Colorado Federation Sees Donations Rise

By Nathaniel Popper

Published July 08, 2005, issue of July 08, 2005.

The annual fundraising campaigns at local Jewish charitable federations have not been a growth industry in recent years, but you wouldn’t know that by looking at the situation in Denver.

Since a new CEO arrived at the Allied Jewish Federation of Colorado in 2002, the annual campaign has grown 51%.

When the 2005 annual campaign closed last week, the federation had pulled in $10.1 million in donations — up $3.4 million from 2001, with steady growth each year. At a time when Jewish federations across the country have seen annual campaigns stagnate and the number of donors drop, Denver’s new CEO, Doug Seserman, has overseen a revival in the Rockies.

Seserman arrived from the world of commercial marketing and the key to his federation’s success appears to be a model that is familiar from Wal-Mart’s success in the business world: a consumer-oriented free-market approach.

Where the federation used to guarantee Denver’s Jewish agencies the same funding each year, now the federation asks them to apply and compete for the federation’s money. And where the federation used to ask donors for one lump sum, now Seserman has allowed donors to choose where their money goes, with a program called Total Choice Tzedakah.

“The older generation understood the collective responsibility that the federation system represents,” Seserman said. “But for the young generation, the campaign is a little esoteric and ambiguous. We have to create something new for them, that they can understand.”

The federation-run campaigns are one of the central institutions for engaging American Jews with their communities. According to the 2001 National Jewish Population Study, 30% of American Jews gave to their federation — more than the rate that went to synagogue once a month or lit Sabbath candles. But the number of donors has fallen from more than 700,000 in the 1990s to 621,000 in 2003, the last year for which figures were available.

The rates of giving have been particularly low in the western states, such as Colorado. Only 6% of Jews in the West gave more than $100 to their federation, according to the 2001 NJPS study — while 10% did so in the Northeast, and 14% in the Midwest.

In other words, Denver had a lot to gain through experimentation.

In 2003, when the Total Choice program was launched, the Denver federation had 4,333 donors out of an estimated 70,000 Jews in the Denver and Boulder area. This year, the federation is up to 5,100 donors.

Seserman, 42, came at his work with the eye of a marketer. Most recently, Seserman had been the chief marketing officer at a digital media company, but his strongest business memory is from his time at Quaker, where the managers used to say that five years into the future, a third of the company’s profit would come from products that didn’t even exist yet.

When Seserman arrived, he saw that the Allied Jewish Federation, like most other federations in the country, was selling essentially the same product as 40 years earlier. Donations went into a communal pot, which was then distributed between overseas needs and local Jewish agencies that provide a wide range of social services.

As at many federations, some wealthier donors in Denver were able to designate where their gifts went. But, Seserman said, he realized that most donors had no options and no sense of ownership over the system.

Within a year Total Choice Tzedakah was created.

Donors can now ask for their money to go to any specific Jewish organization in the Denver area. They can also request that their money only go to overseas needs or only to agencies in the Denver or Boulder areas, a popular option since the conflict in Israel intensified.

“We realized that we had people who didn’t agree with the policies in Israel, and wanted to keep their money closer to home,” said Susan Kramer, a development director at the Colorado federation. (At the same time, in 2002, an Israel emergency campaign raised an additional $2 million.)

Annual campaigns are no longer the only way the federations receive funding. Of the $2 billion taken in by American federations last year, only $860 million came from the annual campaigns. Federations have increasingly looked to endowments and family foundations for funding. The annual campaigns, though, are the most broad-based connection between the federation and the community, and the prime forum for developing larger donors, charitable giving experts say.

Melissa Berman, director of Rockefeller Philanthropy Advisors, said the idea of collective philanthropies, like Jewish federations, giving their donors more choice has been growing for about a decade. Many local United Way chapters have allowed donors to check off which organizations they would like to direct their money toward.

“A decade ago, people really had no sense that they could get information independently and so they were willing to rely on an intermediary,” Berman said. “Now, they have so much information at their disposal. People feel they can make a meaningful choice on their own.”

But Gary Tobin, who tracks Jewish philanthropic giving, said Jewish federations have been slow to pick up on this kind of free-market fund raising.

“Most federations are scared to death of it, because it seems so opposite of what campaigns have been in the past,” Tobin said. “But if I reached my peak 40 years go, I would start looking for other models.”

One example of how Colorado’s new model has worked is Ariana Milobsky. She is 35 and her husband is a pediatrician. Until three years ago, the extent of their charitable giving was a few checks to her synagogue and the local Jewish day schools. Taking advantage of Total Choice Tzedakah, Milobsky made specific gifts to those institutions through the federation. Once the federation had her in the loop, they were able to convince her to give more to the communal pot, known as the flagship fund.

Since 2001, Milobsky went from her first $200 gift to the federation, to $8,000 in gifts last year. Milobsky is now a member of the Jewish Women’s Group of the federation.

“The federation has become my one stop for all my Jewish giving needs,” Milobsky said.

This sort of success has met some resistance from recipient agencies, which lose contact with their donors when the federation takes over fund raising. The federation also takes a 12% cut from designated donations to pay for its fund raising and overhead. But so far, because of the growing pool of funds, all the biggest agencies have seen their federation grants increase.

For federations, the larger danger behind donor-designated giving is that donors will choose to give all their money to individual agencies, and no donations will remain for the flagship fund, which takes care of basic infrastructure for the community. When the Denver federation saw this happening the first year, they began asking donors to designate no more than 30% of their donation.

The national coalition of Jewish federations, the United Jewish Communities, is moving ahead with its own new model. The financial development section has created a “collaborative model” of fund raising, which it is testing with 10 federations this year. The model works to increase donor involvement in federation decision-making without allowing donors to designate where their money goes.

In the meantime, the national offices are watching Denver carefully.

“It’s sort of like an experiment within the family,” said Eric Levine, who was the UJC’s associate vice president for financial resource development until last month, when he took over the organization’s renaissance and renewal department. “It remains to be seen how the model will play out — we need to give them a couple of years to take root and see where they go.”

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