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  • Andres Spokoiny

Three Questions And Three Certainties: Philanthropy In The New Economy

Just a year after economists say the “Great Recession” ended, instability and market crisis are rearing their ugly heads again. For the Jewish community, the ongoing economic turmoil may again threaten many of our institutions that depend on philanthropic support to sustain us culturally, spiritually, and — often — physically. However, as the Jewish community enters a new period of financial uncertainty, we need to recognize that going into “crisis mode” misses the opportunity to learn important lessons and make real strategic changes.

The roller-coaster stock market, debt ceiling battle and credit rating debacle all point to another economic crisis. But is it?

We owe the word “crisis” to the ancient Greeks, who used it as a medical term. The crisis was the point in time for a patient after which they would either die or emerge from the illness, a make or break climactic moment loaded with drama and uncertainty. But the crisis lasted for a short time; afterwards, the patient was either dead or cured.

To call our new economy a “crisis” is misleading; it implies the expectation of a resolution. It suggests we’re in the midst of a passing ailment that time will cure. I think the opposite is true. The lesson of these economic earthquakes is that we are no longer in crisis. We are in a new reality of uncertainty, instability and recurrent shocks. If it’s here to stay it’s not a crisis, it’s the new normal.

Organizations are used to responding to crisis with off-the-shelf measures like cost cutting, layoffs and re-prioritizing. These mechanisms seek to “re-establish the equilibrium” that was lost. But when the Earth keeps shaking, traditional tools for restoring equilibrium won’t help us. Instead, we need to redefine our understanding of our surroundings and our actions to face this new world and its new rules.

Fundamentally, the first and most important question is about the role of social change organizations in this new environment. When faced with declining government funding for critical social needs, are the old models of organizational involvement and support the right ones? Should the philanthropic sector continue to fund the range of programs that it has historically supported, or do we need to reassess those basic priorities? Where is the new line for what needs — and there are many — should be put first? Can the philanthropic and non-profit sectors work together to speak out on these critical social questions?

With the welfare state of post-World War II tumbling in the U.S. and Europe, should philanthropists — those who have been the greatest social innovators of the past decades — talk and make their voice heard in the debate that will define our new societal model?

Second, funders and organizations alike need to question their historical assumptions. For foundations, is the legal minimum of 5 percent allocation the best guideline in times of permanent uncertainty, or do we need funding models flexible enough to respond to the sudden changes that have become routine? We’ve often stuck with the patterns of the past out of inertia, instead of implementing nimble mechanisms to respond rapidly. Is the five-year plan from two years ago still pointing in the best direction?

Finally, in this new environment, what defines the new “rainy day?” When the only constant is change, how can our organizations define their missions, set goals, and make plans to reach them? Is it better to reach for the biggest possible impact now, rather than save for an uncertain future? How can we honor our history and legacy obligations and respond to urgent needs?

As the new president of the Jewish Funders Network, I know we don’t have answers for these questions, but we all need to begin to address them. I also know that as we begin to recognize this new environment, there are three basic certainties that can help guide us.

First: It is clear to me that philanthropists and nonprofit organizations have a critical role to play in this new reality. The state will continue to struggle to define its role and the scope of its obligations. In the meantime, basic needs in several areas will rely heavily on the philanthropic sector. As the nonprofit sector assumes an even more critical role in meeting social needs, we need to focus on maximizing our impacts.

Second, in times of uncertainty we need to be more strategic than ever. Here lies a paradox: the more uncertain the times, the more planning you need. But — and this is a great but — the old style of strategic planning is broken. A linear model of planning for the future and projecting deterministic outcomes just won’t work. Now, nothing is linear: strategic plans need to account for variability, different scenarios, and unintended consequences. It is about making sure that “the heart meets the business plan” and also that the plan has as much flexibility as the economy it’s embedded in. Values must remain constant, but the ways organizations aim to embody them need an ever-increasing fluidity.

Funders now have great power and — as Peter Parker would say — great responsibility. That demands making sure that every dollar is allocated strategically so as to make the biggest impact.

Third, strategy alone isn’t enough. The social-change sector isn’t a zero-sum game. In a new and unpredictable environment, an open flow of information and ideas that bring funders and practitioners to the same table is key to maximizing our collective impact. Where every dollar counts, we need to act collectively. We live in a networked world. From social change to technological development, networks allow for collective action, while allowing individual innovation and social entrepreneurship to thrive. Peer networks, fluid coalitions and ad-hoc alliances are effective and agile ways that our networked world offers us to tackle new challenges in a rapid manner.

The organized Jewish community we live in is a product of the early 20th century. It responded to different challenges and different realities than the ones we face now. The new normal is here, and it is real. For the global Jewish community, our choice is clear: do we seize the moment for collective action, and for a radical re-examination of our business models, or do we just brave another “crisis” until the next one hits?

This article was published in The New York Jewish Week.


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