Mergers on the horizon in wake of COVID-19 crisis
Birthright Israel-Onward Israel consolidation could be a harbinger
The planned merger of Israel trip providers Birthright Israel and Onward Israel, announced Tuesday, heralds a period of increased streamlining as funders, consultants and organization staff begin to apply the lessons of the pandemic, which forced them to work together in new ways.
Several mergers are under discussion, said Aliza Mazor of Upstart Bay Area, which provides leadership and management training to younger, smaller Jewish organizations nationwide. She declined to name the organizations involved, as the deals are not yet public. In addition, she said, about a dozen conversations about how groups can cooperate deeply with each other are underway, and some of those might lead to mergers in the longer-term.
“We don’t want any arranged marriages,” Mazor said. “We knew it wouldn’t create good outcomes. But we have several ripe consolidations in our network and beyond. We are going to see many more of these.”
When the coronavirus pandemic hit, the world of philanthropy was braced for an “extinction-level event,” as John MacIntosh, the managing partner of a nonprofit merchant bank that supports nonprofits, described it in a CNN op-ed on March 20.
Jewish nonprofits had similarly dire concerns and expected a wave of mergers prompted by the failure of groups that were already fragile, or hit especially hard by the virus, said Andres Spokoiny, CEO of the Jewish Funders Network, an organization whose members give away at least $25,000 annually.
Talk of such mergers “was coming out of the fear that the community would implode,” Spokoiny said.
On the one hand, Spokoiny said, it’s a positive development that consolidation didn’t happen under those desperate conditions. On the other hand, mergers and other forms of cooperation can be a positive development. In this sense, the pandemic presents an opportunity to reflect and reorganize that shouldn’t be wasted, he said.
“That doesn’t mean that all organizations have to merge — there’s a spectrum,” he said. “It’s always positive to look for opportunities for partnerships, be it as a merger, as acquisitions, as strategic alignment. It optimizes resources. It generates critical mass.”
Yet the Birthright-Onward combination is the highest-profile deal made public since the start of the pandemic.
“There’s been a synagogue merger here or there, smaller not-for-profits,” said Mark Charendoff, president of the Maimonides Fund, a private foundation that helped lead the effort in March to establish a pool of emergency loans and grants for Jewish groups. “But I would have expected far, far more mergers taking place.”
Birthright, which has almost $70 million in assets, according to its most recent tax filing, is a much larger organization than Onward, which consists of two groups whose combined assets totaled about $3 million in the most recent year they both filed.
Onward is also much younger, having launched in 2012 as a program of the Jewish Agency that in 2016 became an independent organization. Since its first year, however, it has grown: Its first group consisted of fewer than 300 people, while in 2019 almost 3,000 participated. Birthright was founded in 1999; more than 600,000 young people have participated in the free Israel trip.
The two groups provide different kinds of travel — Birthright’s main offering is its classic 7-to-10-day trip to Israel, while Onward Israel offers longer trips, based on internships. Birthright has an internship division as well, called Excel.
The plan is to conclude the deal by September, said Cindy Shapira, who with her husband co-founded Onward Israel. A Birthright spokesman declined to answer questions about details such as a possible name change, whether one organization is absorbing the other, whether the merger will result in layoffs or hiring and how the new entity will handle any overlap between the two organizations’ programming. Leaders of each organization are meeting regularly, said Birthright Israel CEO Gidi Mark.
The possibility of the consolidation arose when funders of Israel-travel programs, along with Birthright, approached Onward Israel, Shapira said. They wanted Birthright to start offering longer trips, and part of Onward Israel’s mission had always been to provide more opportunities for Birthright participants.
Any merger can raise unsettling questions for the people involved — some of whom might fear for their jobs, Shapira said. Founders or leaders might experience feelings of loss.
“We have egos,” she said. “This was our baby.”
But when mergers serve the mission of an organization, it’s important to realize it might be the right thing to do, said Aaron Katler, Upstart Bay Area’s CEO.
“Our reaction was to talk about it,” Shapira said. “We’re captivated by anything that helps send more young Jewish people to Israel and builds Jewish identity. That’s our North Star.”