January 26, 2012
The donors’ rules have changed: The new generation wants to see a social return on investment
By Yaron Neudorfer
According to recent media reports [in the Hebrew press], Jewish federations in North America are studying the possibility of changing the way in which their donor funds are allocated. The world of Jewish philanthropy is a competitive market in every way, and it is swiftly nearing the level of competitiveness that characterizes the business world.
The development and growth of the non-profit sector fulfill social and economic needs that are not adequately addressed by the market economy, but they also increase the competition for every “pocket.” This trend only increased in the wake of the financial crises of 2008, which reinforced another dimension to the competition: that between local Jewish needs in the United States and global Jewish needs.
The rules of the game have also changed for the donors themselves. The older generation of donors was content with sending funds to Israel, assuming that “the need is over there, and they know how best to use the money.” That donor remained loyal to the organizations to which he or she donated for many years.
Today, in the competitive market described above, the new generation of donors wants to see a clear social return on their investment, and seeks to make a real difference. The donors wish to directly support activities that address challenges in which they are engaged, and not just to hand over checks to organizations.
If during Israel’s early years, donor funds were primarily channeled toward the physical construction of the state, toward absorbing immigrants, and toward the distribution of grants to the less fortunate amongst the Jewish people, once Israel’s economy became stronger and the government assumed responsibility for many of these areas in subsequent decades, the donors’ primary challenge became ensuring the future of the Jewish people.
The existential question facing donors today is not the Iranian bomb, but rather how to cause young people in Jewish communities around the world and in Israel to feel connected to the Jewish people in an era of global openness and social networking.
Various studies have shown that visiting Israel is a critical component in the development of a sense of Jewish belonging amongst Jewish youth. A young Jew whose identity is rooted in Israel is most likely to remain committed to the Jewish people, to be active on its behalf, and even to move to Israel. Bringing tens of thousands of Jewish young people to experiential programs in Israel has therefore become a global Jewish mission, into which hundreds of millions of dollars are channeled annually.
The proposal currently under consideration by the Jewish Federations of North America, which will change the way in which donor funds are allocated, reflects this reality. It maintains that funds will no longer be automatically channeled to organizations until Jewish needs in various places in the world—each of which is unique—are adequately explored. The funds will be channeled to those bodies that offer optimal solutions to those needs that are identified.
This is an opportunity to effect significant, lasting change in the Jewish world and in Israeli society. The change will require the relevant bodies to streamline their operations in order to best address the new challenges facing the Jewish people. This philanthropic evolution will mean that only stable organizations with proven capabilities and professional, transparent budgetary practices will enjoy a piece of the pie.
As a result, donations will be directed to addressing the key challenges facing the Jewish people, rather than being scattered amongst dozens of non-profits, ensuring real, meaningful impact. Above all, the change will require that we not remain static, and that we more frequently examine the ever-changing needs of the Jewish people.
The writer is the Chief Financial Officer of the Jewish Agency for Israel.