This post is the first in several dedicated to an analysis of Jewish Jumpstart’s 2010 survey and report, “The Innovation Economy: An Emerging Market for Knowledge and Social Capital.” Watch the presentation of it from June 6th at the Jewish Federation of Greater Los Angeles:

Jewish Jumpstart released the 2010 survey results for the “Jewish innovation economy,” their term for the burst of Jewish social entrepreneurship within the past few decades. Tracking the characteristics of this field and championing its needs are a passion of mine, since this is the Jewish community that I love and nurture. Certainly the part that makes me enjoy being Jewish.

Bob Goldfarb over at eJewishPhilanthropy, however, started a canard unfortunately picked up by others. We need to put this down quickly, before it spreads. Doing some deeply unscientific eyeballing, he asserted that the Jewish startup field as a whole is a waste of money. Here’s the straw man:

Jewish startups collectively receive nearly $200 million in direct funds, not counting in-kind support or volunteer labor. Those funds reach nearly 600 organizations that are “in contact” with 630,000 people, of whom 115,000 are regular participants. That works out to an average of $324,000 per organization and $317 per person, $1739 per active participant. By comparison New York’s Federation has a budget of similar magnitude, around $230 million, and says that some 4,500,000 are “touched” by its work, which amounts to just $50. per person. Even allowing for the fact that attending an event is different from benefiting from a program, the contrast is startling.

Goldfarb is a Harvard MBA. But this paragraph reminds me of those GMAT essay prompts, you know, the ones where MBA applicants must pillory the assumptions to prove your capacity for critical thinking. Having done one too many myself, here we go:
Whose funds? While most of federations’ funding comes from Jews, today is it a standing criticism (from the “Jews first” crowd, not me) that most of its beneficiary agencies are not funded even in majority by Jews – they rely on federal and state service grants. Most of the weight is pulled by our taxes. So if the UJA can claim to have 4.5 million beneficiaries, then so can I – I donated them $36 and then my taxes paid for the rest. “Touched” is a pretty fluffy verb once you begin looking harder.
Who are the beneficiaries? By UJA’s own numbers, only 47% of its budget supports services – the rest is devoted to Jewish identity. You know, schools, shuls and JDub. About 26% is specifically Jewish identity and education, which is the proper comparison to the bulk of the innovation sector. That makes only one-quarter of UJA’s work eligible for this still-erroneous comparison. Really, we need to know how many Jews are beneficiaries of Jewish identity programs through UJA before Goldfarb’s equation approaches usefulness.
Is “efficiency” truly our measure? Goldfarb’s underlying premise is that efficiency should guide our funding. Well, if that were the case, then Birthright, day schools and Zionist summer camp should be defunded entirely. Efficiency is a worthy cause and I don’t mean to suggest that Goldfarb is an ass for suggesting so. But if we’re going to use it as a yardstick, the innovation sector certainly takes the efficiency award.
Take a synagogue for example. I am aware of a synagogue in New Jersey presently raising $16 million for an upgraded building. There are, I estimate, two thousand members there. That’s a whopping $8,000 per person. That’s a far cry from UJA’s “$50” and four times higher than the equally false number for the innovation sector. Are we going to eliminate synagogues, schools and camps for inefficiency? (I would love to say yes, we should demolish lots of them, but that’s not going to happen.)
If we’re nominating Jewish institutions which suffer from chronic redundancy and inefficiency, well, I have a few suggestions. How about any number of those overlapping, self-justified and outmoded “Jewish defense” organizations? Last I checked, there are over a dozen campus “pro-Israel” groups, each doing the same things. And with essays like Allison Benedikt’s, you may be aware they’re failing miserably to bolster Israel. Also, the World Zionist Congress no longer has a reason to exist either, Israel was successfully launched 64 years ago, yet it has a multi-hundred dollar budget. Point is, let’s be smart about “inefficiency.” Personally, I think day schools are vastly inefficient. If it costs me $20,000/year to make Judaism compelling to my kids, then I’m teaching them a shitty version of Judaism. At the least, let’s be wary; some of the best methods are the most expensive.

But the real heart of Goldfarb’s critique is that a small number of Jewish leaders are selfishly hoarding scarce funds for a small number of beneficiaries. He doesn’t need fuzzy math to make his charge and perhaps I spent too much time fisking the numbers. Really, he’s got a valid concern, which I know from reading his other writings comes from a place of seeking only the best for the Jewish people. (Bob, I do hold you in high esteem, never fear.) Still, his blame is misplaced and he established a dangerous canard.
Jewish leadership is highly invested in, yes, but is that any different from establishment organizations? Would Goldfarb still be complaining about these innovators with golden spoons in their mouths if they had gone to work for the federation instead? (I’m curious if we’ve been investing more or less in professional development, and if we’re more efficient nowadays.) The investment has been made – the expenses paid. We’re really discussing “opportunity cost.” What should those heavily-invested leaders do now with their gilded talents? By leaving the existing structures to create their own, are they depriving those prior institutions?
I think the important factor lies in this: What does it say that so many leaders are abandoning the establishment institutions to create their own? It seems that creative people are voting with their feet. Imagine, for example, if Aaron Bisman of JDub Records, or Melissa Weintraub of Encounter, or Nigel Savage of Hazon, all had entered the federation system and slogged their way up the corporate ladder to senior management? Maybe, we’d have an establishment more open to the creative ideas those innovators founded as separate enterprises.
But they didn’t. They saw what many of us have seen: that the bloated bureaucracy of the Jewish establishment world is too invested in itself, too resistant to change, and is driving off a cliff. It raises money for pre-determined “legacy” institutions that lack relevance. Innovators are choosing to leave the system to itself and create something destined to succeed in its place. That to me is the most important and most damning insight from the innovation ecosystem. That our best and brightest know the existing system isn’t worth saving or that it is far more impactful – key word: impactful – to seek change from the outside.
And we should be clear about what kind of change: most of the ventures are Jewish identity, community, and education. Bob, this field is not about to supplant the service providers. (Although Jewish service providers get most of their money from the American government anyway, so what are we really concerned about? The government will find someone else for their grants if UJA ceases to exist. And compared to Catholic services, for example, Jewish giving to the poor is small in comparison. And this coming from someone who believes Jewish giving to the poor should be much, much higher.)
My interest in this is somewhat narcissistic. I grew up largely without organized Jewish life as an Army brat, where raising a Jewish family was an inherently entrepreneurial affair. I identify personally with those motivated enough to create something themselves. And as such, I admit a snobby disposition against those who merely “consume” Jewish life without putting in their due. Or perhaps my greatest personal fault is my unfortunate disdain for those who’ve nursed their whole lives at the bosom of institutional life whose Jewishness is spoon-fed without ever exercising a finger of self-agency.
When I moved to New York City, I promptly got involved in the most personally interesting opportunities here. These were entirely key names in the emergent sector. In six years, I’ve been a conference chair, chapter leader, gabbai, board member, board consultant, business manager, and staff member for over a dozen organizations on the Jumpstart list. And no organization older than 40 years has struck me as interesting enough to warrant my time, money or employment.