Over the course of a 25-year career, Stuart Mellan, former CEO of the Jewish Federation of Southern Arizona, could see that his organization was losing relevance. 

By the federation’s main metric, he had been a successful leader. From 1995 until 2020, when Mellan retired, federation annual campaigns more than doubled from $2 million in unrestricted funds to $4.5 million, of which almost a third were donor-directed funds. But there was another, much larger game in town: During the same period, assets of the Jewish Community Foundation of Southern Arizona soared from $12 million to $108 million. 

Soon, he saw, the foundation would become the de-facto center of Jewish philanthropy in the greater Tucson area — undercutting the federation’s impact.

“Why would the philanthropic leadership of the community continue to coalesce around a federation if it was perceived as not having the most cachet, the most influence or the ability to make a difference?” Mellan told eJewishPhilanthropy.

To avoid that scenario, Mellan advocated for the federation and foundation to integrate into one organization. Earlier this year, he saw his efforts, and those of the Tucson Jewish community, pay off. A combining of the two organizations — creating the Jewish Philanthropies of Southern Arizona (JPSA) — was finalized in March after several years of planning. 

JPSA is the latest in a series of federations and foundations in Jewish communities — from Phoenix to Denver to Columbus, Ohio — that have recently combined. Its creation also reflects a wider shift in Jewish organizational life and philanthropy more broadly, wherein the federation model of a central agency disbursing funds on behalf of the community is giving way to donor-advised funds (DAFs), administered by Jewish Community Foundations, in which philanthropists, not federation staff, decide where their money goes, within parameters set by the foundation.  

The tension between those models is often seen in the language used by communities where the two organizations unite: Jewish leaders make a point of not calling the agency integrations a “merger” – by which they mean a federation absorbing a foundation – in order to avoid alienating foundation donors who are wary of federation leadership. 

“There was a decent amount of concern, particularly from stakeholders on the foundation side, that this not be a merger where one swallows the other,” said Graham Hoffman, CEO of the combined JPSA.

South Arizona community leaders say that the integration of the federation and foundation into the JPSA has been largely successful, with a smooth transition into the new governing structure. While the creation of the JPSA has not fundamentally changed how either the federation or foundation operates, its leaders say the work is more effective by virtue of no longer having two separate CEOs, boards, marketing efforts, finance teams or development staff.

But streamlining operations — especially during the COVID-19 pandemic — has caused donor and community relations to suffer. The federation used to organize programs and services directly for the community alongside its fundraising efforts, but the new leadership wants the JPSA to cut down on its own programming and instead outsource it to other institutions like the local JCC.

In addition, the realities of social distancing have made the integration harder to stomach. Key decisions transforming the community’s central organizations were made via Zoom, which community members say felt impersonal. And with a single smaller board and fewer committees than the foundation and federation once housed separately, some volunteers feel cut out of local Jewish philanthropy.

“We lost a lot of the volunteer engagement that was really core and critical to how people understood and felt close to us in our work,” Hoffman said. “We’re now in the process of bringing all of that back.”

Foundation and Federation

The Tucson area has around 25,000 to 30,000 Jews, and historically, the federation and foundation had clearly defined roles, with a good relationship between the two agencies. “We were really focused on [donor-advised] grants and building the endowment,” said Tracy Salkowitz, former CEO of the Jewish Community Foundation. “Federation was focused on community involvement and raising dollars for an annual campaign, as well as raising money for capital needs.”

For some, it’s the small size of the community that made such a cooperative atmosphere possible. “There’s an awful lot of overlap in terms of leadership; the same people belong on both boards,” said Evan Mendelson, a former foundation board member.

But while the separate federation-foundation model worked, it also meant duplicated efforts that frustrated organizations funded by the two agencies. Until 2013, each organization had its own grant process, which meant that applicants filled out double the paperwork, and guessed how much funding they would get from each agency while trying to build their annual budgets.

“It was cumbersome,” said Todd Rockoff, CEO of the Tucson JCC. The grant and allocation processes also felt like a year-round endeavor, he said, because they “didn’t always align with what an…agency’s fiscal year might be.”

There was no serious conversation about bringing the federation and foundation together until recently. Mellan, the former federation CEO, had wanted to consolidate since he arrived in Tucson in 1995, having worked in communities like Baltimore that already had a merged model. But, he said, “I didn’t want to be viewed as someone who had a personal agenda to grab power and try to take over the foundation, which I think some people perceived.”

Then an opportunity arose: Salkowitz retired in 2018, and Mellan was about to retire. With both agency heads leaving, lay leaders decided to hire one CEO for both and consolidate the organizations. There were differing views on whether to merge the two agencies entirely, and how to balance the federation’s community-focused mission with the foundation’s attention to donors’ desires, especially given the perception that the federation was stagnating while the foundation was surging.

“Are federations trying to bring back foundations within their sphere of influence because they’re losing their ability to function? That’s one way to phrase it,” Mellan said. “I’m one of those people who believes that the community will always want a table to come around…[the foundation] doesn’t have the mission of bringing together leaders to decide on collective action.”

Across the United States, DAFs have seen explosive growth in recent years. A report last year by the National Philanthropic Trust found that in 2020, the total value of DAFs grew 27% between 2019 and 2020, giving out nearly $35 billion in grants that year. The report found that there are more than a million individual DAF accounts.

Salkowitz was concerned that creating a new organization would give the federation primacy, instead of leading with the foundation’s donor-driven mandate, which brought in more dollars. 

“The Jewish community nationwide has created a scenario where the tail is wagging the dog,” Salkowitz said. “Federation campaigns are worth millions, maybe even hundreds of millions.”

But endowments and DAFs, she added, are at a different order of magnitude. “Jewish foundations are worth billions,” she said.

Making the change

To resolve that issue, professionals and lay leaders in Tucson looked to a June 2019 case study commissioned by The Jewish Federations of North America describing how Columbus’ Jewish federation and foundation had handled their own merger, which occurred just before Tucson began the process.

By 2018, the CEO spots for both the Jewish federation and foundation in Columbus were vacant, prompting the community to start an integration of the two agencies under one CEO. The case study showed how Columbus navigated the same potential conflicts Tucson was facing, such as how to reassure donors with DAFs and endowments at the foundation that their money would still be safe.

“We had to overcome the perception that the assets of the foundation would be ‘raided’ if an annual campaign fell short of expectations,” the case study reads. To do so, “it was important that the [new] legal structure viewed all parties as equals, [and] did not create the perception of a ‘takeover’ by one entity.”

Columbus settled on creating a parent organization that would control both the federation and foundation while keeping each agency legally intact. Tucson took the same route. 

In 2019, the federation and foundation boards approved a memorandum of understanding to hire a joint CEO. A year later, Hoffman, originally hired to succeed Salkowitz at the foundation, took the role. Before coming to Tucson, Hoffman worked at AIPAC, overseeing its fundraising and endowment efforts.

The boards of the federation and foundation continued to meet separately. “Culturally, I think there were some thoughts about, ‘Gee, your board operates this way, our board operates [that] way,’” said Deborah Oseran, who served as the Tucson federation’s board chair from 2019-2021. “We really had a year of being two organizations…one month was a federation meeting, the next month was a foundation meeting.”

Earlier this year, nearly four years after the merger talks began, the two boards combined. 

Transitioning slowly was an important part of teaching donors and board members how to integrate the federation and foundation — and how to trust the change in structure, Oseran said. It “gave us and the community a lot of time, a lot of experience to work through how it all can and should work,” she said. “It also gives peace of mind to donors who have yet to completely perceive all of the benefits” of a single organization.

Early on, the donor lists for the federation and foundation were also kept separate, but with the establishment of the JPSA, the lists are now integrated into one database. But federation employees are still restricted from seeing some of the foundation’s donor information. Donors are reassured that “even if you have a common database, it doesn’t mean that every Tom, Dick and Harry can access the same information,” Oseran said.

Pandemic pitfalls

While Tucson’s professional Jewish leadership was able to successfully navigate the technicalities of combining the federation and foundation, keeping community members happy with the change — especially during the pandemic — has been another story.  

“We did community town halls on Zoom, and they felt more like presentations than dialogue,” Hoffman said. 

The pandemic also changed the way rank-and-file Tucson Jews interacted with their institutions — compounding the organizational changes they had to deal with when the federation and foundation combined. With an end to in-person events, and a decision by the federation to suspend any changes to allocations during the pandemic’s first year, many federation committees, a key way for community members to engage, quickly became defunct. 

The size of the new entity also made it harder to find time for Hoffman to speak with community members. “Imagine you’re the CEO of one organization that’s a total of eight staff and a budget of almost $2 million,” Hoffman said. “All of a sudden, you become a CEO to another organization with another 18 staff and an even larger budget. It’s a lot of additional responsibility to take on.”

Nothing substantial has changed about how the JPSA is raising and allocating money, and Rockoff, the JCC CEO, said the combination has streamlined his fundraising process, allowing “greater intentionality about [issues such as], who are we asking for annual gifts? Who are we asking for endowment or legacy gifts?”  

For mainstay community members, the modernized JPSA also feels less accessible than the federation and foundation used to, said Oseran. “I’ve been very involved in all types of committee work for all these years, and we had a much larger board,” Oseran said. “Now, nonprofits have moved toward a smaller, streamlined board and many fewer committees. So that’s a trend that we are learning about.”

With the integration of the JPSA complete, Hoffman is looking forward to rebuilding trust with the community. Committees will be making a return, along with an effort to address community needs identified in a 2019 Rosov Consulting study, such as a greater variety of education offerings and entry points to organized Jewish life.

“It’s hard for a number of our stakeholders to have a clearer picture of what it’s all going to look like when the dust settles,” Hoffman said. “And we need a little bit more time to really unveil that to everyone. We want to do it right…and we acknowledge that change takes time.”