Capturing the Emerging Charitable Markets in the USA: Fundraising for Israel-Based Organizations in the New Economy
by Robert I. Evans and Avrum D. Lapin
As leading nonprofit consultants specializing in fundraising and leadership development for organizations serving the Jewish community, we are increasingly aware that attracting new donors and raising the sights of existing philanthropically-oriented Jews in the United States is not as straightforward as it once was.
Generational shifts have already impacted giving, accompanied by innovations in online giving, decreasing attendance at worship services at U.S. synagogues and new perspectives on the importance of Israel to American Jews. These factors have created a new environment in which nonprofits compete on the “open market” for the support of ever-more entrepreneurial donors.
Those who have the inclination and resources to become today’s major philanthropists are increasingly from technology-related and financial management industries. Gone are the days where the majority of major Jewish donors were largely retailers, doctors, accountants and lawyers. Today’s wealthiest Jews are increasingly self-made and their entrepreneurial view affects their giving styles.
American-born and raised, these new donors tend to seek out opportunities for which they have a passion and to make impact-oriented investments to sustain and grow nonprofit organizations or programs that they perceive to make a measurable difference. In cultivating these prospective donors it is important to keep some emotion in the giving formula but highlight other ingredients that impact the charitable decision-making process.
Where are the major Jewish philanthropists?
Our unofficial, yet thorough, review of the most recent Forbes 400 list of the wealthiest Americans reveals that about 130 appear to be Jewish. Yet when we examine the top 150 gifts made thus far in 2012 (as reported by The Chronicle of Philanthropy) Jewish donors accounted for only 30 of those gifts. What is even more disconcerting is that of those 30 gifts, only six of them went to Jewish causes and two of those six gifts were from one donor.
Why are nonprofits in the Jewish community losing ground? Why are leading Jewish donors not being engaged by the Jewish community’s philanthropic needs and opportunities? What do innovative nonprofits need to do to achieve greater success among prospective Jewish benefactors?
That the substantially wealthy Jewish individuals in America are not currently giving major philanthropic gifts might not be much of a surprise, according to The Chronicle of Philanthropy’s recently-released report, “How America Gives.” One of the most intriguing facets from this report is the postulation that rich people give less, especially when they live in areas where they are surrounded by other rich people. The data seems to point out that households and/or individuals who earn $200,000 per year give a greater percentage of their disposable income to charity when they live in ZIP codes with fewer people who are as wealthy as they are.
Furthermore, individuals who earn between $50,000 and $75,000 annually give a higher percentage of their available, discretionary income to charitable causes (7.6 percent) than those individuals who make $100,000 or more (4.2 percent).
The Chronicle’s methodology has limitations, specifically in that the study only reflects donations that are reported as deductions to the IRS on itemized federal tax filings – meaning that anyone who took the standard deduction would not be included, as well as those individuals whose charitable contributions were made “off-the-books” or irrespective of tax benefits.
Measuring those households above $50,000 means that the giving of lower income Americans is absent from the results. However, the study still gives us an interesting and piercing view into the world of middle and upper-middle class giving.
Emerging Markets in the USA for Giving
Donors of all ages and charitable inclinations today often support organizations that seek them out, both through traditional means, such as face-to-face contact and direct mail, but also increasingly within the emerging fields of social media and crowd-funding. A younger donor might also discover a new Jewish theatre company or museum based on a Facebook friend’s contribution to a Kickstarter campaign, or via a viral Tweet from his/her favorite rabbi on Twitter, the modern version of chatting!
Online and offline interaction must go hand-in-hand. While new donors may “discover” a cause via social media or email marketing, major gifts are still secured the old-fashioned way: making a connection, forming personal relationships, building enthusiasm and asking for a gift in person. Therefore, representatives of Jewish fundraising agencies must still seek out new and emerging markets that might be hiding the next major donors.
Outside of the Northeast:
According to the Chronicle report and subsequent analyses, the Northeast region of the U.S. was perhaps statistically the least generous to charities, with the six New England states filling the last six spaces among the 50 states. However, the percentages of giving from those in Southern states, specifically in the region stretching from Texas east to Delaware and South to Florida, gave more generously.
Outside of the “Old Boys” Network:
Complementary to the Chronicle’s study, new research supports an often-discussed emerging market: women donors. At EHL Consulting, we have long recognized that the Modern Jewish Woman Donor is becoming a power player on the national philanthropic stage. Now, new research by the Women’s Philanthropy Institute suggests that older women are more generous than their male counterparts, giving a whopping 86 percent more to charity than males of comparable age and wealth. These findings are consistent across the entire sample within the study, and are most amazing in the households with the top 25 percent of permanent income, where women gave 156 percent more than similarly placed men.
“Although some [women] may have concerns about their financial security, our study suggests that Boomer and older women share their resources with others more generously than their male peers,” says Debra J. Mesch, Director of the Women’s Philanthropy Institute at Indiana University. “Our previous research has found that women tend to be more altruistic than men and that their giving frequently is motivated by the desire to make a difference in peoples’ lives.”
Outside of the traditional “Big Three” (universities, hospitals and umbrella organizations):
Support for smaller nonprofits may be growing. According to the July 2012 Blackbaud Index of Charitable Giving, small organizations (revenues less than $1 million) led the overall growth with a 7.1 percent gain in overall charitable contributions, and a 14.6 percent increase in the number of online gifts. Similarly, gifts to medium-sized organizations (revenues between $1 million and $10 million) also increased, showing a growth of 1.4 percent overall, with online giving increased to 9.6 percent. However, large organizations (revenue of more than $10 million) saw a decline in fundraising: 2.l percent overall and 1.7 percent online.
While statistical reports are important and contain valuable overviews about practices across the U.S., we are also seeing major changes in donor attitudes and behaviors. No longer can nonprofits in the Jewish community sit back and expect Jews to voluntarily step forward with capability gifts. The questions donors are raising are tough ones, the rationale for “investing” in the work of all types of nonprofits vary by the ages of donors, and in our fast-paced lives, donors are looking for quick “sound bites” to compel them to give.
The motivations that drove immigrants following World War II to make their new homeland in the U.S. a paradise for Jews have changed; their children and grandchildren have new, different priorities. The assimilationist approach of the 1950’s and 1960’s is impacting contemporary Jewish giving, as reflected by so few announced major Jewish gifts today.
Therefore, the challenge in the New Year for all nonprofits seeking Jewish support is to heighten the awareness of Jewish needs, priorities, services and impact. Despite economic challenges, we are living in a wealthy Jewish community, but our Jewish organizations are failing rapidly at making the case eloquently and passionately.
The time is now to strengthen our approaches, make the case more compelling, update the messages and use all of the tools at our disposal to communicate and engage.
[Note: Avrum D. Lapin will discuss in more detail a number of the findings highlighted in this article on September 23rd in Jerusalem at an invitation-only seminar co-hosted by eJewish Philanthropy. To request further information, please contact firstname.lastname@example.org.]
Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, a fundraising consulting firm located in suburban Philadelphia. They are frequent contributors to eJewishPhilanthropy.com. The EHL Consulting Group is one of only 38 member firms of The Giving Institute. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and nonprofit business practices and strategies.