Moving into uncharted waters, the Jewish Community Federation of the East Bay has decided to let its donors steer the ship.
Proceeding with a major financial overhaul, the federation plans to scrap the “community chest” model and transform itself into a conduit for large-scale philanthropy.
In the new model, the federation will largely devote itself to the goals selected by major donors, in addition to its customary funding of local organizations and Jewish concerns in Israel and overseas.
In the traditional model, donations were put into a general fund and yearly allocations were given to various Jewish beneficiary agencies, including Jewish Family and Children’s Services of the East Bay and Jewish community centers.
The venerated allocations model has been scrapped as well. Instead, the federation will begin awarding agencies single and multi-year grants for programs that are deemed worthy. The shift is set to take effect on July 1, 2004.
The East Bay federation is the first in the nation to commit to this financial strategy.
Former Executive Vice President Ami Nahshon — who left to become CEO of the Abraham Fund in New York on June 1 — described the new economic model as a “hybrid” between a community foundation and a philanthropically endowed university.
While focusing largely on major philanthropic donations, Nahshon said that additional fund-raising personnel and an increased emphasis on donor choice should also make the federation more open and accessible to small- and moderate-scale donors. The federation, incidentally, will continue to hold an annual campaign.
The plan has been fully endorsed by the federation’s lay leadership and has been explained to Nahshon’s potential successors, according the federation’s incoming president Eileen Ruby. She noted that the federation would entertain a potential executive’s differing financial plan, however, but she “expects to move forward” with the current plan.
The move has been greeted with varying degrees of enthusiasm from other federations around the nation, and all eyes will be on the East Bay to see how things pan out.
“These ideas get mixed reviews in the federation community. There are those who are rightfully concerned about the ability to meet some of the core international obligations in Israel and with world Jewry that are heavily based on a successful unrestricted fund-raising effort,” said Nahshon.
“On the other hand, even a couple of large and successful East Coast federations are watching us with great interest and are looking at some of these kinds of changes as potential models.”
While many of the federation’s beneficiary agencies are reluctant to give up the steadiness of annual allocations, Nahshon characterized that system as a sinking ship.
“Every agency director I’ve spoken with would prefer to have guaranteed operating funding plus the opportunity to bid on additional program grants,” he said.
But “the new approach is actually a very powerful one for programs and agencies that have been suffering. For programs that deliver a service, meet a great need and have a compelling story to tell, we believe that will help promote their needs in a donor choice environment very successfully.”
Added Ruby: “Unrestricted fund-raising is shrinking. And unless we make some attempt to capitalize on individuals wanting to put money into things they care about, then services are going to go away anyway.”
Ruby noted that the federation has shifted from “tolerating” donor choice to “embracing” it.
The decision to retool the federation around “donor choice” was not an easy one, said Nahshon. He espoused the “Maimonidean idea of collective giving and anonymous giving.” But donor choice is a trend that cannot be ignored.
“Unrestricted giving is losing its market share in both the Jewish and general community across the country,” he said.
“So federation has a choice of accepting that reality and making it work for the community or to put on blinders and pretend the world is different. We do that at our own peril.”
The federation also will have to spend more time — and money — on fund-raising, and do a better job of “servicing its donors.” It will also make a greater attempt to match donors with struggling agencies, acting “as advocates and fund-raisers both,” in Nahshon’s words.
Asked about funding for low-profile projects that may not attract major donors, Ruby said, “We will continue to fund a program that isn’t ‘sexy’ if we think it’s doing good work.”
Discussing the changeover, Ruby added, “I’m not suggesting this is without risk. I’m also not suggesting it will be without some pain and discomfort in the short run.”
However, she remains optimistic. “This makes people nervous, but people will be watching to see if it succeeds. And we think it will succeed.”