Cost Sharing and Sustainability

A key finding of the recent Jumpstart study of Jewish startups is that “startups say they would benefit most from mechanisms that lower administrative and operational costs.” One successful model for sharing costs is Bikkurim: An Incubator for New Jewish Ideas. Bikkurim gives its resident organizations office space and professional support, and they form a community of innovators. In some ways it resembles Jumpstart’s own JSpace concept, which it describes as “the hub for Jewish innovation in LA. The idea,” Jumpstart says, “is not just to realize economy of scale in a 21st century office environment, but to create a hip, dynamic and cooperative nexus for the current wave of Jewish innovation.”

Aliza Mazor, Program Director at Bikkurim, feels the cost-sharing idea is sound, and points to the fact that some 80% of the resident organizations at Bikkurim make extensive use of their office space. Even in an age of telecommuting and home offices, the demand for office space is strong, she says. And occupying shared space creates a peer community that is valued by the participants. Plus, sharing costs makes it possible for the resident groups to have access to high-quality fax, copying, and other equipment that would not be cost-effective for them individually.

This concept has certainly taken root outside the United States in the non-Jewish world. An association of working communities called The Hub numbers twelve locations from Tel Aviv to London to Bombay, Johannesburg, and Sao Paolo. They include two North American sites, in Toronto and Halifax.

In the United States, Tides Shared Spaces, a program of the Tides Foundation in San Francisco, operates a Thoreau Center housing up to 15 nonprofits in lower Manhattan, and another Thoreau Center in San Francisco’s Presidio. It is looking into a similar venture in Washington, DC. Perhaps the largest such undertaking is the NonProfit Center near Boston’s South Station, which some two dozen nonprofits call home.

Within the Jewish sphere, Jerusalem is home to the Zion Hub of the PresenTense Group, an organization “enabling young Jews to form communities of meaning, and launching projects to impact the Jewish people and the world.” More than providing office infrastructure, its co-working program is an animator of community and social entrepreneurship. It has a flexibility that comes from a lesser emphasis on hardware and a greater focus on discovering synergies among young Jewish innovators. (Disclosure: I am a co-worker at the Zion Hub.)

What are the challenges in ventures aimed at sharing operational costs? One of the biggest is the financial risk in setting them up. A big foundation can afford to take that risk, as the Tides Foundation has. Third Sector New England , which operates the NonProfit Center in Boston, raised cash from an $18.5 million bond issue. Housing for Jewish startups probably won’t have access to secure funding on that level.

There are operational obstacles as well. Decisions about rent charges, capital expenditures and monthly expenses get complicated when the occupancy rate is less than 100%, and when the tenants aren’t equally interested in sharing the same office resources. Finally, the changing business environment may make cheap office space more easily available, reducing the incentive for sharing. Or, conversely, nonprofits may become more wary of relocating or committing to a new lease in uncertain economic times.

On a strategic level, the question is whether investing in shared office space is a compelling use of philanthropic money right now. As the Jumpstart survey showed, nonprofits can be expected to welcome lower costs and collaboration; their overhead expenses are very real. But on a communal level, maybe a better use of increasingly scarce money is to train the best of the innovators so they can move their organizations from startup to sustainability.

Infrastructure is important, but managerial expertise is indispensable.

Bob Goldfarb, a senior advisor with the Arts Consulting Group, is president of the Center for Jewish Culture and Creativity. Bob is also an occasional contributor to eJewish Philanthropy.