Is the charitable giving cup half empty or half full?

Guest Columnists Is the

October 22, 2009 12:30

For those of us working with Jewish and Israel-based nonprofits 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. An important paper by Profs. Hillel Schmid and Avishag Rudich, from the Hebrew University's Center for the Study of Philanthropy in Israel, was presented to the Presidential Conference in Jerusalem this week. The content of their paper reflects appropriate research and many observations that require careful scrutiny and examination. 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 because we agree with some of what they will offer to an important gathering of nonprofit leaders. But a number of their conclusions need to be reconsidered by all involved in fund-raising and nonprofit organizations, regardless of whether they are part of the Presidential 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 US and professionals working closely with a myriad of Jewish and Israeli nonprofits - could make are that this new paper cites quickly outdated data and does not reflect enough current citations about a turnaround in giving, a reality that we are witnessing while collectively feeling a sense of relief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 nonprofit 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 was 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 nonprofits 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 nonprofits 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 that only about 8 percent-10% of all US 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 fund-raising 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 nonprofit 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 nonprofits 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 nonprofit 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 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 US donors did not take the importance of financial transparency seriously, including not posting their IRS Form 990 on their US Web sites. The difficulties we encountered in trying to obtain financial and donor data for our study reflects an attitude that all nonprofit 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 global Jewish community to support a wide 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. EHL Consulting works with dozens of non-profits on fundraising, strategic planning and non-profit business practices. Stephen G. Donshik 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 nonprofit organizations and their leadership for tomorrow. This article first appeared on

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