Of Customers, Federations and Donors.

By Dr. Misha Galperin

In the summer of 2015 an anonymous “federation professional” published an article in eJewishPhilanthropy commenting on the imminent demise of the federations in the light of competitive landscape and other factors. I had then asked a number of current and past lay and professional federation leaders to answer a series of questions about federations’ present and future. A number of them including Michael Siegal, Cindy Shapira, Richard Sandler, Susie Gelman, Ted Sokolsky and Debra Corber did with thoughtful insights and passionate views.

Andrew Rehfeld’s “Who Are Federation’s Customers?” comes three years later but deals with a similar issue. Having toiled in the federation vineyards for a few years myself and having been a beneficiary of, a donor to, multiple beneficiary agencies’ employee and CEO of, as well as a COO and a CEO of two Large City federations for a decade and-a-half, I have something of a perspective on the subject myself.

I now work with philanthropists and foundations and consult to non-for-profits, Jewish and secular. So, here’s what I think:

Non-for-profits are mission-driven but must also be market-sensitive.

They have more than one set of customers.

Of course the people whose social service, educational and community needs are served by federations are customers as are the organizations and agencies that provide those services! But if you do not treat your donors and the lay leadership that federations should develop as customers as well – you will continue to suffer the exact fate you have been suffering – the inability to meet the needs of the other customers as your donor base erodes and your revenues decrease (St. Louis’s Federation was down to $9.2 million from just 4,390 donors in 2016 from a Jewish population estimated at 61,100!).

The very foundation of the federation idea, the concept of a community-building and community-supported organization comes from the notion of everyone being both a contributor and a potential beneficiary of the communal pot. The original “membership has its’ privileges” notion. The first fundraising drive in history – the half-shekel census campaign in the Torah was mandatory: if you want to be counted as a part of the Jewish People – put in your contribution. If and when the time comes – you will benefit and be helped from the communal kupah.

We no longer have that luxury, however: to simply tax our constituents in this fashion. Therefore, they need to be treated as valued customers. They need to understand and feel the value-added of the donation they are making to the federation pot. They need to be inspired as were the Jews who brought donations to build Mishkan – the Tabernacle, the one fundraising campaign in our history that raised more than was actually required and had to be prematurely terminated… As they say: we should have such problems…

This is not about the question of whether federations should be “fundraising organizations”: no one wants to give to “fundraising organizations” just as no one wants to pay “fundraisers.” Yet all or nearly all non-for-profits must raise funds to sustain their missions. And if donors do not feel valued, listened to, appreciated, understood – they will not support the organization. Their choice these days are limitless. A very wise colleague – Vicki Agron – often says: donors give to organizations that love them best. The “benefit” these customers derive is rarely anything but emotional: the satisfaction of doing the right thing, being recognized, honoring a friend or a family member, continuing a family tradition, staying true to a religious belief or value or even out of guilt, or anger or fear. These are all motivations that one must recognize in a potential customer. Maybe the word “customer”is what is confusing – then use “stakeholder.” Donors, beneficiaries, agencies, vendors, partners – all are stakeholders in the non-for-profit enterprise.

It is, actually, a lesson that has been increasingly learned and used in the business world as well. Being “mission-driven” is no longer equivalent to “making a profit” in the business world, at least not in the short term. Think about Amazon. The business model for many years has been to keep increasing market share at the expense of making a profit. Eventually, the losses went down, the stock price skyrocketed and, sooner or later, the profits are going up. And that is just one, most obvious example.

So, go ahead, keep treating your donors as taken-for-granted suppliers of funds to serve your “real” customers. See how it works out for you.

Dr. Misha Galperin is President of Zandafi Philanthropy Advisors and author of “The Case for Jewish Peoplehood: Can We Be One?” with Erica Brown and “Reimagining Leadership in Jewish Organizations.”