Federations Fail To Attract New Wealth


By Nathaniel Popper

Published November 18, 2005, issue of November 18, 2005.

TORONTO — Local Jewish charitable federations have long seen themselves as the central address for Jewish giving, but their dominant status is in jeopardy, judging from the buzz in the halls and on the podiums at the annual General Assembly of United Jewish Communities.

This past Sunday afternoon, participants in the annual event were set to discuss how federations and Jewish foundations are “working together” to distribute funds. However, the discussion’s subject quickly turned to how federations are failing to attract funding from Jewish foundations, a rapidly growing source of wealth in the Jewish community.

The conference in Toronto repeatedly came back to two basic points: Philanthropic wealth is growing rapidly in the Jewish community, and much of that new wealth is eluding the federations and going instead to more individualized projects. Sessions were dedicated to such issues as “How to engage the Jewish community in a time of decreasing donor loyalty.” On the final day of the conference, participants were presented with a UJC-commissioned study on fund-raising capabilities, and it was not cheery: “The donor attrition is high,” it said, “Annual campaigns are plateauing,” and, most significantly, “The next generation is generous but not to the federation system.”

The three-day gathering — known to insiders as the G.A. — is the central event for the UJC, the federation network. The roof body for North America’s 155 local Jewish federations, the UJC was created in 1999 through a merger of three existing national agencies. The merger was designed to give donors one location for all their Jewish donations and to provide a unified voice for the federations.

Since the merger, the annual campaign of the federations has grown slowly — the $857 million raised by UJC last year is up 4% since 2001. But this growth has not kept up either with inflation or with the swift growth of other Jewish charities that are capitalizing on the disposable income of retiring baby boomers.

Mark Charendoff, executive director of the Jewish Funders Network, said that the Jewish foundations he works with gave out more than $2.5 billion last year — but many are not attracted by the UJC system of directing donors to give to the local federations, which then divvy up the money between various educational institutions, social-service agencies and overseas causes. According to Charendoff, this centralized approach to giving is not appealing to young donors with foundations who want to have more direct contact with the programs they fund.

At the Sunday session on foundation giving, one participant questioned whether the UJC still could claim to be the “central address” for Jewish giving. When asked this question, Charendoff responded, “If it once was true, I don’t believe that it is true today.”

Howard Rieger, the CEO of the UJC, told the Forward that we was looking to have UJC collaborate more with foundations and to develop more opportunities for donors to get involved with individual projects.

This year’s annual meeting’s focus on fund raising came after a few years during which the UJC has pulled back from the broader discussions of major issues facing both Israel and the Jewish people that once dominated the annual event. At last year’s G.A., some federation officials talked about turning the UJC into a trade association, and this year the trimmed-down gathering — shortened by one day — offered plenty of nuts-and-bolts professional advice. But with the spotlight on the gritty work of fund raising, the local officials in attendance came face-to-face with the difficulties that the federations are having even in this realm.

The three-day gathering was not given only to gloom. The first night’s plenary session spotlighted the $26 million the federations raised in the wake of Hurricane Katrina. This exhibited that while the federations may struggle with long-term fund raising, they are still the go-to Jewish organizations in emergencies.

The UJC is poised to follow up that success by kicking off Operation Promise — a $160 million quasi-emergency campaign to help needy Jews in the Soviet Union and Ethiopia.

In addition, the G.A. put the spotlight on the city of Toronto, where the local federation’s annual campaign recently rose again to become the third largest in North America, at $60 million this year. But the head of the Toronto federation, Ted Sokolsky, said growth was possible only through big changes in the federation’s old model.

“Federations used to want to be department stores, where they sold everything themselves,” Sokolsky said. “We have to be mall operators — and just give a platform to lots of programs.”

For the UJC’s critics, though, the organizations’ difficulty in capturing new donors is a result of the lack of ambition the UJC has shown in pursuing big, visionary projects. Barry Shrage, head of the Combined Jewish Philanthropies of Greater Boston, said, “In the sessions with young people there is energy in the room — but somehow the national agency is not capturing any of that.”

Schrage said that the “American Jewish community is still looking for a voice,” but the UJC system still hasn’t “found a way to create an emotional impact.”

One veteran federation leader, Richard Wexler, said, “The federation system is at a fragile point.”

This year’s conference was attended by close to 4,000, and many of the participants seemed satisfied to treat the G.A. as a chance to catch up on backslapping and shmoozing with other federation professionals. Larger political themes were largely missing. There were rousing addresses on the first day, from Canadian Minster of Justice Irwin Cotler and Canadian Prime Minister Paul Martin. But from the Israeli side, not a single Cabinet minister showed up. This was in sharp contrast to previous years, when the prime minister himself often represented the government.

The most talked about item in the hallways was an effort to abolish an existing UJC committee — the Overseas Needs Assessment and Distribution Committee. This was the committee that had divided up funds between the two main beneficiaries of UJC’s overseas spending, the Jewish Agency for Israel and the American Jewish Joint Distribution Committee, and it was unpopular because it forced the two agencies to compete for money. Under a motion adopted Tuesday, the two organizations to negotiate with each other over how to divide the UJC funds. The resolution also urges federations to increase their overseas allocations and suggests that punitive measures be taken against federations that don’t comply.

The two agencies have been among the first hit by the UJC’s fund-raising difficulties. The largest single beneficiary — the Jewish Agency — announced a week before the G.A. that it would have to cut its budget because of shortfalls in the federation allocation. Last year, the UJC’s allocation to the Jewish Agency dropped to $140 million from $147 million.

For the UJC’s other major overseas partner, the funding issues already have led to the agency seeking out new funding sources. The JDC used to receive 95% of its budget from the federations. That figure now stands at 30% as the JDC has been carrying out its own fund-raising efforts, looking beyond the federation system.

The new chairman of the Jewish Agency, Ze’ev Bielski, said he is committed to increasing federation support for the organization, which historically has focused on promoting and facilitating immigration to Israel. But some federation leaders of the organization said that the Jewish Agency might need to follow the JDC’s lead of looking for new sources of income.

“They are going to have to engage in direct fund raising,” said Wexler, now the chair of the Jewish Agency’s North American Council. “They have no choice, and ultimately it’s going to be devastating for our system.”

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