Time To Increase Funds For Innovative Groups

by Felicia Herman And Nigel Savage
Special To The Jewish Week

For those who are open to engaging in Jewish life, the last decade has been an American Jewish golden age. Nowhere has this been more evident than in the new Jewish “innovation sector,” a peer-group of entrepreneurial organizations that includes Avodah, Heeb, JDub, Hadar, Keshet and Storahtelling, among many others.

Many of these groups have been funded by Natan (a grant-making foundation created in 2002), of which Hazon (a nonprofit founded in 2000) has been a proud member.

Now these gains are imperiled by the deepening economic slowdown. All nonprofits are re-assessing budgets and nervously planning for tougher times ahead, but the young Jewish organizations face two significant additional challenges.

First, in strengthening Jewish life, they are doing something that is

seen as important — but not vitally so —at a time when people will be suffering serious economic hardship.

Second, these organizations are extremely vulnerable financially. Most were founded in the last 10 years. They don’t have the resources that legacy organizations like the Anti-Defamation League or federations have. They don’t get funding from bequests. They don’t have well-established development staffs that can position their organizations to weather economic downturns. And almost none of these new organizations have balance sheet assets, endowments, reserves or savings from which to draw in a time of contraction.
Yet the future of these organizations is vital. In aggregate, they — we — are weaving a new and necessary ecosystem for the future of the American Jewish community. For a growing number of Jewish young adults, these multiple pathways aren’t an alternative to Jewish life — they are Jewish life. These programs have grown because they touch deep chords — for learning, for meaning, for community, for making Jewish life vibrant and relevant in a fast-changing world. Demand for these organizations’ programs continues to increase even as their funding is likely to decrease — and thousands of young Jews’ willingness to engage with Jewish life is at stake.

So what then is to be done? We offer three suggestions.
First: In the next three years, Jewish foundations and significant individual Jewish funders should act as modern governments do in times of significant contraction — increase their expenditures, with the intention of returning to normal levels of giving when the economy grows again. Modern governments go into deficit to provide fiscal stimulus to the economy in times of severe recession, and this is precisely the scenario we need in the Jewish world. Any foundation that cares seriously and strategically about the Jewish future should play a countercyclical role by increasing its giving to see this vulnerable sector through the crisis.
Foundations that ordinarily pay out only 5 to 7 percent of their assets should consider temporarily increasing to 10 to 12 percent, even if the asset base itself has been reduced by declining investment values. Best of all would be to do so publicly, to set an example for others. Once the economy shows signs of renewed growth, foundations can reduce their proportion of funding and return to encouraging non-profits to diversify their funding sources and to reach out to new donors.

Secondly, foundations, federations and funders should provide additional support to young, fast-growing organizations. No single organization in this cohort is doing anything that we couldn’t live without. But together, they are remaking the Jewish world. In the private sector, multi-product companies routinely utilize the profits created by “cash cows” to invest in new and fast-growing market segments.

Similarly, there is an urgent need for significant Jewish funders to create new funding mechanisms to ensure funding for the “innovation sector” over the next two to three years. Otherwise, that sector will risk facing irreparable damage. Two or three of the mega-funders could partner with those funders who know the sector well, like Natan or Slingshot or CoJIR at UJA.

Our third argument is addressed to the nonprofits themselves. Asking funders to step up in extraordinary ways obligates the recipients to take extraordinary measures to be as efficient and effective as they can possibly be. If the young non-profits were private sector companies, we’d see a wave of consolidation in this young and fragmented market sector. The economic situation provides an opportunity for truly innovative organizations to maximize impact while minimizing costs. Young nonprofits need to collaborate more effectively, openly and generously. They need to share space, knowledge, software, hardware, people, and even markets. And where there are opportunities for mergers, they need to pursue them.
Just as governments around the world are beginning to respond to the deepening economic crisis, in the Jewish world, a new generation of funders needs to decide how it will try to control the damage the crisis will wreak on Jewish organizations. An increase grant making under these circumstances may not seem like the obvious solution. But that is precisely what needs to happen if we’re serious about building now for the future. As a new administration starts to plan for change in Washington, we hope that Jewish funders will begin to work together to sustain the changes that are already remaking the Jewish world. n
Felicia Herman is executive director of Natan; Nigel Savage is executive director of Hazon.

Westchester Jewish Conference

Westchester’s Jewish Community Relations Organization

Jerusalem Hotel

Dan Panorama Hotel in Jerusalem