Can the Jewish Federation system embrace Disruptive Philanthropy?

I’m currently attending the annual gathering of Jewish community federations and affiliated communities. The gathering, known as the General Assembly (GA), focuses on issues critical to North American Jewry, Jews abroad, and the State of Israel. As explained by the Jewish Federations of North America, the system’s umbrella organization, the federation movement “represents 157 Jewish Federations and 400 Network communities, which raise and distribute more than $3 billion annually for social welfare, social services and educational needs” placing it “collectively among the top 10 charities on the continent.” In a very rough foundation analogy, that would a foundation with roughly $60 billion in assets.

That’s big; really big. And yet, the federation movement is struggling with declining donor bases, growing local community needs, and challenges to implementing effective philanthropic strategies. So, yesterday’s session on “Disruptive Philanthropy” with Diana Aviv (President and CEO, Independent Sector), Jeffery R. Solomon (President, The Andrea and Charles Bronfman Philanthropies), and Brian A. Gallagher (President and CEO, United Way Worldwide), promised to provide an interesting barometer of how the federation movement is embracing (or resisting) change in its grantmaking approaches.

The basis of the session was Disrupting Philanthropy, a report written by Lucy Bernholz, Edward Skloot and Barry Varela, which looks at the impact of data, information, and networked digital technologies on philanthropy. Sadly, there was little reference made to the report and its key findings during the session. However, the speakers did touch upon some central related themes.

Each recognized the dramatic landscape changes over the past ten years and the accelerating pace of change. Diana Aviv noted the growth of both the nonprofit sector and the emergence of hybrid organizations (L3Cs, B-Corps). She also mentioned a future in which nonprofits might struggle to engage Millennials and will have to become more fluid and adaptable in their operations.

Brian Gallagher reflected on the growth in the number of active and engaged donors who don’t want simply charitable giving transactions, but are looking for more intense engagement opportunities. These individuals will shift the philanthropic marketplace much faster than organizations. They are now also challenging organizational value propositions: organizations such as the United Way, a Jewish community federation, and by extension a local community foundation are now facing the challenge of proofing their value as intermediaries between a donor and a charity. If they cannot, a donor can simply drop that intermediary from the transaction and fund a charity directly.

Jeffery Solomon echoed this critical point. If an intermediary does not add value now to a donor, then it will cease to remain necessary. The growth in access to data and information further challenges the Federation movement to adjust to a changed philanthropic sector. Importantly though, he did list a range of opportunities for the Federation movement to embrace that could stem the drop in donors and philanthropic resources including tactics such as re-granting, donor circles, social venture funding, and more innovative strategic giving.

All of them noted the impact of technology on the sector and the growth in the availability of data.

The discussion with the audience provided more thoughts from the panel. At one point, Diana Aviv simply stated that if the Federation movement doesn’t change, it won’t be around to see the future. As intermediaries, the individual federations need to provide information and data to donors, and must understand that they are operating in a competitive market space. They must articulate a clear purpose, implement models that work, provide a wider vision on how to generate impact, and demonstrate the ability to evolve, adapt, and find new opportunities.

Brian Gallagher provided some positive hope by noting that the United Way affiliates’ efforts to engage donors in the grantmaking process and the designation of their own funds have helped grow donor participation and charitable resources.

The session was sobering for the federation audience and hopefully many will begin to adjust to the disruptions happening now in the philanthropic sector. But I still worry about a field that’s not embracing the latest thinking in sections of the philanthropic space that are currently pushing philanthropy in new directions.

For example, the Federation movement could have a tremendous role in building investment options for the $120 billion market of individuals looking to embrace social impact investing (see “Money for Good” report (PDF)). The federations could find new ways to engage the Millennial Generation in giving, such as the One Percent Foundation does online, or adjust their philanthropic strategies to support hybrid organizations such as L3Cs and B-Corps. One great suggestion came from Jeffery Solomon, who imagined the federation system pooling 10% of its resources to create a social innovation fund – such as fund, with about $300 million to distribute – would easily eclipse other efforts such as the Social Innovation Fund.

But impact investing and social innovation requires increased capital to create more effective community solutions and grow them to scale. Does the Federation movement have the resolve to embrace the necessary change to adopt such philanthropic strategies?

As a barometer, the Disruptive Philanthropy session highlighted how new this concept is for the Federation movement. But the organizations that operate in this system are already seeing their philanthropic models come under pressure to evolve. The next step for the Federation movement is ahead: will it embrace the disruptions and chart new ways to make philanthropic decisions and engage donors?


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