Article Library / 2016

2016 Annual Assessment

The well-being of Jewish communities outside Israel is largely determined by the national and local governments of the countries in which they reside. The Jewish character of these communities, however, and their cultural and social continuity are in the hands of those communities alone. This makes the sources and uses of Jewish wealth (aka material resources) in North America and elsewhere a serious issue that would behoove the Jewish people at long last to regard seriously. As JPPI has pointed out in prior Annual Assessments, the evidence that the importance of this aspect of Jewish life is widely recognized is still lacking.

As a case in point, we consider the issue of generational transition in the United States. The first point is that the conventional wisdom regarding the demise of the federation system, like that of Mark Twain’s while he was still very much alive, may perhaps be greatly exaggerated. The second point is – perhaps not: we lack the information to allow us to actually understand what is going on. These two points are thoroughly intertwined.

From the beginning of Jewish habitation in North America the needs of those in need within Jewish communities – the poor, the elderly and new immigrants – were primarily met by Jewish communal groups. At first, resources were provided via self-help groups, synagogues, and then through the institutional fabric of local federations and national Jewish organizations that were created in the later decades of the l9th and earliest decades of the 20th century. The question is whether this structure is changing – or worse, failing to change – in response to trends that may prove transformative.

The conventional wisdom is shifting toward a belief that, indeed, the older model is in trouble. The thread of this hypothesis notes the passing of the generation with living memory of the shoah, of a world without Israel and of the wide spread of anti-Semitic attitudes which often took practical and even violent form. The sense of community of this generation was inculcated in them by parents or grandparents who themselves were immigrants from closely knit traditional Jewish communities abroad. This interpretation then weaves together corollaries such as a trend toward weaker Jewish identification (or less identification with Israel – two different things), a greater desire to be prominent in giving to non-Jewish causes (albeit often said to be informed by core Jewish values), a skewing of community wealth with donations becoming most preponderant at the highest percentiles of wealth, and a penchant for more hands-on, personalized and outcome-oriented philanthropy. In this telling, the consequence is inevitably either a diminution in the relative share of the more traditional communitarian organizations such as federations or a capture and transformation of these institutions by a relatively small group of very high net worth individuals and private foundations.

The counter to the conventional wisdom frames a different set of hypotheses for which there is also anecdotal and, to a degree, quantitative factual support. In this telling, while federations are continuing to sustain a network of domestic and overseas agencies, they have also become innovators.20 They have conformed and are conforming to both the opportunities and needs of the times and in this act of innovation are preserving both their organization and mission (with the latter reconfigured to accord with the needs of their communities in the early 21st century). There has now been considerable recovery from the disasters stemming from the Madoff affair and the Great Recession and perhaps even some growth. To be sure, there have been shifts from traditional sources of funding such as reliance on mailed appeals, but these have been met by new initiatives such as planned giving campaigns. And these two income sources are categorically different from each other. Mail campaigns were important for the current account balance but never solely about dollars; they were about participation as well. Growth in planned giving is not so much a reaction to a flattened effectiveness of direct mail but rather an instance of adaptation and innovation designed to secure both assistance from wealthy families in a position to provide it and continuity of services on the current account through income generation from a capital account independent of the annual campaign cycle. In fact, rather than a consistent trajectory toward an ever more concentrated core of supporters and personally directed Jewish philanthropies, a number of phenomena have countervailed the trend. Several of the tallest poles from what might be termed the Golden Age of Jewish philanthropic entrepreneurship (e.g., Avichai, Bronfman, Glazer et al,) have now either been wound down or are undergoing a shift from active Jewish giving.

What is the actual situation? This is an important question for Jewish people concern and U.S. communitarian attention. But this then raises the practical issues discussed previously by JPPI in this context. We lack many of the data and a good deal of the information that would allow us to gain a clearer view of what trends are most dominant and the direction they are driving this process. U.S. federations and Jewish organizations conform to federal regulations for reporting to taxation authorities on their annual income, expenditures, and activities. These are not sufficient, however, to engender a sufficient standardization across Jewish organizations that would permit cross-organizational or cross-year comparisons.21 There is neither a consistent taxonomy nor sufficient detail that would permit carrying out such assessments without the expenditure of considerable labor each year. And there is no central authority either charged with the responsibility or sufficiently well-endowed with resources to carry out the effort. It could only come from a collective decision by a critical mass of such institutions to take upon themselves the discipline of framing and adhering to a common protocol allowing evaluation from a community, national, and Jewish people perspective.

What appears largely to be supported by the evidence is that the relative importance of community-based, principally federation, shares of Jewish charitable funding is declining, but this is more a statement of basic arithmetic than necessarily of substantive trends: when new charities enter the arena, the relative shares of incumbents necessarily decline. But the absolute value of those incumbent shares may still increase. In other words, what may be on the decline is less the federation system than the dominance enjoyed by that system in the world of U.S. Jewish philanthropy.

Although federations were founded with the intent to serve the local community, after they began to amalgamate with the local United Jewish Appeal beginning in the 1930s, they also became a major focus for Jewish overseas relief and, eventually, Israel-oriented giving and action as well. This, too, has affected the current transition in the sources and uses of Jewish wealth for Jewish people purposes in the United States. What may be the less obvious story is precisely the dog that did not bark – that is, the resilience of the federation model in an era in which the perception of economic threats to Israel, and so the impetus toward Israel-related giving, for which federations served as major conduits, has declined.22 As one data point, when United Jewish Appeal of Greater New York merged with the New York Federation in 1986, NY UJA was raising 70 percent of the total funds pre-merger and the local federation 30 percent. This shows how UJA’s focus on Israel was a major driver of local Jewish giving. With Israel’s surging economic strength, its dominant security position in the Middle East, and the increasing disproportion between the scale of even generous U.S. giving and the scale of Israel’s needs, one might have expected a decline in fundraising. Instead, despite the re-contextualization of U.S. Jewish philanthropic dollars in Israel, despite the highly reported trend to direct donor giving, despite the proliferation of Jewish organizations both in North America and in Israel, New York UJA-Federation’s annual campaign receipts grew from $115 million in l999 to $153 million in 2008 and is expected to exceed the 2008 level (and thus fully recover from the Great Recession) in 2016. The stronger federations such as Baltimore, Cleveland, Chicago, Detroit, Miami, and Washington have experienced similar results. Federations appear stronger than most predicted and the conventional wisdom continues to report.

The transformation of the Israel dimension in North American Jewish philanthropy demonstrates that the flow of money and its use for Jewish people purposes is often part of a larger story. While changes in how U.S. Jews regard Israel may affect the sources and uses of Jewish community resources, it is also the case that tracking such patterns may, in turn, give us insight into both fundamental changes in attitudes and their practical effect. In this case, a reconfiguration of traditional patterns driven by transformations of perceptions of Israel may be either a signal or confirmation of a profound change to what has been, since the founding of Israel, one of the fundamental totems of Jewish identity in North America. If so, this would suggest the need for serious attention by those who monitor geopolitical trends. They would need to weigh what might ensue from a resulting rebalancing of allegiances, interests, and priorities within the Israel-Washington-American Jewish triangle. Hence the importance of such a shift and the value of information providing early warning of its trajectory goes beyond “mere” questions of finance and budgetary accounting.

What is to be done? Passively, there is a need to be capable of observing more accurately the drivers of Jewish giving as they may, indeed, shift over time in response to generational and other substantive changes. But to assume a more activist posture, the Jewish people and the affected communities need to be able to weigh different means to align such phenomena in service to major Jewish people interests and needs. Neither will occur in the absence of a marked shift in the availability of information. This would require addressing several needs. One is for more uniform reporting and accounting protocols to support aggregation and comparison. Allied with this would be greater knowledge sharing in aggregate among Jewish organizations. The point is not necessarily to disclose details about particular gifts or bequests which may be in themselves sensitive or otherwise confidential. Rather, it is to enhance confidence that the general categories into which each such gifts may be fit share consistency with those used by similar organizations. In the absence of this, the effort required to gather and scrub any credible data sets will be so large as to deter attempts to create them.

These reporting protocols could easily be made consistent with IRS provisions, those of other taxation and regulatory agencies, and accepted accounting practice while also providing consistency across federations and major institutions. But this is merely preliminary. Once the information becomes – if not widely and publicly available, then at least consistent so that vetted researchers and analysts adhering to confidentiality protocols may be reasonably assured of what the data describe, it would then for the first time truly become possible to support a review of players and processes in the Jewish people marketplace for financial supply and demand. Doing so would assist both sides of philanthropic transactions – both donors and recipients – as well as Jewish communities as a whole to better shape the correspondence between goals on one hand and ways and means on the other.