NEW YORK (JTA) – Under pressure to reduce the annual dues it charges Jewish federations, the United Jewish Communities must cut its budget and lay off a significant number of employees, the organization’s CEO and president told his staff.
Howard Rieger told employees Tuesday at the UJC, the umbrella organization of the North American federation system, that he was under a directive from the federations to slash the organization’s budget from $40.2 million to $37 million – in addition to making up estimated losses of $2 million due to inflation.
Approximately 25 percent of the $5 million the UJC needs to clear likely will come in the form of layoffs.
Rieger and the UJC’s chairman, Joe Kanfer, have spent the last year and a half trying to implement an operational strategy to streamline the organization. That plan has included the UJC playing a more active role in advising federations and splitting the organization into a North American office and an overseas office in Israel.
The call for budget cuts came after several months of meetings between UJC representatives and a cross-section of leaders from federations of various sizes. During the meetings, a number of federations complained vociferously about the annual dues that each federation pays to make up the UJC’s budget.
“We have been looking at the entire operation in terms of optimizing its effectiveness, and over that period of time we have reorganized and have some reorganizing ongoing,” Kanfer told JTA Tuesday. “There has also been pressure from a small number of communities, but in general this was about looking at the organization and saying how can we run as effectively as possible.”
Kanfer would not discuss the exact number of layoffs coming; he said it would be “in the double digits.” Nor would he discuss what jobs were under review, saying that while lists had been compiled, no decisions had been made.
The UJC’s Budget and Finance Committee will meet here May 7 to draft a final plan to cut the budget. That plan must be approved by the 155 federations when the UJC board of trustees and delegates assembly meet May 27.
Since the United Jewish Appeal, the Council of Jewish Federations and the United Israel Appeal merged in 1999 to form the UJC, the organization has been on a steady budget and employee purge.
When these next budget cuts go through, the UJC will have lopped 13.5 percent of its budget since its inception, slicing it from $46.2 million in 1999 to the proposed $37 million. Staff often has been at the center of those cuts.
The UJC’s staff has been reduced from 305 at the time of its creation to 245 in the 2007-08 fiscal year, according to numbers provided by the organization.
Dues have become a sore point for a number of federations, most notably the Jewish Federation of Metropolitan Detroit and the Jewish Federation of Palm Beach County in Florida, according to UJC insiders.
“We believe strongly and have articulated strongly that UJC has to be carefully reviewed, and the UJC budget has to be carefully reviewed, and that the dues that the federations pay and the way in which they pay them need to be reduced,” the CEO of the Detroit federation, Robert Aronson, told JTA.
Aronson described it as a “good first step – but a first step only toward a thorough evaluation of the efficiency and effectiveness of UJC.”
He complains that after federations send approximately 4 percent of the proceeds from their combined annual campaigns to the UJC, they still have to pay for fund-raising operations in their home cities.
The Detroit federation takes in about $45 million a year. Some $8 million of the total goes toward the organization’s own operating expenses, with 6 percent of that subtotal spent on fund raising. It has fired 14 employees in the past year.
Aronson says he supports the idea of a national arm of the federation system, but believes it should be focused on professional development, national advocacy for the federation system and fund-raising consulting.
“Our primary concerns are the cost of the organization and its effectiveness, and that it is harder and harder to raise money locally,” he said, adding that there is “a strong conviction here that the dollars we raise should go to meeting needs.”
The UJC currently assigns dues to each federation based on the percentage that its annual campaign makes up of the combined annual campaign proceeds of all the federations.
Kanfer said the UJC likely would change the formula: Instead of looking at each federation on a year-by-year basis, the organization likely would base its formula on the three-year average of each federation’s campaign and three-year average of the system’s intake.
This should help avoid fluctuation in dues based on spikes or dives in a federation’s campaign, he said.
Kanfer said the UJC is exploring a number of ways to reduce its budget – through outsourcing and other steps – and to broaden its revenue stream by charging more fees for service from the federations, starting joint venture funds for specific charitable projects with private philanthropists and reaching out to private foundations for grants.
In areas where it may duplicate the work of other Jewish organizations, the UJC will move to support those other groups instead of pursuing the work on its own, Kanfer said.
These organizations include JESNA-the Jewish Educational Service of North America, the Jewish Community Centers Association, Hillel: The Foundation for Jewish Campus Life, the synagogue movements and other organizations focused on Jewish education and religious identity.
The federations consulted by UJC formed a consensus to reduce dues and cut the budget, according to the CEO of the Jewish Community Federation of Cleveland, Steven Hoffman, who held Rieger’s job at UJC from 2001 to 2004.
“There are communities that fail to appreciate the value of the UJC and there are others who are experiencing financial challenges,” Hoffman said, “and there are communities like ours that believe that an adequately funded national organization is critical to the future of the Jewish community in the United States. And you have to reach a consensus among all of these to keep the organization moving.
“So here we are at this moment: $3 million of dues had to come out of the budget.”
Hoffman said his federation is supporting the budget cuts for this year in order to maintain that consensus.
“It is sufficient to say they weren’t alone,” he said, explaining that the Detroit and Florida federations were not the only voices pushing for dues reduction. “There were enough for me and our community to support this decision.”
Ultimately, layoffs are the painful choice, said Hoffman, who had to cut significant numbers of staff when he was the head of UJC.
“When you have to make staff changes, it is not pleasant, it is not easy,” Hoffman said.
Asked how many staffers he had to fire, he answered, “I blocked it out of my head.”