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Donors, Awaken

Jewish nonprofit organizations face financial collapse

Felicia Herman
March 26, 2020

“We are at risk for losing a significant part of the infrastructure of Jewish life in America.”

It was that sentence, uttered last week by one of the core leaders of the Jewish nonprofit communal system, that fundamentally changed my understanding of the COVID-19 crisis. You don’t have to care about Jewish organizations in particular to be worried about this—because unfortunately, this point holds true across the nonprofit sector in America and beyond.

My lane is philanthropy and the nonprofit sector, and after a week of conversations with funders and grant recipients alike, I see a speeding 18-wheeler about to slam into this lane, coming the wrong direction, obliterating just about everything in its path. Let me be very clear: I’m not talking at all about the virus itself. I am talking about the financial collapse of the nonprofit sector and the disappearance of the very organizations that remind us of our highest humanitarian and communal values. Organizations that inspire, educate, connect, nurture, and provide care for all of us, including (but not only) the most vulnerable.

I run a small foundation in New York City focused on supporting cutting-edge Jewish and Israeli nonprofits. Natan is a giving circle: Our funding comes from our members, who aggregate their contributions and collectively make grant decisions. We are also a venture philanthropy, funding new and emerging ideas addressing key challenges in Israel and in Jewish communities around the world. This gives us a unique vantage point in the philanthropic ecosystem: We’re focused on engaging “everyday givers” in thoughtful, intentional philanthropy on the one hand, and on funding nonprofit innovation on the other.

The first email from a grant recipient asking for emergency funding came in last week; since then we’ve seen dozens. Our conversations with our grantees and with our colleagues across the Jewish philanthropic sector over the past week or so have been, to be frank, terrifying.

I’m not sure that everyday, individual givers—who account for 68% of giving to American nonprofits, and who interact with and benefit from institutions that are the bedrock of our communities and that enrich all of our lives—understand that we’re currently at risk for losing much of what we hold near and dear in our communal lives.

The almost overnight shutdown of all of our institutions means no earned revenue for many organizations that rely on it—no ticket sales, no registration fees, no memberships. (Cultural institutions in New York—the first to lose revenue from closed facilities—are already experiencing widespread layoffs.) Then there are the currently catastrophic losses in the financial markets, which are wreaking havoc on the endowments of the few nonprofits large enough to have them, as well as on the wealth of many prospective donors, including foundations. And finally, if widespread unemployment comes to America and it persists, then we will see Depression-level drop-offs in memberships, fees, and donations, with a concomitant uptick in the need for social services and relief of all kinds.

In the past few weeks, we’ve come to understand more about how small businesses and restaurants work and the ways that many of them are at serious risk if they stay closed; and we’ve watched the airlines, cruise companies, and the hospitality industry implode and begin to furlough thousands. But how many of us understand how nonprofits work?

I’ll tell you: Most are hand to mouth. Most don’t have endowments. Few have cash reserves. (“You mean you didn’t spend everything we gave you?” ask major donors, disincentivizing organizations from putting reserves away.) Some operate in the red each year; even more just scrape by. Almost all have cash flow problems. (This is why, when you make a donation online, many organizations ask you to make recurring monthly donations—to try to steady their cash flow.)

What happens to organizations that must stop operating at the same time that their donor base can’t or won’t give? They go broke, and very quickly. They lay off workers and they close, sometimes forever. They take with them the heart and soul of our communities.

Donors of all sizes, large and small, need to awaken to this reality. This means you—no matter how much you give or to what. Have the emergency fundraising appeals started to trickle into your email inbox? The little theater in town, the food bank, the church, the community center? These are but the first tiny waves in a tsunami that all of us must understand is coming.

Even as each of us struggles with our own personal, family, and professional challenges—including, in many cases, potential employment and loss of personal investments—we need to be thinking about how much we can spare to try to preserve the communal organizations that we and those before us have built, generation after generation, and the new organizations that continually come to the fore to fill gaps and adapt to new challenges and opportunities.

All of the money in all of the government bailouts in the world—even if they include nonprofit institutions and workers, which not all of them will (despite the lobbying efforts of nonprofit organizations)—all of that money won’t be enough to stop the financial collapse of the sector. All of the grant and loan pools now being created by major foundations and donors—incredibly generous and inspiring and collaborative and strategic as they are—even that won’t be enough. The devastation will be too widespread and too deep.

For days, I’ve been on calls with CEOs of major Jewish foundations and federations (the umbrella organizations that, to differing degrees, aggregate and coordinate philanthropic allocations to Jewish communal organizations in communities across North America). Those leaders are working tirelessly to coordinate massive new grant and loan programs, and they’re absorbing, daily, the pain of agonized calls from nonprofit leaders staring massive layoffs in the face. They are worried about the mental, intellectual, and spiritual health of their communities. They’re resilient, my dear colleagues and friends who are called to the work of serving their communities every day, and they are innovative.They will create new systems and collaborations to do what they can. But there is only so much they can do unless all of us, the individual givers, also step up.

So what can we do?

First, we need to come to terms with the fact that this part of our society is tremendously at risk, and that they have no fallback plan.

Second, we need to give to them, or they will go out of business.

I can speak most definitively about my own tiny corner of the world, the American Jewish nonprofit and philanthropic sectors. I use these to illustrate the broader problem, not to argue that these organizations are more or less worth saving than others. Our sector is identical to any other part of the nonprofit world. Here’s what’s at risk: nonprofit preschools, synagogues, food banks, afterschool programs, formal and informal Jewish educational programs, services for vulnerable populations, Jewish community centers, museums and historical societies, arts and cultural institutions, nonprofit media, educational trips, youth groups, summer camps, organizations building tolerance and fighting hate, and on and on and on.

Some of these are human services organizations that fit into the “basic needs” categories that we intuitively understand we need in a disaster. The rest may seem like “luxuries” in comparison, but they are the warp and weft of our daily lives—they are what make us human. Furloughs and layoffs will begin very soon; most organizations simply cannot go for too long without revenue or the ability to run programs. Even those institutions that have adapted quickly and beautifully to (free) online programs—these too will collapse without membership dues, program fees, and donations.

All we can do as individual donors is this: Understand the needs of the organizations in our community that we care about, carefully assess our own financial situations, stressed as they may be, understand which programs our hearts and souls can’t afford to lose—and give.

Do a kind of “triage” for your giving: Decide what you care about the most and where your dollars can have the most impact. Give to the organizations you love, that feed your soul (which will, by the way, make you feel more empowered and inspired in a time of mass anxiety). Collaborate with other givers wherever possible—either through collective giving vehicles like giving circles, or by giving to the collective giving institutions in our communities that are shouldering enormous, communitywide burdens, such as the Jewish federations, community foundations, the United Way. And then just give—as humbly, as sensibly, and as generously as you can.

Felicia Herman is President of Natan, a venture philanthropy in New York; Director of the Aligned Grant Program of the Jewish Community Response and Impact Fund, which was created in response to the COVID-19 pandemic; and Managing Editor of SAPIR: A Journal of Jewish Conversations.