A Leaders Update - A Diversified Investment Approach

The following blog first appeared Friday, March 9, as an email update from Keith Krivitzky, CEO, the Jewish Federation in the Heart of New Jersey.

Dear Friends and Colleagues,

With the stock market getting more volatile, I've been spending some time looking at my financial investments. Sometimes I think I should invest more in individual stocks, and then there are other times when I think I should invest in certain sectors or targeted funds. And then, when things get crazy and I'm worried that any choice I make will be wrong, I wonder about giving a chunk of my money to a broker who, in theory, might know more and be better able to manage it day to day.

In reality, I try to ensure my portfolio is balanced and want a mix of these things. Even if I get excited about particular stocks, I usually don't know enough or spend enough time to ensure that these are smart investments... though investing in them is fun. My best performers long-term tend to be index funds that match the market, though I am looking more at spdrs and targeted sector funds where I think there is particular room for growth. And I'd love to find a fund manager I really trust and who knows a sector really well or who has an approach that can produce enhanced returns over time to give a piece of my investments.

I'd imagine many people take a similar approach to their financial investments. I wonder, however, why more don't take this approach to their philanthropic investments? This, and the equivalent of dollar-cost averaging (think monthly giving), are proven tools to improve performance.

This kind of thinking has several implications for the Jewish community and the Jewish Federation....

The first is that the traditional Federation approach is like the old-school approach to relying on a broker to manage all of one's investments. There are still people who do this and we still do a good job in this way, but for most people this will not be the preferred form of giving. So, our Federation has evolved in terms of our approach, to focusing on specific areas where we need and can ensure return on investment (ROI), as well as enabling individuals to invest in areas where their passions lie and we can make a real difference.

The second take-away here is that is the Federation covers the targeted sector and "index" approaches effectively, and if a philanthropic investor cares about Jewish life - then shouldn’t giving to the Jewish Federation be a piece of their giving portfolio?

I think this metaphor is worth more thinking and sharing, to encourage people in our community to be just as serious about their philanthropic investing as their financial or retirement planning. And there is more we need to do to spell out our areas of expertise, past and anticipated ROI, as well as risk factors.

What do you think? And what would be helpful in making the case for giving in this way?

With that, some reads for the weekend:

And best for a Shabbat Shalom!



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