This piece was written in advance of the United Jewish Communities’ General Assembly, which will take place on Nov. 11-13 in Nashville.
San Francisco (JTA) — North American federations embody the ideas of community, common cause and the ability to respond to collective concerns. They are vital institutions and we want them to succeed.
Federations have been the hub of a system involving community centers, family services, bureaus of Jewish education and many more organizations. But this system is becoming unglued and changes need to be made.
I have worked for three decades with more than 70 federations, including New York, Los Angeles, Cleveland and Baltimore. I have been a consultant with the Council of Jewish Federations, the United Jewish Appeal, and scores of constituent and beneficiary agencies.
I believe that federations are essential. I don’t have all the right answers. But I think I have some of the right questions.
Endowments
Endowments are a big federation success story, but trouble is brewing. Many federations proudly promote the size of their endowments, noting how much money is under federation management.
Is it real? Touting an amazing growth of funds under the federation roof paints a not-quite-honest picture. Key issues include:
• Part of or apart from the federation? More and more federations are losing control of their endowment funds as they evolve into quasi-independent entities or completely separate organizations.
• Are endowments Jewish philanthropies or not? A close examination of federation endowment funds shows many, if not most, of the grants and dollars from donor-advised funds and supporting foundations go to non-Jewish causes.
• How should endowments report their holdings? Endowment funds are a mixed bag of unrestricted and restricted funds under federation oversight. Philanthropic funds and supporting foundations are donor-controlled, not federation-controlled.
• How do endowments measure success? Are endowments doing well if they manage more and more money, give money to secular causes or give more to Jewish causes? How do we assess what the outcomes should be?
• Should endowments spend down? Endowment advocates will tell you that the money they hold on to is for an emergency or a “rainy day.” Exactly how hard does it have to rain to loosen up dollars? And where does it need to rain — and upon whom?
• Endowment directors and federation executives — who’s in charge? What happens when the endowment director has more perceived power and authority than the federation executive, as is the case in some communities?
Federation-agency system
The federation-agency relationship, the core of the federation allocation system, is outmoded.
Most of the funds federations give away through the allocations process are entitlements, with the largest amounts going to the same agencies year after year. How can federations develop new, more flexible ways of allocating funds?
There has been an explosive growth in the number of innovative programs and organizations, only some of which now get small, leftover grants.
What should the federations’ relationship be to these new and growing networks of Jewish organizations at the local, national and international level? Who should be in and out? Does the constituent/beneficiary agency structure make sense any more?
One example of a regular recipient is the Jewish Agency for Israel.
Many donors have no idea what it is or does, and others are openly hostile to it.
What should the federations’ relationship be to JAFI? Are there other organizations in Israel that should be supported as well, or substituted?
The annual campaign
The annual campaign built the federation and generates hundreds of millions of dollars annually.
But in real dollars it has declined precipitously since 1967 when adjusted for inflation. The donor base is aging, especially for the largest gifts.
• Does an umbrella campaign still make sense?
Federations provide a small percentage of the annual operating budgets of many agencies. Should federations raise and distribute money to local agencies, or would it be better to simply help them raise it themselves?
Should federations consider running one campaign for local needs, and a separate one for Israel, as they used to? Would federations increase the number of donors and how much they give this way?
And what about the American Jewish Joint Distribution Committee? Is it time for JDC to go its separate way and run its own national campaign?
• How can federations turn around their shrinking donor base?
The number of donors to the annual campaign is down over the past 20 years. Federations invest very little in developing, acquiring and managing donor lists. How can local federations and the United Jewish Communities invest in a national database system?
One potential source of new donations is non-Jews. The majority of Americans support Israel, and many use Jewish community centers, Jewish vocational services and other Jewish organizations.
The annual campaign is built on a pyramid, with the largest gifts setting the scale for all gifts. Major gifts have been stagnant at the top, and the pyramid is not high enough anymore. Donors capable of giving $5 million or $10 million to the annual campaign do not do so.
How can UJC create national and international peer groups of the wealthiest donors to radically change the standards of giving?
Administration and function
Federations are shooting themselves in the foot on some administrative issues that seriously harm their image. Some internal measures will help them better relate to donors, other Jewish organizations and the Jewish public in a healthier way.
• Overhead: Federations perform many services as programs within the federation that are viewed as administrative overhead and make the bottom-line fund-raising costs look much higher than they really are.
• Consensus or paralysis? Federations rely on a consensus model to get things done, trying to get the most people representing the most points of view to reach some common ground. The result is often the least common denominator, with the fewest people terribly unhappy, but nobody really happy either. Is this still a good model?
• Finding the right executive: Federations often seek the impossible — someone who knows the federation business as an insider, and someone with fresh new perspectives, who is unsaddled by the old way of doing business — i.e., an outsider.
• Establishing better relationships with private foundations: In some communities, private Jewish foundations give away more money than the federation, and in some places, a single Jewish foundation does so.
Many foundations often complain that federations are too slow to respond to changing needs and are too bureaucratic. Federations complain that foundations start projects that they do not finish and leave the mess for federations to clean up.
The bottom line is that federations need to change. If they do not, they will remain part of the Jewish philanthropic landscape, but nowhere near as important as they ought to be.
Gary Tobin is the president of the Institute for Jewish & Community Research and writes frequently about American and Jewish philanthropy.
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