GA Curtain Raiser: Looking for Answers

The federations need a serious conference to tackle their challenges; will the GA be that conference?

eJP will be asking the hard questions at the GA. First up, federations’ overseas giving: A look at the hard numbers reveals there has never been a better time to raise money for Israel outside the federations, or a worse time to depend on the federations’ overseas largesse.

by Haviv Rettig Gur

By all measures, the American federation system is in decline. The financial backbone of American Jewish life for a century is coming to terms with the simple fact of declining donations and participation. And no one is more aware of it than the federations’ own trade association, the Jewish Federations of North America.

JFNA is a good trade association, providing its constituent federations with a Washington office that works with legislators on tax policy affecting charitable giving, an Israel office and UIA subsidiary that track money sent to Israel to assure it complies with IRS rules and the intentions of donors, and an annual General Assembly, slated for November 11-13 in Baltimore, where federation employees from over 150 federations, some with hundreds of employees and some with just two, can socialize and network.

But for all that, JFNA may not be able to tackle the most important questions that face the federation system, or meaningfully affect the changes that are ravaging federations big and small.

Will a federation program manager, fundraiser or chief executive come away from the GA with new insights into succeeding in a difficult financial environment and a Jewish community that is moving away from large centralized institutions?

Will JFNA’s much-discussed (and often derided) Global Planning Table – charged with reexamining federation giving overseas, though without a clear mandate to influence that giving or any promises from participating federations that it will increase – actually lead to increased giving or a more effective distribution of money abroad?

Failure in a period of success

Nowhere is this need for direction – and lack of it – more evident than in federation giving to the nonprofit sector in Israel. Federations are less and less interested in giving to Israeli society, largely because their declining donor base is less and less interested.

But not so American Jews.

American Jews are giving more to Israel than ever before, and they’re doing it in new ways. Instead of large umbrella organizations with millions of dollars in operating costs, they are now giving to smaller, leaner projects that pride themselves on efficiency and transparency, and enable the donor to become involved directly in the work of the organization.

It’s not at all clear this is a good thing for the donor’s dollar. Ironically, small organizations often duplicate each other, have poorer oversight over their finances and can’t offer the scale or efficiency that makes the donor’s dollar go much farther in a large organization.

But efficient or not, the scale and speed of this shift is startling.

According to a remarkable study of American Jewish giving to Israel titled “The New Philanthropy” that was published in April by Brandeis University researchers Ted Sasson and Eric Fleisch, in 1975, fully 79 percent of American Jewish giving to Israel went through the centralized systems, the UIA and Jewish Agency. By 2007, that figure had dropped to just 16%.

And while giving through the large umbrella organizations declined by two-thirds in real value during this time, from roughly $830 million (in 2007 dollars) to $330 million, overall giving to Israel doubled in real value, from $1.05 billion in 1975 (in 2007 dollars) to $2.06 billion in 2007.

More money is being raised for Israel than ever before, and less and less of it is going through systems affiliated with the federations.

How was this achieved? How could funding for Israeli nonprofits grow so dramatically without the help of the federation system?

The answer highlights the weakness of the federation movement today: The Israelis have been beating the federations at their own game.

It’s not surprising that Israeli nonprofits were paying attention to trends in American Jewish philanthropy. The $1.65 billion donated by American Jewish organizations to the Israeli “third sector” in 2007 (the gap from $2.059 billion isn’t spent in Israel, but on programs in the United States and on fundraising expenses) amounted to roughly half of all philanthropic support to Israeli nonprofits that year.

And once they started paying attention, the Israelis quickly adapted themselves to the new environment. The past 20 years have seen an explosion in the number of Israeli nonprofits raising money independently in the United States. In 1985, just 265 Israeli nonprofits maintained an “American Friends” organization in the United States that allowed them to raise funds directly from the American Jewish community. By 2000, this number had ballooned to 436. By 2010, to 667.

This trend is true for every type of Israeli organization and agenda, from religious to secular, left- wing to right, medical, academic, or cultural – all have seen the same explosion in “Friends” organizations.

Simply put, there has never been a better time for an Israeli nonprofit to fundraise on its own in the United States, or a worse time to be dependent on the federation system’s overseas largesse.

Even more damning is the harsh truth that giving overseas is up among American non-Jews as well, according to the American Association of Fund-Raising Counsel’s “Giving USA 2012” report. The report notes that between 2001 and 2011, American philanthropic giving to overseas organizations rose 167%, adjusted for inflation. In 2011 alone, inflation-adjusted giving overseas rose 7.6%, to some $22.7 billion.

As Fleisch and Sasson explain, the seven-fold increase in giving to Israel outside the umbrella bodies since 1975 (in 2007 dollars), can’t be explained by strengthening American emotional ties to Israel, but by the professionalization of Israeli fundraising in North America.

In interviews with the heads of major “Friends” fundraising organizations, they learned “that many of the leading fundraising organizations have increased the size and improved the training of their professional fundraising staff.”

The federations’ overseas giving is declining. Will they be able to tap into the enormous energy of American Jewish overseas philanthropy generally, which is not declining? Can JFNA offer more to its constituents than conferences and processes, but rather best practices, training, thoughtful research and a new culture that understands the changes taking place in Jewish philanthropy, and might make federations better able to cope and succeed?

Will the General Assembly end with a fizzle, one more meet-and-greet on the Jewish calendar, or tackle the hard problems facing the federation world? There’s nothing wrong with highlighting the Soviet Jewry movement, or asking David Gergen to opine on the meaning of the US elections. But the Jewish people don’t need more ceremonies or political panels.

If the federation system continues to decline, thousands of crucial American Jewish institutions – synagogues, schools, old age homes, outreach to the poor and disadvantaged, community centers, and more – will be hard hit.

eJewish Philanthropy will be at the GA, looking for a meaningful discussion of the problems of the federation world; ready to praise, ready to criticize, but above all, looking for answers.