Avoiding the ‘Jewish fiscal cliff’

The main Capitol Hill sport these days (after obsessive coverage of the Petraeus scandal) is how the government can avoid the impending “fiscal cliff.”
November 28, 2012

The main Capitol Hill sport these days (after obsessive coverage of the Petraeus scandal) is how the government can avoid the impending “fiscal cliff.” A similarly serious financial challenge lurks in the future of the Jewish community — namely, how do we better balance our books and continue to fund an engaging and vibrant Jewish community? We may not be running toward a cliff, but a long slide would leave us in the same place.

Unfortunately, the Jewish Fiscal Crisis (JFC) is more systemic and fragmented than even our government’s current dilemma and cannot be solved by fiat of raising taxes or cutting programs. Rather, the JFC will only be resolved through addressing three difficult issues:

1. How we are organized.

2. How we educate and motivate donors and collect monies.

3. How we deliver services through a complex structure of separate yet (ideally) nonduplicative organizations.

As a long-time participant and funder in Jewish life with a good sense of our history and our complicated communal psyche, I appreciate how fortunate we are relative to previous generations. The point of this commentary is not, “Woe is us.” Rather, the focus here is to present ideas and generate a discussion that leads to collaboration. These ideas are all rooted in my practical experience as a business strategist and nonprofit activist, and in a genuine concern that our community needs to develop strategies that increase overall communal resources for worthwhile initiatives, and generate and allocate our communal resources in the most efficient manner possible.

Background: The impending Jewish Fiscal Crisis explained

The Jewish community has always contended with some level of financial strain, but the situation has materially deteriorated due to numerous interrelated factors and trends, including:

1. Difficult macroeconomic times, which have increased demand for poverty services and annual subsidies (e.g., for synagogue membership and day school tuition).

2. Generational shift in funders, with groups like Avi Chai spending down and next generation mega-donors frequently focused on non-Jewish causes.

3. Limited growth to no growth in Federation ongoing campaigns (not including emergency disaster and crisis relief).

4. Continued inefficiencies as organizations duplicate services yet refuse to merge or coordinate.

5. Expanded reliance on “free” pricing practices (Birthright, PJ Library, Chabad, High Holy Days, etc.) spawning a communal entitlement psychology.

6. Inability to effectively leverage new technologies to materially lower operating and marketing cost structures.

7. Increased unaffiliation as individuals have weaker formal ties to religious organizations.

8. Lack of unity with certain funders and segments (e.g., ultra-Orthodox) with targeted giving on particular agenda and not broader needs.

Vision: Preserving our foundation while seeking innovation

To create the necessary economic foundation for the Nextgen Jewish community, we need a game-changing cooperative approach that disrupts the current economic paradigm while at the same time takes into account established organizations such as the UJA-Federation.

In this regard, the publishing industry serves as an instructive model of how to move forward. Publishers are investing heavily in innovation in the new world of e-books and online distribution while at the same time working to protect their core print businesses. Significant restructuring and mergers are just one visible manifestation of this dynamic process.

We should apply this separate-but-focused approach in the Jewish community. The Federation system and other large incumbent organizations are our printed books, and we need to ensure their continuing, valuable, bottom-line contribution. At the same time, we need to explore and master innovative “e-book” approaches in a way that does not jeopardize major components of the Jewish enterprise.

Plan: Alternative strategy group with focused initiatives

We will only achieve substantive improvement through a collaborative effort that leads to a select number of focused initiatives that ultimately disrupt and improve how the market system operates. Thus, the challenge is not just to envision and implement any one option, but also to achieve widespread community acceptance. With this goal in mind, we should empower a think-outside-of-the-box, Simpson-Bowles-style committee to brainstorm, create and help implement such game-changing initiatives.

The participants would need to include key funders and representatives of incumbent organizations with leadership by visionary participants inside the community — forward-thinking federations (Combined Jewish Philanthropies of Boston), philanthropic groups (Andrea & Charles Bronfman, Avi Chai or Schusterman Foundations), philanthropic resources (Jewish Funders Network) — as well as market-savvy outsiders (Steve Einhorn or Jeff Weiner of LinkedIn).

The critical ideas on the agenda for this group are not necessarily high-profile, exciting projects, but rather the spinach on the table. They may not be as fun to eat, but they will give the community the basic nutrients to increase resources across the board and allow donors to more efficiently allocate for our future.

Here are four initial ideas this committee should consider (more details are available on  jewishjournal.com):

Idea 1: A transparent marketplace

Our community needs to better collect and organize critical, baseline information on the financials, best practices and strategies/missions of Jewish nonprofit organizations. Information is power, and we need to make our donors smarter about their choices and allocations. Donors can’t maximize their efficiency if they can’t assess where the dollars are going and how they are being spent.

Idea 2: Empowered and informed donors

A “one-size-gives-all” mentality is no longer the only answer as donors become less focused on institutional fulfillment and more interested in individual giving based on personal interests. We need a charity information platform that educates, activates and connects the Jewish community and is a trusted source that provides independent, high-quality and conveniently accessible information. This is not just a stand-alone Web site but will be a larger initiative that includes online and offline elements, all designed to improve donor engagement.

Idea 3: Communal efficiency

There are many organizations working in similar areas that might benefit from a range of coordination and cooperation. More resources need to be devoted to helping organizations start joint-venture operations and merge where it makes sense. There should be a venture fund with access to experienced professionals to assist organizations with the leap to consolidation.

Idea 4: Jewish giving category campaign

Last but not least, we need to address how to increase the overall amount of money given to Jewish causes. This would be general campaign to generate awareness of the importance of Jewish giving and engage funders to increase their allocation to Jewish charities by addressing attitudes, the paradox of choice and informational requirements.

In the end, though, we need to keep in mind that we will not win over major sources of new money through a campaign, but rather through a thoughtful and organized approach to giving Jewishly. This will only be accomplished through the types of initiatives discussed in this article (and in more detail in the extended paper) and other ideas that arise through these discussions.

Mark Pearlman has served on numerous charitable boards. He created JInsider.com and most recently launched Sinai Live Books. On a professional basis, Pearlman is a business and marketing strategist focused primarily in the investment area.

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