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Rising tide of Jewish family foundations

Bruce Heilter, left; Sue and Harvey Allon, rightTO give to federation, or to give to foundation.

That is the question.

Or is it?

With sincere apologies to the Bard, it cannot be denied that within the world of Jewish philanthropy, it certainly is a question that has been asked a great deal of late.

In what some are calling a revolution and others an evolution, the federation-foundation debate has gathered considerable steam and relevance in the last decade.

It seems clear that Jewish foundations — most notably, Jewish family foundations — are playing a significantly greater role in how Jews are giving their money away.

And while still strong and central, the American Jewish federation network, once virtually the only address in town for Jewish philanthropy, is now compelled to share the stage.

Interestingly, while it might seem black and white, either/or, the debate isn’t that simple.

Many Jews who funnel philanthropic funds through family foundations are also ardent supporters of their federations.

Foundations are themselves often federation supporters.

Foundations and federations sometimes work together on joint endeavors.

Federations, sensing the change in the weather, have set up their own “supporting” foundations, and provided their donors with such new vehicles as donor-advised funds, to allow philanthropic choice and freedom, largely mirroring what many see as the foundations’ inherent advantages.

In other words, the landscape of Jewish philanthropy is clearly changing.

In a 2008 essay on the website ejewishphilanthropy, Dan Brown cited figures from the Foundation Center that in the decade between 1998 and 2008, giving by family foundations in the US more than doubled, with family foundations providing nearly 60% of all foundation grants in the country.

Also of interest was the finding that as of 2008, 67% of all family foundations had been established since 1990, strongly suggesting an upwardly growing trend.

A handful of other numbers and trends:

• Education was the top priority of family foundations in the Northeast, Midwest and South, while health was the highest priority for Western family foundations.

• Nearly half of family foundations are categorized as “small,” meaning that they give less than $50,000 annually

• Dr. Gary Tobin of Brandeis University has recently estimated that there are some 7,000 Jewish foundations in the US — well over half of which are family foundations —with assets totaling more than $10 billion.

• Tobin has also found that some 24% of Jewish family foundations give away more than $250,000 per year.

As substantial as some of these figures might seem, there are signs that the current level is only the beginning.

On the Jewish Virtual Library website, Evan Mendelson, in an essay entitled “The History of Jewish Giving in America,” writes that the growing flood of Jewish family foundations is being significantly expanded by the increasing numbers of supporting foundations and donor-advised funds being set up by Jewish federations.

Already, Mendelson writes, these kinds of foundations are estimated to hold well over $3 billion in assets.

Further, those who watch money trends are predicting that “an enormous transfer of wealth is expected in this country during the next several decades,” with as much as $10 trillion passing down from wealthy seniors to their heirs. As many as five million new millionaires will likely be created.

“While billions of dollars have flowed into foundations over the past few years,” Tobin writes, “it is but a trickle of what is expected to take place over the next decade.”

DENVER Jewish philanthropists with experience in family foundations have their own perspectives on why this growing method of giving has worked for them.

Finance expert Harvey Allon, for example, who with his wife Susan founded the Denver-based Oak Tree Foundation in the last decade, sees the family foundation as an important part of his family’s overall philanthropic strategy, but not the sum total.

Oak Tree, managed by former CAJE director Daniel Bennett, concentrates its giving in education (both Jewish and general) and “organizations that represent Jewish values,” says Allon, mentioning Jewish Family Services as a standout.

The Allons, however, are also significant supporters of the Allied Jewish Federation of Colorado — both in time and money — and value that part of their philanthropy no less.

“We support Allied Jewish Federation because we’re a small foundation and they allocate to a large number of groups in the Denver area, so it’s an efficient way to give to all of those groups. The federation allows you to cover a lot of charities with one gift.”

There is no stark line of differentiation between their foundation and federation giving, he adds. Oak Tree sometimes gives totally independently and sometimes in conjunction with the federation.

While Allon says he doesn’t pay much mind to national trends regarding a growing Jewish preference for foundation giving, he knows why he and his wife do it.

“It’s a mixed blessing,” he says of the foundation model.

“It requires additional management and oversight, but it does allow you to build a principle and to fine tune your goals and objectives. From the financial side it allows you to build that base and on the giving side it allows you to fine tune your giving to meet your objectives.”

In addition to allowing the giver more freedom of choice, in purely practical terms, Allon says, the family foundation allows greater philanthropic flexibility.

“It means that if you have a capital event [a fundraising campaign for construction] you can set aside money rather than give it all in one year and then not give at the same level the next year. You can create a foundation and give the earnings and part of the principle over time.”

For a foundation is to be able to “fine tune” its giving to meet its philosophy doesn’t necessarily equate with demanding strict oversight of the recipient. The Allons’ philanthropic strategy is based on supporting organizations and causes that the family already trusts to spend their money wisely and effectively.

“We don’t believe in micro-managing,” Allon says, emphasizing that this approach applies to both federation and foundation giving.

“I’m sure that every single person that gives to federation would allocate federation’s flagship dollars differently, but the benefit of using the federation is that it covers a lot of organizations.

“It may not do it in exactly the ratios that you would want to, and it may not include every organization that you would want, and it may include organizations that you wouldn’t want, but it is an efficient way to cover a large number. So in the case of federation we don’t micro-manage.

“But we do [through the Oak Tree Foundation] contribute to other organizations that federation may not donate to, and we add more to some than federation does contribute to. In terms of most of the organizations that we give to, we don’t tell them how to allocate or how to spend their dollars. For us, it’s either we’re in or we’re out.”

The late Dorothy and Emmett HeitlerWHEN
it comes to determining the balance between Jewish and non-Jewish, or general, charities — another huge issue in the current dialogue between Jewish philanthropists — Allon supports the idea that foundations are totally free to make those determinations on their own.

“I would hope that we would review each cause on its own merits and look at it that way,” he says of Oak Tree specifically.

“We’re not critical of Jewish philanthropists who give more to secular causes. In our case, we have found many Jewish causes to be very worthy of our philanthropy at the level that we can afford.

“We’ve probably contributed more heavily to Jewish causes, but that is as much because we have found worthy ones in that area as it is because they happen to be in the Jewish community.”

As people who take their philanthropy seriously, he adds, the Allons have found the family foundation model to be an excellent partner with the federation model in helping them realize their goals in giving.

“We view philanthropy as an opportunity, as a privilege,” he says, “so if we’re in a position where we can be philanthropic, that’s something that we find rewarding.”

ONE of the earliest Jewish family foundations in Denver was the Heitler Fund, set up by the late Emmett and Dorothy Heitler in the 1950s and funded largely by the proceeds of the sale of the family business, the Samsonite Corporation.

While the foundation provided limited financial support to the Heitlers’ descendants, their son Bruce Heitler says, the bulk of its assets were given to charity.

It was a process that was handled efficiently and relatively quickly — mostly in large gifts — and the foundation ultimately depleted itself to the point where today it exists largely in name only.

“The idea was to give it away,” Heitler says of his parents’ approach to foundation philanthropy. “Which they did.”

During the 50s and 60s, the Heitler Fund was a major supporter of National Jewish Hospital and of Children’s Hospital, of which Dorothy Heitler was chairman.

It was also the primary financial backer of the Shwayder Theater at the Jewish Community Center.

Although longtime federation supporters and leaders, the Heitlers used their family foundation as their primary giving vehicle, their son says, at least partially because it allowed them a significant degree of freedom and independence.

It also allowed them to exercise their personal preference in philanthropy, which was largely based on funding large capital projects.

“What happened is that when there was a significant capital event, they thought that was a good time to put it into something that was designated for charity, that coincided with what they thought was right to do and had a tax benefit as well. And over years they would make those payments out.”

There were also practical advantages to foundation giving that allowed them to maximize the effectiveness of their giving.

“If you want to take a charitable deduction in a year that you make a windfall profit and you don’t want to give it all away at once (because you don’t know who to give it to or you want some time to think about it) then you create a foundation,” says Heitler.

“That lets you take the deduction in year one and make the decisions about it in subsequent years.”

The  younger Heitler, who is active today in real estate development, no longer uses the family foundation — or any foundation — for his own giving.

“I write checks,” he says simply.

“In some ways my policy is quite different from my parents, in that they were focused on using the money to make a significant difference. That’s fine if I can do that, but I’m also concerned that making frequent small gifts is healthy for the donor.

“The view that I subscribe to is that charity is a two-sided coin. It has some benefit for the recipient but at least as important as that is that giving charity has a benefit on the donor.

“That effect only comes up when it’s the donor’s money, not when you’re giving somebody else’s money away, including a foundation’s. That’s a process which is healthy.

“When I’m getting money in, part of what comes to me is as a custodian for other people who need it, and using the act of giving as a reminder to me of that is very important.

“That encourages more frequent giving rather than massing all of the giving into one concentrated gift. It’s just a different strategy. My concern is in part that I should be constantly reminded that money is a gift — a psychological, character-building vehicle, for me, I hope.”

Heitler’s own philosophy about giving, while different in approach from his parents, nonetheless adheres to the central idea that philanthropy should be a personal sacrifice — that the act of giving away one’s personal resources is essential and beneficial to the giver and more closely manifests what Judaism puts forward as tzedakah.

“THE experience of giving other people’s money doesn’t accomplish the same thing in terms of character building for the donor that real tzedakah ought to do,” he says.

“It’s an interesting thing, this profession of directing other people’s money. I don’t think that has much to do with charity, frankly.  It doesn’t do all the things that charity, in a Jewish sense, does, which is uniting the giver with the community somehow.”

While federations and community foundations, such as Denver’s Rose Community Foundation, undoubtedly accomplish a great deal of good, Heitler says, “you lose the character effects on the donor, and I think that’s really important.”

Federations, he says, might be “too government-like” for some people.

“You give money, the money shows up in the federation and people sit around on a board and decide how to give that money away. That feels to me more like sitting on a board of a corporate entity and getting paid back some kinds of honors or whatever.”

Likewise, when Rose Community Foundation, through its Rose Youth Foundation, teaches youngsters how to be effective philanthropists, Heitler feels that such instruction, while helping to creating a sense of civic duty, still misses the point of true tzedakah.

“I don’t think that gives a tzedakah feeling of uniting a community,” he says.

“Private giving is probably better. If a family were to say, ‘We’re taking responsibility for a homeless person,’ and if all they do is put that person in an assisted living center and support his expenses, then you’re getting closer to tzedakah. A mitzvah is something that has a peculiar ability to build a bridge between the finite and the infinite. It has a cosmic aspect to it.”

He suspects that this desire for more “intimacy” between giver and recipient may have lot to do with why more Jewish philanthropists are choosing the family foundation model.

He is grateful to his parents for helping him understand this deeper nature of giving, Heitler says.

“My parents had a huge sense of responsibility of being a part of, and acting in, the community,” he says.

“I’m not sure that that’s necessarily what they liked. I’m not sure that I like it either — I might have a little bit of bias to be a hermit, I think — but I do feel, probably from them, that I have an obligation to be actively involved in things where I can make a contribution to the structure of the community.

“Part of that is giving money but also being involved in activities that I can make a contribution to.”

Copyright © 2012 by the Intermountain Jewish News

Chris Leppek

IJN Assistant Editor | ijnews@aol.com

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