tides, Community Partners, and the San Francisco Film Society, among others – or the Center for Jewish Culture & Creativity, the Foundation for Jewish Culture, and, if I may, Jumpstart, among others, have acquired significant program-related expertise and so are able to help funders advance community action goals that require coalitions of nonprofits.
The other type is the capacity-building intermediary, most notably the incubator. Whether or not they allocate funds (not all do), they all place educated bets on new and less established philanthropic ventures. Acumen, Ashoka, Echoing Green, StartingBloc, and others, as well as Bikkurim, JHub, Joshua Venture, Jumpstart (again, if I may), Paideia, PresenTense, ROI, UpStart, and others, all serve as mutual funds, allocating community resources with specialized sector expertise. The BYFI Alumni Venture Fund, Natan, and Slingshot are philanthropic incubators, too – not only allocating innovation funds to early stage investments, but just as importantly, if not more so, training their members to become expert funders themselves. The Jewish Funders Network performs similar functions through its matching grants work in areas of new and less familiar need, where field-specific expertise is a must.
In their current form, these two additional types of intermediaries are a little more than a generation old in the general philanthropic/nonprofit sector (though of course others have exercised similar functions for a longer time, though not in such a purpose-built way). The internet aldo is extending and expanding their reach exponentially. Jewish philanthropists concerned with leveraging their funds and benefiting from intermediary expertise should look to them as well.
Hi Steve,
I appreciate your dedication to the Jewish people, and the hard work you must put in for what is often a thankless job. That being said, claims like those you made need to be exposed for what they are.
I think you’ll agree the ultimate goal is to help the Jewish people, and not any particular organization or bureaucracy.
As you say above, it’s all about “impact” so I’d like to question your claims of efficacy:
1.
According to this document ( http://www.jfri.org/local_includes/downloads/41579.pdf ), you have a $50,000,000 endowment and were able to do this:
“JFRI launched “The Network,” a young adult affinity program that has
attracted 125 young adults, and created young adult volunteer leadership
teams involved in Jewish learning, volunteerism and philanthropy.”
You’re bragging that you got 125 people in 18 months? According to your site, 18 of those people are “Chairs” of the group and you get 50 people to an event. So your organization is bragging that it took one-and-a-half years for 18 people to get 32 more people into a party? ( http://www.jfri.org/local_includes/downloads/44121.pdf )
I’m confused, maybe that’s because I’m not “enterprising”…
2.
You write, “This is not to say the information was widely available. But an enterprising donor could obtain it.”
An “enterprising donor”? Wait, so you want the donors to just trust the system, yet you want them to be “enterprising”? I thought your point was that, thanks to your expertise, we don’t have to be enterprising? I guess you do want just the dumb, uninformed donors. This makes sense, because…
3.
In 2009, you got paid $216,146 and your organization lost $4,135,771. No wonder you knocked Guidestar above! I wonder who’d invest if you posted those numbers on your site.
Your numbers are going down over 14% a year, and you’re spending time on a blog defending your model? At some point, you’ve got to accept when things aren’t working.
Yes, I’m being harsh. You’re welcome. I point these things out because, as you say yourself in that PDF, “Nothing less than the future of our community is at stake.”
Actually, that’s inaccurate: The Federation is at stake. The community can always give directly. I don’t see Chabad talking about how their community is at stake. They’re growing. (Maybe they just haven’t noticed the poor economy, because I don’t see them using that excuse.)
The Federation model may have worked for your grandfather, but so did the rotary phone. People aren’t buying many of those either.
I believe it’s important that we expose these failed systems which pay unqualified professionals to squander donations. Every day these organizations exist, more young Jews increasingly lose faith in their community and their traditions. That’s what’s really at stake.
Ari Teman
JFNA Hero of the Year, 2009