By Joseph C. Imberman
The purpose of this piece is to provide basic information on the status of our endowment programs within the federation system and to encourage greater focus and attention by leadership to growing this crucial revenue stream for federations and to the utility of individual donors.
In 2013 the JFNA’s annual endowment survey reported that total assets under management in the 151 federated communities was approximately 16 billion dollars. Those same entities distributed 1.4 billion in grants in that year. 2014 data should be published later this year after JFNA reexamines the way in which it collects and reports the information.
Endowment development in the Jewish federation system is the product of a long and distinguished history and has been one of the most productive philanthropic revenue streams for the Jewish community. It is also a stream with significant unrealized potential, and one of the least understood. Indeed, endowment contributions in 2013 amounted to $1.6 billion, a figure that continues to eclipse the collective total raised in the annual campaign by almost 67 percent. As someone with a 30 plus year career in federation endowments both locally and nationally I feel a responsibility to remind leadership which is deeply concerned about the growth of our capacity to serve constituencies spread across the globe about the opportunities to be realized from continued endowment growth.
As many are aware, the biggest opportunity is the increasing participation in and growth of assets in donor advised funds which have been a trademark of Jewish federation endowments for over 40 years. In 2013, donor advised were prevalent in over one half of the Jewish federations, and comprised almost $5 billion or 30 percent of the collective endowment assets. 80% of the 1.4 billion in grants originates from donor advised funds and supporting organizations. These funds are not permanent endowments but essentially philanthropic accounts which allow a donor or family to participate in giving and with the collaboration of federation or another charity distribute all or more than the income generated. They have been treated as endowments by our system for reporting purposes with our permanent funds but have significant differences in operation and mission. During my last year on the job we determined to change the branding of our 2014 Annual Endowment survey to recognize this crucial difference.
When a former JFNA National Annual Campaign chair asked me “So what are we doing with all this money (alluding to the billions invested by our system )?” I had to remind him about the true nature of our asset base, the positive side of which is that grants from the donor advised funds make up approximately 20% of our Annual campaign revenue, although some communities informally report up to 30 or even 50% of their annual campaign contributions coming from this source. I call this complex revenue stream which emerges from the donor advised and other funds a virtual endowment for the system.
Jewish federation endowments have a bifurcated asset base – the donor advised funds and all of the remaining types of permanent funds which have been contributed by generous donors since the turn of the last century. While the federation system would treasure an endowment allocation like that of many universities (with substantially more permanent funds) in reality when it comes to endowment we are faced with a situation in which the vast bulk of these assets can only be termed “semi permanent” or even transitory. The most important permanent endowment in the federation system which we have tried to build over a period of over 20 years, the Permanent Annual Campaign endowment (PACE) has been marginally successful, serving to attract largely older donors, or those with a deeply engrained commitment to unrestricted giving to the annual campaign. Every recent piece on giving over many years points to the desire by the younger generation to give with a focus (see recent publications from the Johnson Center at Grand Valley State University at Nextgendonors.org and 21/64 formerly of the Andrea and Charles Bronfman Philanthropies). Women’s giving for endowment purposes in the system is focused on the Lion of Judah Endowment (LOJE), a highly marketed and successful form of giving which has tended to be topped out at $100,000 per donor because of the unique dynamics of giving and leadership in the system, which chose in the early years of the program to encourage endowing a gift of $100,000 rather than the entire (and frequently much larger) gift to the annual campaign. Both PACE and LOJE focus on the totality of the annual campaign and therefore require a donor who is confident and desirous of supporting the mission and vision of the entire annual campaign as opposed to a particular project or activity.
Given the nature of our donor base and fund development in the system it should be no surprise that we have major communities with only 1% of their annual campaigns endowed but very large supporting organizations and donor advised funds pouring enormous sums into charitable activity of infinite variety but focusing in many other places beside the Annual campaign.
In the next piece we will focus harder on permanent giving rather than donor advised funds and some expectations for endowment development and its impact on federation capacity to meet needs, and some development suggestions for the professional.
Coming tomorrow: Part II: “Permanent giving for endowment purposes, our expectations for the future and suggestions for success”
Until recently, Joseph C. Imberman was Associate Vice President, Planned Giving and Endowments at the Jewish Federations of North America (JFNA). He now manages a consulting practice for endowments and foundations and acts as Senior Advisor to the Montreal Jewish Federation (FCJA).