Is the Charitable Giving Cup Half Empty or Half Full?

    Last week, The Jerusalem Post published an article, Reduced Jewish philanthropy may hurt our welfare services, in which the writer states, “The continuing decline in Jewish philanthropy, mainly in the US, could seriously harm Israel’s nonprofit sector and, in turn, damage many of its welfare services.”

    The JPost article, relying on research by Prof. Hillel Schmid and Avishag Rudich from the Hebrew University of Jerusalem’s Center for the Study of Philanthropy [to be released at next week’s Israeli Presidential Conference], goes on to quote the research paper’s authors saying, “The recession and decrease in philanthropic support will surely result in some painful implications for Israeli social services and their providers, primarily nonprofit organizations.”

    Today, we bring you a response, jointly authored by three long-time participants in the global Jewish communal world.

    Also, you can download a copy of the referenced research, Implications of the Decline in Philanthropy for Israeli Non-Profits, for further reading.

    Is the charitable giving cup half empty or half full?
    by Robert I. Evans, Avrum D. Lapin and Stephen Donshik

For those of us working with Jewish and Israel-based non-profits these days, we sometimes lose perspective. We are often tempted to convey provocative or inadvertently misleading approaches, prompted lately because of the shifts we are confronting as a result of the global economy; this impacts charitable giving and organizations dependent on philanthropic support.

Next week, Professors Hillel Schmid and Avishag Rudich, from the Hebrew University of Jerusalem’s Center for the Study of Philanthropy in Israel, will present an important paper to the Israeli Presidential Conference in Jerusalem. The content of their paper reflects appropriate research and many observations that require careful scrutiny and examination. For regular readers to eJewish Philanthropy, you know that we follow and comment on many relevant issues and discuss innovative approaches and “best practices.” The Schmid/Rudich paper is sure to catch much attention and in fact, The Jerusalem Post has already presented one article about the report. To try to provide some perspective we have combined our commentary this week, especially because we agree with some of what they will offer to the leaders of an important gathering of non-profit leaders. But a number of their conclusions need to be reconsidered by all involved in fundraising and non-profit organizations, regardless of whether they are part of the President’s Conference or receive funding from Jewish federations or hold other affiliations.

Perhaps the most obvious criticisms that the three of us – all “alumni” of the federation system in the U.S. and professionals working closely today with a myriad of Jewish and Israeli non-profits – could make are that this new paper cites quickly outdated data and does not reflect enough current citations about a turnaround in giving . . . a reality that we are witnessing while collectively feeling a sense of relief that probably the worst of the economic woes are behind us.

In addition, Schmid and Rudich seem to portray Israeli non-profit organizations as the victims in the drama of the decline in philanthropic gifts to Israeli organizations. This characterization does not reflect the full story since the beginning of the crisis stimulated by the economic downfall and exacerbated by other pressures and shocks, including the Bernard Madoff mess.

Perhaps the real challenge to the situation confronting North American and Israel-based non-profits is how to ensure their sustainability and continuity of support from donors, whether they are in Israel or abroad. And it is here that Schmid and Rudich combine caution and pessimism as they point to changes in levels of support from Jewish Federations and foundations.

Quite frankly, too many non-profits have expected far too much support from foundations; with the extended downturn on Wall Street in 2008 and 2009, foundations cannot give away more than they are earning and violate their charters. Giving USA reported only about 8-10% of all U.S. charitable dollars came from foundations in 2008; yet Giving USA noted that 82% of all charitable giving came from individuals last year in the form of current and testamentary giving. Those whose perspectives on fundraising have been limited, or who are inexperienced in reaching out for charitable support, focus their efforts almost entirely on foundations and overlook individual giving, the biggest pool of potential dollars.

Additionally, the increasing generational disconnect between emerging major donors and the Federation world is limiting the pool of allocable dollars to organizations both domestically and overseas. The outlook for Federations is a bit unclear as well and is requiring some internal evaluations at every Federation as well as at The Jewish Federations of North America (formerly United Jewish Communities).

Representatives of non-profit organizations should be less interested in telling potential donors what their needs are and what services they provide while being more interested in learning about donor priorities, dreams, or concerns. In identifying the overlap between the donor’s interests or priorities and the services the organizations support and provide to clients and members, many questions often go unanswered. This emphasizes the importance of the organization’s staff and volunteer leadership doing their “homework” so they can continue to have meaningful and relevant discussions and dialogue with the people they hope will support their activities.

The organizations that have been experiencing the hardest time as a result of the economic setbacks are those that depended on too few sources of support. There is no question that the smaller agencies whose budgets were covered up toward 90% by one of the foundations that severely retrenched or went out of business had placed themselves in a very vulnerable position. This should be a “wake-up call” for all organizations to understand the importance of diversifying their support and not to rely on a sole funder.

As has been pointed out, donors should be interested in funding programs, and it is up to organizations to meet those challenges by providing clear and current information and reporting on the impact of charitable funds. Smart non-profits not only need to acknowledge donors but they also must continue to cultivate strong personal connections while demonstrating transparency in reporting on their programs and the use of funds. This creates a context for organizations to acknowledge their accomplishments and to state their unmet needs. The clearer the organizations are in their communications the greater the opportunities to solidify support from present donors and to interest new donors.

The Schmid/Rudich paper touches on the decreasing support from local Federation campaigns to the Jewish Agency for Israel and the Joint Distribution Committee. This is more a result, as hinted above, of the lack of success in the continual branding of the Federations’ use of funds through these large organizations. This does not create the context for developing personal connections between the donor and the organization, which is critically important for today’s emerging philanthropists. The Jewish Federations of North America and the local Federations need to reposition themselves with a stronger connection to the Israeli non-profit organizations and to develop ways for donors to express their interests and commitments through the small agencies that demonstrate a direct impact on people’s lives. As we have said, “it is all about the donor” and donors and foundations will support organizations and their programs when there are strong connections.

We, at EHL Consulting, examined levels of giving from 2001 through 2006 by Americans for 100 selected Israel-based organizations. Our research showed no decline in support during a period that included good and bad economic periods. For example, we learned that many organizations seeking dollars from U.S. donors did not take the importance of financial transparency seriously, including not posting their IRS Form 990 on their U.S. websites. The difficulties we encountered in trying to obtain financial and donor data for our study reflects an attitude that all non-profit leaders need to address. We applaud the Hebrew University for hinting at this paradigm change.

One certainty, however, is critical: donors at all levels and across the globe will absolutely respond with generosity when asked appropriately to support vibrant and innovative organizations that truly make a demonstrable difference. The financial capacities exist in the worldwide Jewish community to support a far range of dynamic programs and organizations; let’s look at the changes brought about because of the economic crisis as a way to create more responsiveness to needs and to present transformational opportunities that encourage voluntary charitable activity to willing donors.

Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, of suburban Philadelphia, and are frequent contributors to EHL Consulting works with dozens of non-profits on fundraising, strategic planning, and non-profit business practices. Become a fan of The EHL Consulting Group on Facebook.

Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Leadership and Philanthropy Program and has a consulting firm, Stephen G. Donshik Consultants, Ltd., focused on strengthening non-profit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewishphilanthropy.

The EHL Consulting Group and Stephen G. Donshik Consultants have a cooperative relationship and are working together to provide comprehensive services to non-profit organizations.