Boston’s Jewish Federation Allows Donors to Have More Say Over Gifts

Jay Ruderman, head of his family’s foundation, and several of his relatives approached Boston’s Jewish federation two years ago for help in pursuing a new philanthropic goal for the family: providing aid to young adults with disabilities. Officials at Combined Jewish Philanthropies of Greater Boston didn’t take any action at first, they just listened very carefully.

Then, the federation swung into action. It reached out to Jewish Vocational Services, a group it had long supported that provides job training to adults. Now the donors’ money is helping the vocational charity serve a broader number of clients, giving teenagers and college-age students with disabilities access to training, internships, and jobs.

The Boston group is unusual in its willingness to collaborate with donors over where they want their money to go. As long as a project advances a Jewish cause and meets other basic criteria, donors can earmark their funds. And when donors suggest a project that the federation thinks might be popular with other supporters, it might even promote the idea in citywide fundraising pitches.

That approach is not typical in the Jewish-federation world, where for decades local leaders have chosen which social-services and other charities will benefit from the money raised in annual fundraising drives.

But other Jewish charities are now considering whether to follow Boston’s lead. Allowing donors more say in where their money goes is a key reason the Boston federation has been thriving in the slow economic recovery while those elsewhere continue to face a tough time. In Boston, donations rose more than 80 percent last year to $132-million, helping Combined Jewish Philanthropies rise to No. 162 on the Philanthropy 400, up from No. 256 last year. And in the fiscal year that wrapped up in June, giving surged another 60 percent. The federation is now raising twice as much as it did in 2007, before the recession took hold.

Shift in Approach

The Boston federation’s fundraising approach evolved under the leadership of Barry Shrage, its president for 25 years. He incorporated the earmarking idea into a 2007 plan for ways of improving contributions to the organization by more than incremental increases over the five years that followed.

The new approach did not insulate the Boston federation entirely from the bad economy. Donations to Combined Jewish Philanthropies fell by 21 percent in 2009 and 14 percent in 2010. But with the group’s new fundraising outlook, those losses have been more than erased.

Boston officials have worked especially hard to collaborate more with people who set up donor-advised funds, accounts that individuals and families set up at the federation to make charitable gifts at a later date. Because more and more donors went to use some of the money for secular causes, says David Strong, the federation’s chief financial officer, “we want to make them understand how we can work with them on all their philanthropy, not just Jewish causes.”

That attitude, along with recovery in the stock market, Mr. Strong says, has helped gifts to donor-advised funds to soar, to $76-million last year, and then more than double in fiscal 2012, to $159-million.

Gains Not Typical

Over all, few federations have achieved such impressive results. Compared with the Boston federation, almost every other Jewish federation on the Philanthropy 400 had a much smaller increase or reported a decline in total contributions last year.

At the Chicago Jewish federation, for example, donations were flat in 2011, declining by 1 percent, even though fundraisers had persuaded about 70 of its most generous donors to double their annual campaign gift.

Chicago takes an approach similar to that of other federations in urging its donors to make unrestricted donations. Mr. Schrage says that what bothers him about that long-held tradition at the federations is that it favors the same “entitled institutions” year after year and is “generally empty of vision and purpose.”

With little reason to donate more, he says, donors simply contribute a little more every year when they might give big increases if they were excited about a cause or asked to pay attention to new and pressing concerns.

While some federations have philosophical objections to letting donors have so much say, they also have a practical concern: Will people give as much in unrestricted money to annual campaigns if they are allowed to earmark a portion of their donations?

As it turns out, the Boston campaign hasn’t suffered from offering the option.

Its annual drive will raise $45.6-million this year. It’s one of the fastest-growing campaigns among federations in big cities, says Jerry Silverman, president of Jewish Federations of North America, an umbrella organization for 155 federations.

Over the past five years, donors who earmarked a portion of their gifts for particular causes increased their unrestricted gifts at twice the rate of other donors, the Boston federation found.

While other federations may be subject to criticism from donors or board members if they emulate Boston, Mr. Silverman says the federation is “on the leading edge of being able to recognize a shift in their market and being able to adapt, apply, and grow—and raise the meter on results.”

Other Jewish federations have taken notice and sent staff members to Boston to learn more about Combined Jewish Philanthropies’ internal operations and its relationships with donors, says Zamira Korff, senior vice president for development. “There is a sense of emotional and intellectual partnership” with donors, she says. “We are not just handing out a menu of giving opportunities.”

Serving as an example to others, she adds, can be both exhilarating and daunting. “It’s a high-wire act,” she says. “The more we succeed, the more pressure we have to keep the bar high.”