Lost & Found

One nonprofit's struggle to maintain its identity —and funding—in an era of rapid change.

Case Studies

Lost & Found

One nonprofit’s struggle to maintain its identity —and funding—in an era of rapid change.

Girls gather at the entrance of the Pleasantville campus of the Jewish Child Care Association in Westchester, NY, in a photograph taken by JCCA staff circa 1948.
From the moment, 184 years ago, when a group of Jewish New Yorkers organized a “Hebrew Benevolent Society,” no one questioned the reason for its existence: to help children of their own diaspora. Immigration ordeals and the tumultuous 1822 Depression had cast thousands of Jewish boys and girls adrift. Many lost mothers and fathers to illness. Others were abandoned. The Hebrew Society responded with some of the city’s first orphanages and foster homes, never wavering from its mission to “ameliorate the condition of the unfortunate of the same faith.” So focused were the group’s founders that they even set up a special “dowry fund” for Jewish orphan girls who came of age and married. After nearly two centuries, the files of the Jewish Child Care Association still tell the story of children nobody else wants, the ones society calls its “throwaway kids.” The late humorist Art Buchwald was one of the nonprofit’s most famous alums. But today, most of the 4,500 children served annually by the JCCA aren’t Jewish. The old “dowry fund” for Jewish orphan girls cannot be tapped — because there aren’t any. And thanks to a financial crisis exacerbated by the impact of 9/11 and changes in the value of the nonprofit’s investments, the JCCA now finds itself with an identity crisis, struggling to redefine itself for the 21st century. To be sure, the JCCA isn’t alone. Faced with similar pressures — especially fierce competition for ever-scarcer donor dollars, falling income, rising costs, and faltering investments — many of the nation’s nonprofits are finding themselves caught between the tug of their evolved identity and a new, jittery pragmatism. Indeed, pure allegiance to a nonprofit’s original mission these days can seem palpably — if not sometimes irretrievably — at odds with the need to confront market forces and bloated expenses. For many older nonprofits especially, says Stanford Business School Professor William P. Barnett, the challenge is to distinguish when they are “acting on behalf of their identity as opposed to their ultimate goals.” Barnett, a specialist in organizational change, says it is important for nonprofits to draw a line between what they’re doing to survive and what they’re doing to help those in need. “Often,” says Barnett, “those goals can get blurred in the struggle.”

Photograph:William Irwin Red Ink No kidding. For the JCCA, that challenge has been especially daunting. Like many nonprofits, the association faced a financial crisis, beginning around 2000, that was exacerbated following the terrorist attacks of 2001. Before then, withdrawals from the venerable and abundant endowment, comprising some $81 million in investments, had been enough to cushion the effects of higher operating costs, funding cuts, and relentless deficits. If the JCCA was in the red, its leaders figured, at least it wasn’t a dark shade of red. After all, returns on endowment investments had been running at a very healthy 15 percent or more. But after 9/11, with the stock market faltering and the endowment returning barely a percentage point or less for several years, the organization’s managers and overseers realized they had a permanent crisis on their hands. Rising costs, uncertain public funding, and anxiety over growing global and regional competition for donor dollars all contributed to a dour prognosis; drawing from the future to cover current operating costs threatened to sap the endowment irretrievably. And sink it did — to $70 million, then to $65 million. Last year, the nonprofit had only $54 million in public revenue to cover $61 million in expenses. Clearly, something had to be done. The first impulse was to cut and sell. By 2003, some 36 people in a work force of 600 lost their jobs. Managers closed a successful youth residence on 87th Street in Manhattan and sold the building. Real estate seemed a life raft in the red ink: Over the years, the JCCA’s properties, acquired up to a century ago and spread throughout the metropolitan area, had exploded in value. Perhaps inevitably then, there was talk of selling the most valuable property of all: the 150-acre Pleasantville campus in suburban Westchester, bought in 1898, the association’s very heart and soul. The fact that few of the 325 campus residents weren’t Jewish made the facility a particularly attractive target: as New York’s Jews fared better and waves of new immigrants arrived over the decades, beneficiaries of JCCA aid have been, increasingly, African Americans from the inner city, as well as Caribbean immigrants, Latinos, and Haitians. Their mothers and fathers might be in prison. Their teachers may have given up on them. Some students are developmentally disabled, unable to function in home or school. Thanks to a program that has become a national model, even siblings who needed to be away from their families were able to share residential settings at JCCA. “There was no question we were doing good here,” says CEO Richard Altman. “But it became clear that we were no longer able to sustain ourselves on the present course. It was time for change.” When the financial pressures hit their peak some five years ago, the association had to start asking itself tough questions about its identity: Had it strayed too far from its purpose? Had mission creep undermined its fiscal health? Was it time to rededicate itself exclusively to Jewish kids, whether or not they were needy — or justify its service to “the condition of the unfortunate,” no matter who they were? Could the Pleasantville property heal financialwounds without disaffecting scores of new and old donors and supporters who now volunteered there? And what about the children? Did it matter if they weren’t Jewish, or was there another way? Metaphor for Change Indeed, such questions are being raised in earnest across today’s seismic philanthropic landscape. But how are these challenges being resolved, if at all? According to Barnett and others, some nonprofits find they need to split into two organizations to survive, while others turn inward to collectively redefine their mission with donors, supporters, and association leaders. Failing to resolve these issues, however, is not an option if a nonprofit expects to survive.

Consider the 15-year-old Russian-American nonprofit partnership known as the Wild Salmon Center. Like the JCCA, its mission once seemed unambiguous: To protect one of the world’s last remaining strongholds of wild Pacific salmon and steelhead on the Kamchatka Peninsula in Russia’s Far East, perhaps one of the last untouched breeding grounds for nearly one-fourth of all Pacific salmon. But in recent years, Wild Salmon Center leaders devised an innovative, powerful new fundraising model: mixing sport fishing with research. Wealthy anglers would pay $9,270 to take remote, two-week trips into the wilderness, with the proceeds benefiting the science. The best way to enlist guardians of wildlife, the founders figured, was to get them waist-deep in water. But foundations that gave the salmon center at least 60 percent of their total funding balked at the prospect. “They got wary about the idea that they were subsidizing rich fishermen,” notes Stanford’s Barnett. “They said, ‘Wait, are you an environmental organization or are you a tourism outfit for rich fishermen?’” For the Wild Salmon Center, the situation was nothing short of what Barnett terms a “legitimacy crisis.” As a solution, the founders recently created a new organization to focus on angling tourism, Wild Salmon River Expeditions. The salmon center, meanwhile, will focus on conservation and science. While not all expedition profits will be funneled to the salmon center, anglers — with individual net worths of $5 million to $30 million apiece — may become new donors who, because of their experiences, are more likely to understand and care about the need. But a key question remains: How much of the split will go to the nonprofit? “That’s going to be another battle,” says Barnett. The Nature Conservancy, meanwhile, has similarly been forced to reexamine its mission and identity — in its case, following a spate of bad publicity that raised questions about how closely it was sticking to its stated purpose. The Conservancy had sold land to trustees at reduced prices and allowed drilling for oil, among other practices. The struggle erupted anew this year when the Conservancy helped forge new protections for 21 million acres of wilderness in British Columbia, a package that allowed managed timber-harvesting in another 14 million acres. Which areas should be most protected? Some argued to safeguard areas rich in charismatic endangered species such as wolves and grizzly bears; others argued for diversity of species, many far less celebrated or at risk of extinction. Which stand is purer? Which is better for the environment? Conservancy CEO Steven J. McCormick argues thatthe bigger question should be, “what difference are we making?” To be sure, without a revenue stream and a reliable stable of donors, these questions may be especially difficult. “Very few nonprofits have the luxury of being pure to their missions,” observes Elizabeth T. Boris, director of the Urban Institute’s Center on Nonprofits and Philanthropy. Adds Diana Aviv, president of Independent Sector, the Washington, D.C.-based coalition of nonprofit leaders: “Those people who hold out for an all-or-nothing approach are opting for a strategy that’s likely to fail 29 times out of 30.” Is survival and prosperity possible without losing one’s organizational soul? Nonprofit experts suggest some formal soulsearching may be in order. “Remember,” advises the Urban Institute’s Boris, “you’re not doing this alone. You have funders, board members, members.” The Road Less Traveled Ultimately, the Jewish Child Care Association did just that — it looked inward, sounding out its donors, board members, employees, and volunteers. But it did this only after fiercely intense scenes between members of the board and among volunteers forced a formal reassessment of the association’s very identity that inspired a board retreat, the intercession of an organizational psychologist, training by a provocative Orthodox rabbi, and the involvement of an outside consultant specializing in nonprofit strategy, fundraising, and branding. Photograph: William Irwin To be sure, those who wanted to provide more services to Jews rather than non-Jews had always voiced their opinions. But by 2001, those voices had grown forceful. “The split of opinions on the board is long-standing but became more intense with the post- 9/11 fiscal realities,” says Jane Barowitz, the association’s vice president of communications and marketing. “This brought the [Pleasantville] campus into focus as a real estate asset versus a mission-central necessity.” Some partisans argued for a return to core organizational values: a return to serving Jewish children exclusively. Others argued for broader scope. Altman, the former social worker who had assumed the organization’s helm in late 2003, realized the JCCA needed to go beyond spending cuts and layoffs. To find common ground and identify key questions, he had New York-based Anthony Knerr and Associates lead a board retreat in April 2005. The well-known strategic consultancy, often retained by nonprofits in periods of change, has helped organizations as varied as Radcliffe College in its merger with Harvard, the Salzburg Festival, Carnegie Hall, Columbia University, and the Investor Responsibility Research Center. For the Jewish Child Care Association, the key question became — as organization records later described it — how to restore “financial equilibrium” and retain “Jewish values and programs” while adapting to “changing demographics.” In the end, it was the chief executive, Altman, who convinced everyone that redefining the JCCA’s mission could help it move forward. “He was the change agent,” recalls Barowitz. Altman realized that without any change, the endowment would be depleted, forcing a shutdown that would, in effect, abandon future generations of children who needed the services JCCA provides. By the summer of 2005, a strategic planning group guided by Altman to consider the fate of the Pleasantville campus zeroed in on a fresh approach, noting in a report how it resolved “to develop a plan for infusing Jewish values…in all of JCCA’s programs, including those that primarily serve a non-Jewish population.” While committing to expand programs for the Jewish community, meanwhile, the committee added a caveat: programs for middle-class families had to pay for themselves with fees charged to families. As part of strategic planning that began late that year — and which ended only last November — one Jewish donor wanted participation of a Manhattan think tank known as the National Jewish Center for Learning and Leadership. The donor urged supporters to understand why a Jewish organization might choose to aid people outside the faith, and the learning and leadership center seemed perfect for the task. Deliberately provocative, its mix of rabbis and scholars boasts of helping revitalize institutions by getting them to confront “intellectual and ethical challenges of the wider world” so they can “imagine new Jewish possibilities.” The think tank itself has faced questions of legitimacy and, as it notes on its Web site, “has been accused of championing shallow forms of Jewishness that have no sustainability” and “legitimizing forms of Jewishness that are inauthentic to Jewish tradition.” Leading the planning sessions for JCCA’s staff was the think tank’s director of organization development, Tsvi Blanchard, an Orthodox rabbi and organizational psychologist. Blanchard likes to explain how individuals and communities alike are part of larger circles — that a “web of relationships” extends well beyond one’s own group. As he puts it on the leadership center’s Web site, Jewish “spirituality
is also about how you organize society — what are the values and principles that underlie the creation? Are you building inclusive, expansive communities, where many voices can speak fully, or are you defining the terms of what is admissible and what goes outside of the line?” He reminded his listeners of the Jewish mission to “repair the world” — in Hebrew, tikkun olum — and to seek social justice, or tzedakah. The world is filled with people in need of remedy and justice.

Blanchard’s message proved persuasive — even among donors who might have been reluctant to continue supporting an organization serving non-Jews. “There’s always a subset of people who say, ‘My money is for Jewish causes only,’” explains Altman. “But we’ve learned there’s a group of Jews out there who have a core belief system in which they feel it’s an obligation to serve the entire community. This is a Jewish obligation because of our tzedakah obligation and part of our tikkun olum values. We are supposed to open our arms to everybody.” Indeed, it was the children telling their stories to board members that ultimately convinced a board task force to keep Pleasantville intact. “It gets to your heart,” says JCCA President Leonard Elman, a Manhattan lawyer and 30-year board member who was, himself, unsure about the property until hearing from the children at a January 2006 meeting. “We save lives.” The board also hired a branding consultant to distill JCCA’s identity and broader message — eventually reinforcing it with a new tag line, “Every child deserves to grow up hopeful” — and replaced an outside fund developer who’d focused on foundation grants with an in-house VP whose job it was to build a donor base. Still, the move was considered risky. “We were very worried,” acknowledges Altman. If fundraising around the new identity failed, everyone knew, the only possible fallback was to cut more jobs, cut programs, and, worst case, sell the Pleasantville campus. But so far, so good. Fundraising was up 28 percent in the first year, and the JCCA netted $2.8 million last year. Targeting donors has also paid off: there is now a potential donor list of 18,000, up from 12,000 only a couple of years ago, providing a better balance of income. Rather than rely on foundations for 70 percent of revenue and acquiring 30 percent from other sources, the split is now more like 55-45, Altman says. And while “the few Jewish family foundations we made pitches to by and large turned us down, probably because of the new broad-based mission,” Altman acknowledges, the JCCA is finding its way back from the brink. Says Elman of the former social worker CEO: “It’s important for people in this business to be good businessmen.” Though it still can’t unbind the strings to spend money designated for orphan girls — some legacies are untouchable — this year the board expects to tap roughly 5 percent of its endowment to meet its deficit. In the year following 9/11, it had been a hemorrhagic 11.5 percent. Photograph: William Irwin Spending has not changed, and the Pleasantville campus is intact. The difference now: the fresh infusion of foundation and general fundraising dollars. Also, funding from a variety of new public sources, including state money targeted for mental health care. Meanwhile, new and successful advocacy for restoring cuts in government funding also has helped. The JCCA is back in control again. By discovering how to be true to itself, the organization has found that it can afford to be.

Identity Crisis Here’s how some nonprofits have wrestled with mission creep: