Start And Stop for Jewish Startups?

Feb. 18, 2009, The Jewish Week — What do independent minyanim, JDub Records and the environmental group Hazon have in common? Seemingly nothing. Yet they’re all young Jewish startups founded in the past decade that are attracting legions of disconnected Jews. Together, these organizations make up what has been dubbed the “Jewish Innovation Sector.”

According to the 2008 Survey of New Jewish Organizations, sponsored by The Natan Fund and The Samuel Bronfman Foundation, more than 300 Jewish startups with operating budgets of under $2 million have been founded since 1998, and they’re engaging close to 400,000 Jews. Since the mid-‘90s, nearly $500 million has been raised by new Jewish startups, with the Jewish Innovation Sector representing a $100 million economy in 2008 alone.

“It’s time to take these organizations seriously,” says Felicia Herman, Natan’s executive director. “It’s a substantial, growing sector that cannot be pigeonholed as a collection of ‘next-generation’ experiments or a product of luxurious times.”

The survey, which was released Tuesday night during “The Lean Years, Part II: Strategies for Survival” event hosted at The Samuel Bronfman Foundation, is the first of its kind to examine the contours of the Jewish startup sector, and how the economic climate may impact growth in this sector. Not surprisingly, New York and California are home to 56 percent of Jewish startups, with the remainder located in 22 other states. Most of these startups are small; 37 percent have a budget of $50,000 or less and about half have one or fewer employees on payroll.

Other key findings include the fact that close to half of these Jewish startups categorize their missions as religion-related, with the remainder focused on education, arts and culture, social justice and youth development. Only 2.9 percent of Jewish startups self-identified as human service organizations, fewer than 1 percent deal with health care or mental health and none were primarily involved with employment or housing initiatives.

And while two-thirds of the population engaged by Jewish startups are in their 20s and 30s, nearly a third are baby boomers and older. “These organizations speak to a multigenerational community,” says Shawn Landres, CEO and director of research at Jumpstart, the think tank for Jewish nonprofit innovation that carried out the survey.

Jewish startups are “dynamic but fragile” — especially in the current economic climate, Landres says.

The survey was mailed out on Nov. 30, and most respondents completed it by the second week of December — BM, or before the Bernard Madoff scandal broke. Still, as of the end of last year, 59 percent of respondents reported having taken action in response to the recession. Common cutbacks included delaying planning new initiatives (41 percent), reducing the scope of programs and/or services (32 percent), slashing marketing budgets (24 percent) and freezing salaries (19 percent) and new hires (17 percent), as well as reducing staff hours (14 percent). “I’m sure it’s increased since then,” Landres says.

As the economy shows no sign of improvement, Jewish startups are particularly vulnerable. Merging, however, is not necessarily the answer. “So many people say, ‘Why don’t they just merge?’” Landres says. “But mergers are so complicated; it’s one organization eating up another.” More than 40 percent of respondents felt that a merger could have a somewhat or very negative impact on their organization’s health.

“Almost every one of the organizations founded in the last 10 years you could argue that the Jewish community would be fine without it,” says Nigel Savage, founder of Hazon. “But you couldn’t proceed without any of us. The survey shows, in aggregate, that we are the future of the Jewish community. This isn’t an alternative to the Jewish community.”

To survive, startups must begin to view themselves not as a lone island, but as part of this much bigger Innovation Sector, Herman says. That way, they can actively pursue opportunities to collaborate with one another in more systematic ways, such as sharing administrative costs and pooling health insurance and other benefits coverage.

Sharing office space is part of the solution. About 10 percent of Jewish nonprofits are already doing that, Landres says. On West 36th Street, American Jewish World Service rents out part of its space to Hazon and AVODAH. The arrangement has allowed the organizations to plan joint staff training sessions, learn from one another and partner on programs.

The success of the arrangement has motivated Savage to create a proposal for Makom Hadash (literally, “new space”), wherein five to 10 organizations would share offices and save costs. “If I were a single funder of Jewish organizations, I would quickly say, ‘I’m not going to pay for 17 photocopiers and 17 different systems of tech support,’” Savage says. “By all means, have independent identities, goals and missions — but make sure two plus two equals seven.” It’s too soon to know whether his vision for Makom Hadash will come to fruition, he says, but due to the economic climate, “there is significant interest in doing something like this.”

While startups are more vulnerable — they’re younger and in many cases haven’t built up large reserves of cash to get them through hard times — they’re also more adaptable. “They don’t necessarily rely on the types of endowments that have been hard hit by the Madoff scandal,” says Dana Raucher, executive director of The Samuel Bronfman Foundation.

When you’re smaller, there’s less to lose, says Daniel Septimus, founder of MyJewishLearning.com. “UJC and Hadassah laid off a ton of people. We didn’t lay anyone off.”

Although the philanthropic universe has shrunk, Raucher firmly believes in the importance of continuing to invest in Jewish innovation, even during this downturn. “The future of the Jewish community as a whole are with people who feel invested in and have ownership of their Judaism,” she says. “We should not abandon them.”