Wednesday, March 21, 2012


An article in the Forward -- Fast-Growing Charity Funds Raise Issues -- raised and discussed the "propriety" of charitable tax deductions for the "fastest growing method of philanthropy you've probably never heard of..." My issue is with an attitude that seems to be prevalent among many Federation Endowment and Federation-related Foundation professionals that their role is to maximize endowment and foundation assets (including but not limited to donor-advised funds and other forms of philanthropic funds) without regard to how the income and principle of those funds are allocated. A New York Fund professional expressed it best when she told the Forward's Paul Berger: "Our goal is to facilitate our donors' philanthropy and to do it within strict legal parameters." And there's the rub. For this attitude reaches the largest so-called "Jewish foundations." 

As reported this month in ejewishphilanthropy -- A Look at Jewish Foundation Giving -- The Institute for Jewish and Community Research studied the " characteristics of selected Jewish foundations with approximately $20 billion in combined assets..." Among the findings -- "[N]early one quarter (24%0 of total dollars donated by Jewish foundations, or $335 million, went to Jewish causes..." Should this finding be worthy of celebration?

Our communal endowments -- and the philanthropic and donor-advised funds therein -- have grown at a rate far exceeding that of the communities Annual Campaigns. That growth has been a source of incredible pride -- we now hear with great regularity speeches about communal FRD that by necessity emphasize growth in communal endowments and downplay the downturn in annual campaign. But nowhere is there any discussion about how the income and principal of those funds are being distributed. JFNA has a strong Endowment and Planned Giving effort but G-d forbid that this question is ever discussed there, ever raised with communal planned giving and endowment professionals. And the reality is that there is good reason for this "shhhhh." And, look at the record -- how many lay Chairs of the PG&E Department have resigned in frustration or otherwise since the merger?

The endowment professionals see their roles as principally focused on "growth," not on distribution. My own "research" suggests (and, certainly the results confirm) that in the main they refuse to move donors toward federation goals out of fear that they will lose that "growth." Sure, if Donor A wishes to distribute $1,000,000 from Donor A's philanthropic fund as an Annual Campaign gift, "we'll take it, but we're not going to push it." That's not perceived as "our job." The attitude is "better that the money is with us than with Fidelity" or something like that even if the results for the community end up being the same.

You can't even have a conversation on the subject. I recall a visit with one of the greatest professionals driving the communal foundation effort. I had looked at the data for this foundation -- allocations to Jewish causes, of which Federation and federation agencies were just ones among many -- and found that allocations to secular, non-Jewish causes were as I recall about 80%. So I asked, like the dumb son at the Seder, "at what point do you just stop calling it "The Jewish Community Foundation or ______________________" and just "rebrand it the Community Foundation?" The response, more or less: "..if not for us the community wouldn't even be getting the 20%" or whatever that percentage was/is.

I'm probably wrong about this. Maybe it is better to have whatever percentage it is "with us" than "elsewhere" no matter where the funds ultimately go. But, I do know:

     ~ The Annual Campaign is the lifeline of the community. Those funds support federation, our agencies and Jews in need wherever they may live -- all of it;

      ~ Planned giving and endowment funds, evidencing continued strong growth, are funding donors' wishes, often in the broader, secular community to the exclusion of federation and agencies' plans...and all we count nationally is the total of those funds' growth;

     ~ And, should not JFNA be the venue where we, as a continental polity, actually discuss how we can best, if we can, and if we should, be the facilitator and advocate among fund donors/creators for federation-centric funding. Isn't that also our responsibility? Would not the debate have value -- a debate from which our national endowment and planned giving professionals walk away from as quickly as they can.

I know, silly me.



Anonymous said...

Here's are 2 questions to ponder regarding today's post. 1.) Why should JFNA push the issue of distribution to Jewish/federation causes? 2) Why should JFNA push the increase in assets versus of federation foundations?

Let's make a few assumptions. Start with $5 bil in cummulative DAF (I have no idea if this is correct. Assume that the DAF distribute 5% = $250 mil. Assume as you say 20% goes to Jewish/federation areas of concern = $50 mil. Objective grow the distribution rate to 25% to Jewish causes = an increase of $12.5 mil. Further distribute the $12.5 mil at the 20% rate to overseas agencies = increase of $2.5 mil to overseas.

Which is better for JFNA to take credit for (not that it does very much to address either in reality), take credit for increasing the overseas funding by $2.5 mil or growing the collective endowments by 10% = $500 million?

Anonymous said...


I could not agree with you more. I am in a community with a separately incorporated Jewish community foundation from the federation. Their mantra is growing their assets. By growing their assets (DAFs, permanent fund, etc) they believe they will make Jewish life stronger into the future -- they are "about tomorrow" while federation's campaign "is about today." Really? I thought we were all about today and tomorrow.

What they are unable to see are the following:

1. The foundation seems almost afraid to "pitch" ideas for funding to DAF holders. Why? Because they want to be seen as "non-biased" and cannot help one organization over another. And, I would suggest, in most cases the foundation professionals have no clue about the interests of their fund holders. Therefore, donors are left to themselves to give their money away -- typically to pay off annual pledges they make every year to organizations -- not for new and innovative ideas.

2. More assets in reality for these foundations means more fees. They want to expand their capabilities and the only way to do so is to have more fees generated.

3. The foundations typically see themselves as an island unto themselves -- not involved in community priority setting processes. Therefore, if they make grants on their own (via own unrestricted funds) it is for projects of their choosing that may not be in line with the community's priorities at all.

4. The real measure of the success of the foundation, as you said, is not the amount of assets, but the amount of distributions. Where they go, how many dollars, what percent of assets are being given away, etc. is really what matters.

5. In addition, the ability for communities to speak directly to fund holders must be opened up. Ideas are out is already in the bank...yet "blocking" conversations is not a healthy scenario.

6. Finally, especially for those that are separate from the Federation, when there is a "community emergency" and funds are needed immediately, people always turn to Federation. How many times has a Foundation stepped in with their assets in the bank (especially unrestricted) and put dollars into the community itself? They often stay far away holding onto to their resources. Where are they when the community needs them?

I am glad you raised this issue. It has been a challenge for many years. Let's tout our billions in assets, yet watch as a large percentage of that money goes to non-Jewish causes or far less than 5% of the assets are distributed on an annual basis.