Trends in Philanthropy

The Importance of Communal Living

2010-09-19T08:05:00.000-07:00

I have recently had the honor of becoming president of my synagogue. As such, I have the honor of addressing the congregation on Kol Nidre. Below is the much of the text of my speech that explains my feelings about the importance of synagogue life. Apologies for the length; thank you for indulging me.

Early celebrations of Yom Kippur were much different than today’s. When the Temple stood in Jerusalem, observance was far less participatory. On Yom Kippur, Jews would travel to the Temple where the High Priest would seek repentance from God on behalf of the entire community. The Priest would symbolically confer the sins of the Israelites onto a goat that would be released in the wilderness and then sacrifice another goat as a purification offering.

The High Priests and Temple were the focal points of Jewish observance throughout the First and Second Temple Periods. It was the destruction of the Second Temple that marked the end of this era of Jewish life and the creation of the Diaspora that opened the door for a new kind of Judaism.

Religious practice became more participatory with greater involvement from the individual. The synagogue emerged as an important institution and evolved to become the center of social and religious life. Historians attribute the popularity and portability of the synagogue to the continuity of the Jewish people. Without the synagogue, we would not be here today.

My own relationship with synagogues started at birth. My parents were avid temple goers and the synagogue was the center of not just their religious life, but their social life as well. By age 6 or so, we were living in South Windsor, CT, a small suburb east of Hartford. The town was close to my father’s work, had a decent public school system and a small, but active, Reform synagogue.

In my family, regular attendance at Shabbat services was mandatory. Being that this is Yom Kippur, a confession: I did not always appreciate the joys of going to synagogue. Often, on Friday afternoons, I would complain of mysterious ailments in an effort to be left home. “Friday Night Fever” was my parents’ diagnosis, as they pushed me into the car. However, it did not take long for me to memorize the words, both English and Hebrew, of nearly every Shabbat evening service in the Gates of Prayer. My parents’ faces would be marked by a combination of horror and pride as I would randomly quote prayers, responsive readings or meditations at inappropriate times.

As I started to look ahead to my Bat Mitzvah, I decided that if I was going to spend so much time in synagogue, I might as well make the most of it. I may have known the words in the prayer book, but it was time to learn the meanings. Not just of the prayers, but also of the ritual and practices that were associated with Judaism. It was time to stop reciting and start participating.

Through religious school studies, combined with experiences at Camp Eisner, a Reform Jewish summer camp, I began to develop my own relationship with God and an appreciation for ritual and observance.

I was also absorbing the bigger picture. Judaism was more than ritual and learning. It was about community and, in my town with a small Jewish population, the center of this community was our synagogue. Our group of 100 families celebrated every simcha together. We weighed in on political issues like prayer in our public schools. We adopted a family of Russian Jews and supported them until they could sustain themselves. We walked for Israel and raised funds to support Jewish causes.

And, we came together in times of sadness as well. My own relationship and reliance on the synagogue community was sealed when I was nearly 17 and my father was diagnosed with cancer. While he was ill, the parade of visitors, study partners and friends assured us that we were not alone in this struggle. The day he was diagnosed was the last day anyone in my home prepared a meal for almost 18 months. In the 6 months he was treated to nearly a year after his death, there was always dinner waiting for us on our door step, organized, cooked and delivered by someone from our synagogue.

While that entire period was incredibly formative, it was all those leading up to it that enabled me to survive that experience. At a time when I could have easily turned from God, I was fortunate to have a history and heritage to support me. Embracing what were by then familiar Jewish traditions sustained us all. My father especially, who for the first time in decades was released from work obligations, had the time to study and explore religion and God as never before. The strength and comfort he drew from his faith and community enabled him to come to terms with his disease and set a powerful example.

Modern medical advancements were not enough to save my father from cancer, but primitive thousand year-old Jewish practices and traditions saved the rest of our family. Our synagogue community guided us through months of confusion, loss and pain. And it is that foundation and those feelings have guided and sustained me since.

My story of my relationship to synagogue is likely not that all that different from the ones each of you holds in your own hearts. It often starts with a particular need or an event—God willing, a happy one—but an event that is meaningful and draws you to a synagogue. Maybe even this synagogue.

Perhaps you were seeking a Shabbat service, a rabbi to perform a wedding or a religious school for your child. Maybe you were in the process of choosing Judaism or you read about an adult education class of interest. Or perhaps it was for help in your time of need – a shiva minyan, a counseling session, a funeral.

And we, Rodeph Sholom, were able to fulfill that need. And the way we did it –that sermon, that prayer, that class or even committee meeting, touched you and encouraged you to stay and try something else. And for that, I am grateful.

Because the reality is, our community is only as strong as the people who comprise it. And our ability to help each other, to provide that ritual, education, philanthropic or programmatic experience is 100% dependent on all of us showing a willingness to not only find what we are seeking but also to help others meet their own needs.

There are many who will point to changing demographics, declining percentages of affiliated Jews and growing numbers of individual and even virtual ritual opportunities as proof of the declining relevance of the synagogue.

I could not disagree more. In a time where the world around us is changing rapidly, when technology evolves faster than we can read the accompanying directions, when uncertainty is the only thing that is certain, the presence of a synagogue community—of this synagogue community—can be a lighthouse in an otherwise stormy sea.

This congregation provides an unbroken link between our past and our future. For nearly 170 years, Rodeph Sholom has flourished through its commitment to the deeds on which the entire world stands—study, prayer and acts of loving kindness. Like a three-legged stool, you need all for balance. If you remove the communal aspect of our lives, you are taking away a central obligation of Judaism. We are not just individuals, we are part of a larger people who are ultimately responsible for each other.

Each day, Rodeph Sholom lives that promise. Our buildings may be large, our list of members may seem long, but we are no different from that synagogue of my childhood—we are a network of small, interconnected groups that need and support each other. The examples are numerous: our Congregation Based Community Organizing initiative through which we discovered an overwhelming demand for ritual experiences for families with special needs, the first of which was held last week on Rosh HaShannah, our Young Families Group, Our Young Professionals Group, our Empty Nesters. Those who study torah, participate in Mitzvah Day. Or the group who took care of Davida Bernstein. An elderly congregant with no family in New York City, in her declining years, Davida was never alone. There was someone from Rodeph Sholom to take her to doctors’ appointments, provide meals, or visit. And it was our own Rabbi Levine who took that early morning call from the doctor and later led the congregation in saying Kaddish.

This is Rodeph Sholom—and I am honored and proud to be a part of it. Here, you can meet your own needs, be they are spiritual, educational, philanthropic or communal. But you can, and must, help others meet theirs as well. Be a part of our community, not just because it will enhance and enrich your own life—and I firmly believe it will—but also because it enable the same for others. By attending services, classes or events you are creating opportunities for others to do the same; a sacred and selfless act. And frankly, our world can always use a few more of those.

And yes, your financial support is also important, as well. The ritual services we offer, the religious school, the b’nei mitzvah program, the Shabbat dinners, the adult education, the youth programming, the hundreds of activities that take place here have always been open to everyone regardless of ability to pay. It is part of the very fabric of who we are as Jews and as Congregation Rodeph Sholom. We are committed to keeping that promise and only with your continued generosity can we make sure that we never have to break that sacred vow.

Each of us sitting here tonight has found something in this holy place that touches us; please join me in making sure that we can create that same opportunity for future generations. I look forward to working with you in the coming years to ensure that Rodeph Sholom continues to grow and thrive. On behalf of the entire congregation, thank you for your dedication and commitment.

I (Heart) New York

2010-08-05T08:18:00.000-07:00

Yesterday was a big day for New Yorkers as two of our own were recognized for outstanding accomplishments. I am not talking about Alex Rodriguez who finally hit his 600th home run--though now Yankee fans around the world can breath a sigh of relief and concentrate on the pennant race--but about two others who have both set tremendous examples.

The first is our very own Mayor--Michael Bloomberg. About six weeks ago, Bill and Melinda Gates, together with Warren Buffet, kicked off what could be the most world changing philanthropic act ever. News of a clandestine dinner hosted by this trio leaked out. Details revealed that in between courses, the guests, selected for their multi-billionaire status, were encouraged to take the “Giving Pledge” --a vow to donate at least half their wealth to charity.

These three philanthropists are rumored to have personally called at least 80 of the Forbes 400 richest Americans. To date, at least 40 have committed and Mayor Bloomberg was one of the first to add his name to the list and publicly declare his intentions. Thank you, sir. You honor our city with your leadership in this field. As an American, I am doubly proud to see the commitment my fellow citizens continue to hold for improving the world.

The Giving Pledge web site contains the names and stories of all who have gone public with their commitments. I encourage you to read them. Their stories are moving and inspirational.

The second New Yorker is someone you probably do not know unless you read today’s Daily News or New York Post--Jorge Muñoz, of Queens. Yesterday, President Obama gave out the 2010 Presidential Citizen Medals to 13 Americans. This award is given to those Americans "who have performed exemplary deeds of service for their country or fellow citizens"--whose commitments to improving their communities are truly outstanding. This is another list you should read.

Jorge Muñoz, a school bus driver from Queens, created a mobile soup kitchen. Every night, he would drive around and deliver hot meals to homeless people that would otherwise have gone hungry. Here is what President Obama said about him:

"When Jorge Muñoz saw homeless men gathered on a street corner with nothing to eat, he could have rolled up his window and driven away. Instead, he came home from his job as a school bus driver and started cooking hot meals for anyone who was hungry. These days, the 'Angel of Queens' feeds over 100 people every night, rain or shine. And Jorge says, 'You have to see their smile. That’s what I get paid.'"

You don’t need to be a billionaire to change the world.

It’s Not What You Spend, But How You Spend It.

2010-07-12T13:15:00.000-07:00

Israel’s Finance Ministry announced that increases in the country’s Education budget would not keep pace with increases in the national budget.

A budget reflects the priorities of the organization allocating funds; by not increasing the education budget, the Israeli government is making a clear statement about its view on the importance of educating its children vs. other programs and initiatives.

That said, I can’t say that I disagree with the Finance Minister on this particular point. The education budget has increased steadily over the past two decades while student performance has continued to decline and the schools themselves continue to decay. It not always about what you spend, but how you spend it.

It is time for the Israeli government to get serious about education reform. It is a crisis that must be addressed immediately. Improve the curriculum, provide training and development for teachers, upgrade the facilities. Until then, thousands of children will continue to be left behind, ignored by their government that will be forced to support an under-educated population.

Where Have All the Dollars Gone?

2009-03-23T14:53:00.000-07:00

In the past few weeks, public opinion against Wall Street and anyone who has ever worked in the financial services industry has clearly reached an all-time low. Congress is seeking to enact retroactive taxes that could impact thousands of people, and AIG employees are receiving regular death threats.

This wave of anger and desire for punishment is overlooking the critical philanthropic role that many financial services professionals play in our society. Yes, many Wall Street bankers, traders, and their colleagues at hedge funds and private equity firms may earn salaries well above the national average. But they also contribute a huge percentage of that wealth to charity. Some firms actually mandate percentages of income that senior executives are required to donate.

New York City is home to thousands of organizations that provide food, shelter, clothing, education, job training, access to the arts, counseling, medical services--the list goes on and on. These programs help not just New Yorkers, but people in need around the country and around the globe. Moreover, these organizations also employ approximately 14% of NYC’s workforce (source: New York City Economic Development Corporation).

The impact the loss of these donor dollars will have on the not-for-profit community is already being felt and will only worsen over time. Daily, I learn of organizations--many of which have been around for decades--that are cutting programs and laying off staff. In the next few years, literally hundreds of millions of philanthropic dollars will disappear, perhaps never to be seen again.

This tragedy must be recognized and addressed. The recession will only increase the demand for the types of services these organizations provide. Philanthropically-minded individuals who now face salary caps, higher taxes and restrictions on charitable deductions are going to be less incentivized--and less able--to help the organizations that have relied on them in the past.

Of course, I am not an unbiased source. I live in New York and--as even our Mayor has admitted--this city’s economy is dependent on the financial services industry. I also run a not-for-profit organization that was founded by a handful of young Wall Street professionals who used their first bonuses to help others. Yet I see every day the importance of Wall Street, not only to our city, but also to our country and our world—and this is a message that seems to be getting lost in the press. We can’t blame this mess on an entire profession. We need to move forward. America has always been a very charitable society--let’s not change that.

Don't Be Such a Stranger

2008-11-25T15:09:00.000-08:00

A recent study examining giving patterns of wealthy donors noted that 60% of households that stopped giving to a specific charity did so because they no longer felt connected to the organization.

This lesson is important for all nonprofit organizations, particularly in these difficult times. Economic circumstances may result in declined giving, even from long time supporters, but it is more important than ever to maintain relationships with donors.

Charity executives need to be turning up the communications--emails, letters, reports--to ensure that donors continue to feel connected to the organization and understand that their support is making a difference. Donor cultivation is always important, but in this economy it becomes even more critical to let your supporters know how much you appreciate them.

"The Times They are a-Changin'" (Bob Dylan)

2008-10-08T09:20:00.000-07:00

Just when you think the economic news can’t get any worse, it does. Daily stock market declines, a credit crisis, and talk of a long lasting, international recession crowd the headlines and broadcasts. Nearly everyone is worried about their own jobs and the financial health of their companies.

For those of us in the not-for-profit world, the stress is even greater. Our success is directly dependent on the income of others; donations come from disposable incomes. Despite the best intentions and the philanthropic nature of Americans, I am uncomfortably certain that there will be a decline in charitable giving this year.

So how should nonprofit organizations respond? If you don’t have the money to fund your programs, the answer is painful yet simple--you must cut. But if you do have enough capital to fund your current activities, what should you do? Cut now to save for next year? Continue to spend normally while expecting to substantially reduce budgets in the future? Nothing is black and white, and there is no one right answer. Here are a few suggestions to help not-for-profit executives weather the current economic climate:

Continue to review budgets and trim anything that is unnecessary. Donors will want to see that you are responding to the economy. They’re cutting back, their businesses are cutting back, and you should too.

Continue to fundraise--if you don’t ask for money, you won’t get it. Don’t be surprised if even long time donors turn you down or decrease their giving, but don’t give up. You must keep asking.

Involve your board in the discussion. Reach out to key supporters for their opinions. Have them help you identify different options.

Ask board members for their own personal financial commitments. Now is the time for a board to show leadership. If they can’t commit during these times, you can’t expect others to do so.

Develop an action plan that includes future decision-making milestones.

Communicate with your supporters. Let your community know how the economic uncertainty will (or will not) impact your organization and the demand for your services. Focus on donor stewardship so that when the market does come back, your support base will too.

There may be some not-for-profit organizations--like their for-profit cousins--that do not survive the current downswing. This is an unfortunate reality. However, if your services are in demand, your programs effective and your operations sound, you will get through this period. It may involve hard decisions and unpleasant actions, but the times have to change back at some point--don’t they?

"These are the times that try men’s souls." (Thomas Paine, 1776)

2008-09-18T11:04:00.000-07:00

The front page of today’s Wall Street Journal included a headline that read “Worst Crisis Since ‘30s, With No End in Sight.” It is the latter half of this sentence that is particularly frightening.

The current level of economic uncertainty and turmoil is unprecedented and leaves many not-for-profit organizations fearing for their futures and unsure as to what the appropriate near term actions may be.

Many of my colleagues—particularly those who work for Jewish organizations that traditionally solicit funds now, in advance of the Jewish High Holy Days—are wondering if it is still appropriate to ask for money during a time when their donors may be facing personal financial crises. My answer to them is yes. You must ask. You may change the way you ask and you should understand when even longtime supporters say no, but you must continue to ask.

In the coming months, the role not-for-profit organizations play will increase in importance. Demand for programs that address basic socioeconomic needs like food, health and education will rise exponentially. The ripple from the financial market meltdown will soon be widespread, unemployment across all sectors will increase and the need for assistance will grow. A shrinking tax base will reduce government funds available, and not-for-profit organizations will be called upon to fulfill critical needs in communities across the country and around the globe.

Organizations must keep up their development efforts in order to meet this demand. No one said the work was easy, but we all agree that it must get done.

Fight Fiercely Harvard

2008-06-11T17:24:00.000-07:00

Philanthropy News Digest: Alumni Group Presses Harvard to Do More With Its Endowment

NY Times: Alumni Group Tries to Elicit Social Action From Harvard

Much has been made in the press lately about a group of Harvard alumni who are pressuring the university to use some of the estimated $35 billion Harvard endowment to fund programs beyond Harvard. In particular, the articles tell the story of one alumna who asked her classmates to redirect their reunion contributions to struggling colleges in Africa and requested Harvard’s support in this process.

I salute the efforts of alumna Paula Tavrow to help African colleges and commend her for encouraging friends and contacts to support this cause. I also understand the frustration many alumni may feel (full disclosure: I am a Harvard alumna) when being solicited for donations to help grow an endowment that is already larger than the GNP of many countries. However, I understand Harvard’s position and the university’s reluctance to officially disperse funding to outside organizations.

First of all, while not intimately familiar with the mission of the Harvard endowment, I must assume that it grew out of donations from alumni who expected the money would be used to directly benefit Harvard. While giving to colleges elsewhere in the world is commendable and needed, such an act could alienate many longtime Harvard supporters. Plus, it just isn’t nice. No matter how noble the cause, you can’t take money that was given for one purpose and use it for another.

Second, there is no good argument in favor of Harvard sharing alumni information that was given with the expectation of privacy. Tavrow’s group expresses frustration that Harvard refuses to share its alumni contact list. Good for Harvard—fight on! When I provide Harvard with my personal information, it is under the assumption that it will not be shared with outside organizations who might want to solicit me for funding. I’m sorry, but “the ends justify the means” argument is not working for me here. With all the social networking sites and online resources available, there are plenty of other ways to reach fellow Harvard alumni who want to be found.

Despite these defenses, I am not letting Harvard off the hook so easily. Harvard has what I term CTWM—“Change The World Money.” CTWM is money that when deployed correctly can have a real impact. I will reserve my general thoughts on CTWM and how it is being used by the institutions and individuals who have it for another blog.

There are endless ways Harvard could harness its vast resources to change the world. Harvard could create programs that teach alumni about effective philanthropy. It could educate its students about world problems and require service obligations for students to get hands on experience. Harvard could create more scholarships for students from underdeveloped countries, or initiate programs that will help these students pave a path toward higher education. It could implement professional development and training programs for university administrators, as well as professors from other universities. Harvard could use its endowment to subsidize the salaries of graduates who choose public service or not-for-profit careers. Many these ideas may already be in motion (disclaimer #2: I don’t always read the alumni magazine), and if so—my apologies.

Harvard has a worldwide reputation as being a leading academic and research institution. The superlatives and “ests” (biggest, largest, best) that are used to describe the university’s achievements, qualifications, awards, etc. are endless. Harvard now has the opportunity—and I would argue the obligation—to leverage its capabilities to find new ways for the university and its community to change the world. I look forward to watching the progress.

If You're Happy and You Know It Clap Your Hands

2008-03-26T11:54:00.000-07:00

Science Magazine has just published a study that documents something those of us in the philanthropy business have known for years—people who donate to charities or splurge on gifts for others are happier than those who do not. While most of those surveyed assumed they would be happier if they spent money on themselves, the opposite proved to be true. It’s worth keeping the results of this study in mind over the next few weeks as you tally up your 2007 charitable giving for your taxes, or find a crumpled $20 bill in your coat pocket—or even as you deposit your 2008 “economic stimulus” tax rebate.

Paint by Numbers

2008-03-25T12:03:00.000-07:00

Ellison Research has just published a study that reveals 62% of Americans believe charities are spending too much money on overhead. Those polled indicated that they perceive most charities as spending an average of 36 cents per dollar on overhead vs. the 22 cents these same people believe charities ought to be spending. However, according to The Chronicle of Philanthropy’s comments on the study, most watchdog groups report that well-run charities often spend between 30 and 40% on such costs.

The Chronicle of Philanthropy discusses the study in detail and points out the obvious issue for charities: donors, many of whom have no idea how to run a not-for-profit organization, may be less likely to donate if they think the charity spends too much on overhead.

There is another point that should be noted: donors are now demanding more and more accountability from organizations. Gone are the days when philanthropists were satisfied to write checks and assume that the programs they funded were working; they now seek measurable results, often by way of demonstrated improvement and side-by-side comparisons with other organizations. Donors have a right, and--in my opinion--an obligation, to seek detailed information about how their money is being spent. However, they also must understand that there is a cost to retrieving, preparing and analyzing this data. You can’t demand infrastructure and not expect to pay for it.

Donors, charity “watchdogs,” and non-profit managers must understand that there is no “one size fits all” approach. The percentage that an organization spends on overhead may vary from year to year depending on capital campaigns and projects, one time events, currency fluctuations or other unusual situations. While the numbers are important, it’s the story behind the numbers that paints the full picture.

Physician, Heal Thyself

2008-01-16T11:31:00.000-08:00

A few weeks ago I wrote about several new organizations that seek to provide information on charities to help donors make decisions. One of the organizations, GiveWell, has been
in the press lately because its two founders—one of whom served as Executive Director—promoted GiveWell on various Web sites while posing as neutral third party commenters.

In response to this discovery, the board of GiveWell demoted the Executive Director and fined both him and his co-founder $5,000 of their $65,000 salaries. While I realize that everyone makes mistakes, I am shocked that an organization whose mission is to reveal “the truth” about charities would accept such practices from its management. Perhaps the “slap on the wrist” each received for this behavior would be appropriate in the hedge fund world, but it should be unacceptable in the philanthropic one.

If the founders would go to such extremes to promote their organization—which had recently been featured on CNBC and mentioned in both the Wall Street Journal and New York Times—how can their rating system and opinion of the operations of other organizations be taken seriously? The GiveWell founders have deliberately misled the very people they claim to help. Instead of pointing out the problems with other rating systems, they should be taking a hard look at their own practices.

"I Can See for Miles and Miles" (The Who)

2007-12-21T11:03:00.000-08:00

The end of the year is a popular time for predictions. In the past few weeks, I have read articles predicting 2008’s top performing stocks, workplace trends, fashion influences, World Series winner, election results and celebrity divorces--just to name a few.

Never one to be left out, I am providing my top 5 predictions for trends in philanthropy in 2008.

1. Ever-increasing focus on accountability and transparency
Donors want to know how their money is being spent and what it is accomplishing. The most successful not-for-profits will continue to create new ways to share information, document success and measure their effectiveness. As a result, donors to these organizations will be more committed and engaged, and the organizations themselves will gain the resources to expand.

2. Application of business management principles
Donors who derive their wealth (and ability to donate) from business success expect the organizations they support to adhere to certain basic business principles. Charities that adapt these principles to their operations will thrive. These organizations will learn to effectively hire and retain strong staff members, while letting go of those who cannot perform. They will become more focused, create long term plans and better understand their markets. While not-for-profits are meant to address pressing societal issues, they still need to be budget conscious—“dollars in” must be greater than or equal to “dollars out.”

3. Increased partnerships
With more than 1.4 million charities competing for the market share, not-for-profit partnerships make sense. An increase in this practice will allow organizations to focus on their core competences while providing more services to their target audiences. Partnerships will also allow for increased reach without duplication of overhead. It works for business; it can work for philanthropy as well.

4. “Hands-on” philanthropy
The days of a donor writing a blank check are long gone. Today’s philanthropists are far more sophisticated. They not only feel passion for an organization’s mission, but they also want to be involved in shaping it and contributing to its successful execution. The most effective charities will learn how to leverage this trend to meet the needs of their supporters without sacrificing overall focus.

5. Shortage of quality professionals
Each of the many new not-for-profits being founded every month requires quality management to successfully translate vision into reality. At the same time, experienced leadership in established organizations is aging toward retirement. The shortage of high quality not-for-profit leaders will continue in the short term. Organizations should plan ahead—retain strong employees, continue to cultivate and train from within, and don’t be afraid to think outside of the box when it comes to hiring new staff. People with diverse career experience can bring a new set of talent to the fund-raising profession.

Who’s Watching the Watchers?

2007-12-20T14:58:00.000-08:00

There has been a recent surge in the number of organizations and individuals providing services designed to help potential philanthropists evaluate charities. A recent article in the New York Times discusses the new GiveWell site, which is already generating controversy for its detailed evaluation and criticism of existing charity rating methodologies.

First of all, I applaud anyone who decides to dedicate their life to helping other people. Whether it’s the guys who started GiveWell or more established organizations like Charity Navigator, any sincere attempt to improve the way society takes care of its most vulnerable citizens is important and impactful.

That said, any attempt to create a universal ranking system for the approximately 1.4million 501c3 organizations operating in the United States is destined to fall short. A quick review of general statistics such as the ratio of program spending to fundraising expenses, the percentage of repeat donors, or the number of people served can’t even begin to tell the whole story of an individual charity’s impact. On the other hand, providing specific details and complex analysis can detract from organizational effectiveness, particularly for smaller charities, by diverting staff time and resources away from programs.

The answer, of course, lies somewhere in between. Top level analysis is important, but does not paint the clearest picture. Smart donors will need to ask more specific questions about documented results, long term planning and management focus. Getting advice and analysis from a third party is not a bad idea, but donors need to understand how the methodology and ratings used pertain to a specific charity. Getting the highest rating may mean that an organization excels at achieving its mission—-or it may mean that it excels at being rated.

Quantity vs. Quality

2007-11-13T09:15:00.000-08:00

Neal Sandler's article "The Crisis in Israel's Classrooms" in the November 19 issue of Business Week addresses the ongoing decline of Israel's education system, a crisis that has been brewing for decades. However, like many others, Mr. Sandler is quick to erroneously blame budget cuts for the "breakdown in [the] financially strapped school system." While there have been cuts, Israel's current level of education spending at 8.3% of GDP is far greater as a percentage than that of countries like Japan, South Korea, Finland and Sweden that continuously rank at the top of international education surveys, including the one referenced in this article.

As any good Businessweek reader knows, it is not what you spend, but how you spend it. And throwing more money at a broken system isn’t a solution. For decades, Israel's education system has been managed poorly—if at all—and as a result, many of the country's citizens are woefully undereducated with few tools to help them compete in a knowledge-driven, global economy. The societal impact of this crisis has been felt for years, but perhaps now that a financial motivating factor has brought it to the world's attention, Israel will give its education system the overhaul it needs and its citizens deserve.

In the meantime, not-for-profit organizations, like the one I run, must continue working from the outside to improve the system. Until Israel is willing and able to undertake major educational reform, the work of external, well-managed entities is a critical supplement to the meager offerings of the country’s own system.

School's Out Forever?

2007-10-31T12:07:00.000-07:00

Secondary school teachers—junior high and high school—have been on strike in Israel for 18 days. For 18 days, students have not attended classes. Buildings may remain open, but there is no compelling reason for students to enter them.

Strikes are common in Israel across many industries. However, most strikes are resolved within a day or two. Parties are driven to the bargaining table, and to compromise, by the outcry from those parts of the country impacted by a lack of airport baggage handlers, garbage collectors, utility repair people, social security staff, etc.

As someone observing from the United States, I am struck by the lack of public condemnation of the strike and the inability of both parties to come to an agreement. News of the strike is often buried on Israeli news Web sites, and I have read little of parent protests or demands that both sides meet to get the children back in school and provide them with the education they need and deserve. It begs the question of whether getting one’s luggage within an hour of landing is more important than educating a country’s future leaders?

Today I was speaking about the strike with a colleague at a US based foundation that also funds supplemental education in Israel. She mentioned how troubled she was by the lack of organized response from the many NGOs that spend hundreds of millions of dollars each year to supplement the inadequate Israeli education system. Each day children are out of school, our job becomes that much more critical and difficult. We need the support of the schools, the teachers, the government and the parents. How can we help a system that can not muster the energy or excitement to help itself?

She also told me something even more troubling. Many of the children in disadvantaged communities have used this time off to find jobs that will help supplement their household income. Getting these kids back into school now that their families depend on the extra income may be difficult once the strike is over.

I don’t know enough about Israeli politics and unions to say who is right or wrong in this case, and while those in charge continue to debate the issue, I would encourage them to focus on the real matter at hand—that no matter what the final agreement reached may be, the children are the ones who have been coming in last.

For further commentary on the situation, I offer the links below:

Ha'aretz: Story of a 12th Grade Student

Jerusalem Post: Government Not Taking the Strike Seriously

Ha'aretz: One Teacher's Story

How Big is Your Pond?

2007-10-29T07:59:00.000-07:00

The call came just the other night. It was 8:15 and I had just finished putting my kids to bed. “Hello, is Karen there?” “This is she.” “Hi, Karen, my name is Jane Smith and I am a student at Harvard College. I am calling you about the Harvard College Fund.”

Ah, the Harvard College Fund. In August of 2007, the Harvard endowment was reported to have reached $34.9 billion. If it only earned 5% simple interest per year--which, given the salaries of those running the endowment seems like a low figure--that would still provide $1.7 billion a year of interest income. There are at least 6 countries just in Africa with GDPs lower than that number. And while Harvard’s endowment is huge, it is not alone; there are many other universities and organizations with bank account balances over a hundred million dollars.

People often ask me why they should donate to such an organization when the amount they can afford to give will have relatively no impact. Why be a small fish in an enormous pond when you can be a huge fish--or even a whale--in a small pond by donating the same amount? A gift that may seem insignificant to a mega-charity can literally change the world for a smaller organization.

Donating to a large organization to which you feel a connection or whose mission you support is essential. Even if your donation is small, you are signaling that you are part of the community and are taking responsibility for and ownership of the organization’s actions. This is an important message.

However, in a small organization you can have a greater impact and help shape and determine the future of the charity. If you want to get involved and become a leader at an organization, the price of entry is likely much less at a small charity that at a big one.

While being a big fish has its advantages, being the biggest can have its drawbacks. Some small organizations are not equipped to handle one donation that is significantly larger than any other. The organization might not be prepared to scale up operations or have a plan to efficiently deploy additional resources. Additionally, an organization should never become too dependent on a single donor, nor does the donor want to feel too much responsibility for an organization’s ongoing success.

That said, don’t be afraid of being that first whale! Work with the organization to develop a plan to get others to reach the same level. Make your gift a “challenge” grant and set an example for others. If you can take this kind of leadership position, then you can help your favorite charity grow and expand programming, which is ultimately the goal of any donation.

"If I would be in this business for business, I wouldn't be in this business." (Sol Hurok)

2007-10-02T12:16:00.000-07:00

A recent article once again discussed the shortage of quality managers for not-for-profit organizations. In response to this growing market need, many leading MBA programs are developing specific programs to encourage and prepare students for such a career path.

Such programs can be a boon for the industry, not so much because of the skills they could teach, but because of the credibility they bring to the profession among MBA students who might have thought about philanthropy only as a hobby to be started post-IPO.

Business skills and acumen are needed in not-for-profit organizations. Not for profit leaders must be able to develop a strategic plan, prepare and manage a budget, and hire, motivate and retain employees. Donors recognize the importance of a highly-skilled manager and more and more are drawn to organizations with business savvy leadership. However, a successful manager must also believe in the cause, and be willing to give more of him or herself and, sometimes get a little less (salary, recognition, acknowledgement, credit) in return. As I tell others who are considering the transition from corporate America to not-for-profit, “it’s just like running a business but you are not running a business.”

The Most Valuable Commodity is Information (Gordon Gecko, “Wall Street”)

2007-09-20T08:07:00.000-07:00

In today’s world, the need for charity presents itself in various ways throughout daily life. The decision of whether or not to give should not be a difficult one and, thankfully, most Americans agree with me. According to a Wall Street Journal/Harris Interactive Survey, in 2006, nearly 83% of American adults contributed to a charity.

The harder decision is where to give. Many people spend more far more time evaluating the effectiveness of their new insulated lunch box than their philanthropic dollars. The lunch box will last only the school year, but the charity donation has the potential to change the world.

Do you really know the organizations to which you give? Do you know how much they spend on programs and services versus overhead and fundraising? (it should be 75 - 80% on programming for most organizations) How accountable are they for their activities? How do they report success and failure? What are the challenges they are facing and how will they meet them? The answers to all these questions should be communicated in an organization’s annual report or Web site. Knowing them will help you make sure you are getting the most impact for your dollars.

If you are a professional on the receiving end of these donations, you have the obligation to encourage this learning. Look around your organization. How is it spending the money donated by its supporters? Is information readily available to donors or are you and other managers afraid of donor scrutiny? Transparency is an operating imperative for today’s not-for-profit organizations. Your donors demand it from their financial investments; you should readily provide it for their philanthropic ones. Raising the standards for reporting and operating will help those organizations that are performing well continue to soar and encourage others to make the improvements needed have real impact.

It's About Sense, Not Cents

2007-09-19T08:52:00.001-07:00

“No Strings Attached,” an article in the September 20, 2007 Chronicle of Philanthropy discusses the emerging trend of large, unrestricted donations and the positive impact these donations have on organizations.

The article emphasizes importance of unrestricted gifts and their advantages over restricted gifts. I agree that unrestricted gifts do provide many benefits to an organization—they offer flexibility as priorities can shift and needs change over time. Additionally, an unrestricted gift enables the management of the organization, those most knowledgeable of the needs and programs, to drive the funding decisions, not the donor.

However, this article overlooks the upside that can come with a restricted donation. A restricted gift may allow an organization to start a new program without allocating funds away from existing successful ones. Restricted gifts can involve donors who are attracted to the overall mission and capability of the organization, but want to support only a specific program.

Organizations who feel constrained by a restricted donation may not have thought through the implications of accepting such a gift. Organizations should have a 3-5 year operating plan identifying areas that will need funding—whether it is a specific project or general operations. This plan should be shared with donors so that all parties can work in partnership to achieve the same goals. As the conversation between the donor and the organization unfolds, the donor should be educated as to the impact his or her leadership gift can have on the future success and sustainability of a program—and the entire organization. Such a process will ensure that there are no “surprises” and that both the philanthropist and the organization can maximize the benefits of the donation.