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  • Andres Spokoiny

Independent Funders and Federations: Bound Together and Bound to Change

[This essay is part of a series from leaders in the field of Jewish philanthropy, who will offer reactions and analyses to Jack Wertheimer’s report, Giving Jewish: How Big Funders Have Transformed American Jewish Philanthropy, commissioned and released earlier this year by The AVI CHAI Foundation.]

Jack Wertheimer’s study, Giving Jewish, alongside the other work of The AVI CHAI Foundation that supports and contextualizes it, is an important milestone on our journey towards a more effective, impactful, and thoughtful Jewish philanthropy. We can’t be effective if we don’t know the field and are unaware of how it has changed.

As the head of the Jewish Funders Network, I’m keenly aware of the difficulty of obtaining an accurate picture of the field. First of all, much of Jewish philanthropy goes unreported. Religious organizations, for example, are exempted from filing 990s and Donor Advised Funds make tracing funds from donor to nonprofit almost impossible. Also, there’s the eternal debate of what counts as “Jewish giving.”

And that’s a first takeaway from the study: there’s much to be done to make our field more transparent. It’s not only important from an ethical perspective, but also from a strategic one. As funders, we can’t make informed decisions if we don’t know, for example, how much funding is going to a specific issue. We can be under the impression that a certain field is underfunded when it isn’t and vice-versa. That can also make us overestimate the impact of major foundations on the communal world, because they tend to be more transparent and file tax reports. Smaller gifts to religious organizations surely represent a big, uncounted portion of Jewish philanthropy.

And that leads me to what’s probably the most “meaty” finding of Jack’s study: the growth of independent philanthropy, seemingly at the expense of federating giving, and the growing impact and influence of major funders on Jewish Life.

It’s tempting to blame the shift from collective to individual philanthropy on the “excessive individualism” of donors. (And the word “blame” requires an assumption, which should not be accepted without question, that the shift is a bad one.) It’s equally seductive to fault the federation system for its supposed obsolescence. But that belief has its own contours and boundaries of truth. In reality, the explosion of individual philanthropy is linked with major sociological trends of the last 30 years. The whole developed world’s patterns of association have changed, our approaches to community have mutated, and even central aspects of the human condition have evolved. We live in a society that places the individual, not the collective, at the center of the social construct. To assume that Jewish philanthropy will preserve its traditional forms in a different world would be wishful thinking; to assume that collective structures could remain relevant in their mid-20th century formats amidst the biggest challenges to collectivism that humans have ever experienced would be a delusion.

The question of big donors, as Jack signals, begets the question of communal democracy. Yes, at face value, one can fear that the increased power of a few individuals will be detrimental to processes of democratic participation in Jewish life. Then again, the reality is more complex than that.

First of all, the federations have never been precisely a paragon of democracy. Mainly, they have been run by individuals who may or may not have been representative of their communities or those communities’ interests and values. At the same time, there are collective mechanisms in federations that involve many communal actors and a diverse cadre of leaders and activists. In theory, federations define funding policies through iterative processes of consultation designed to elicit the opinions of large parts of the community. As with many systems, this works in practice sometimes better than others.

On the other hand, one can present a caricature of the big funder as a whimsical billionaire deciding, from his ivory tower, the fortunes of the community. Yet that’s not how most philanthropists operate. They consult with a vast range of communal players; they employ staff who represent different visions and ideologies; and they create partnerships that involve negotiations and concessions with many stakeholders. What’s more, the proliferation of high-capacity funders operating outside the legacy communal institutions might, in time, prove to be the vanguard of an increase of accountability and broad participation for the field. Restless elites often start disruptive social movements – a pattern that dates back, at least, to Moses rebelling against the Pharaonic house he grew up in. In Britain’s American colonies, a decision by wealthy elites to rebel against the Crown eventually led to increased civil liberties and democratic rights for poor and minority people whom many of the original elite rebels didn’t remotely have in mind for them. Something similar could theoretically happen in Jewish philanthropy, and the growth of giving circles and crowdfunding are two examples of how new philanthropic models might be created as the old models drift further into the past. Federations are also rethinking and reforming how they operate in response to the new environment, and, as they continue this exciting work, they may introduce participatory models that don’t only engage the departing mega-donors more, but the micro-donors in new ways as well. Now, this optimistic vision of elite-led democratization can’t by any means be counted on – but neither can it be counted out.

By raising optimistic possibilities about the issues Jack describes, I don’t mean to minimize the ethical challenges that our field faces. High-capacity funders of all kinds do have great – and growing – influence and power, and power always brings along ethical questions. Are we using our power in the right ways? Are we being positive or negative disruptors of communal dynamics? Do we consider indirect impacts of our grants on larger communal systems? These questions are particularly acute in private philanthropy, because private foundations don’t have built-in feedback or accountability mechanisms the way federations and public charities, and even corporate foundations (ever concerned about the parent companies’ brands), do, even if and when these operate imperfectly.

At JFN, we have wrestled with this for a long time. Two years ago we produced Funders and Power: Principles for Honorable Conduct in Philanthropy. (We updated it this year in light of the #MeToo movement.) Funders don’t need to be defensive about having power, but they do need to own it and seriously consider the range of ethical questions that it gives rise to. Also, because of that lack of feedback mechanisms, we need to invest in evaluating ourselves. To that end, JFN is in the planning stages of partnering with Jack, AVI CHAI, and other foundations to produce a follow-up study that will focus on the image and perceptions of foundations in the larger community.

Many people may argue both sides of a posited “foundations vs. federations” debate, but that, in my opinion, misses the point. The emergence of independent private philanthropy is a reality. It’s also incontrovertible that independent philanthropy – because of its higher level of risk tolerance – has spearheaded many of the innovative programs that are today transforming Jewish Life. But it’s equally incontrovertible that federations – or similar structures of communal philanthropy – fulfill a critical role in Jewish life. The question, then, is how to see communal and private philanthropy as two sides of the same coin and create (A) more effective systems of ethics and communal accountability for both, and (B) a mutually reinforcing relationship between the two.

These two worlds are not as separate as we tend to think. Many (maybe most) independent foundations or their principles are also major donors in their local federations. And, more importantly, new models of partnership between foundations and communal organizations are emerging all around us. Donors realize that federations can be effective delivery systems for their programs; one has only to see the deployment of PJ Library around North America as a partnership between the Harold Grinspoon Foundation and the federations; or the same model applied to Moishe House, Birthright, OneTable, and more. Those partnerships are a platform for wide-ranging collaborations on numerous issues. Funders have become keenly aware of the value of communal systems, provided those organizations are willing to work in partnership with them instead of merely soliciting them. In that sense, many federations are refocusing on providing value to augment – rather than directing – the individual philanthropy of their donors. This is putting the relationship on a completely different footing, one that is conducive to more partnership and collaboration. Both sides need to continue on this route: funders realizing the intrinsic importance of federations as both delivery mechanisms and added value, and federations accepting expanding their role so as to be a vehicle for funders to realize their visions. The signs are encouraging.

As I said at the beginning, knowing ourselves is a prerequisite for growth. In that sense, Jack and AVI CHAI are giving us a valuable tool. It’s now up to the rest of us to build on it, argue with it, and expand it, but, whatever we do, let’s keep the conversation going.

This article was published in eJewish Philanthropy.

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