It is the GA’s focus on younger participants and the high-profile guest list of speakers that have given this year’s conference a tremendous cache, but the federation folks here are still very much dealing with what everyone hopes is the aftermath of the recession.
The system’s higher-ups say that they believe the worst is over. The federations collectively raised around $900 million through their annual campaigns in 2009 and, with two months to go in 2010 they have raised $750 million — or about 4 percent of where they were last year at this time, the treasurer of the Jewish Federations of North America, Michael Gelman, said at a media briefing Sunday afternoon.
“We are feeling cautiously optimistic that we have pushed from out of the depths,” the organization’s CEO, Jerry Silverman said, pointing to impressive fund-raising totals from the recent major gifts campaigns of the UJA-Federation of New York, the JUF-Jewish Federation of Chicago and the Jewish Federation of Pittsburgh, three of the country’s strongest federations. Beyond that, Silverman said, the JFNA saw 25 percent increases at two recent fund-raising events, its campaign directors’ mission and its national cabinet mission. “It’s a significant move forward,” Silverman said. “It’s a new chapter. Now we have to move forward as a collective…. There seems to be a new energy.”
Such developments are generating some optimism, but conference organizers are not ignoring the carnage that the recession left in its wake — a drop in local fund raising that forced several federations to seriously re-think how they do business.
At a session Sunday afternoon, just before the JFNA’s media briefing, the leaders of the Jewish federations in Miami, Washington, Montreal and Cincinnati described what they have been through over the past two years and how they used the recession to make tough calls.
A quick rundown:[[READMORE]] The Jewish Federation of Greater Miami had to cut its budget 15 percent, said Ellen Rose, the co-chairman of the agency support committee that the federation set up to keep its partner agencies informed about what they should expect with shorter federation dollars and increased need around the city.
The federation held two special campaigns over the past two years to minimize as best it could cuts to those agencies, one $900,000 campaign aimed at major donors and another $750,000 campaign to reduce cuts to the federation’s partners.
The federation in Cincinnati initiated a significant initiative to integrate the business sides of the federation, the Jewish Family Services outfit and the local JCC in an attempt to save all three significant dollars on overhead, according to its president, Bret Caller.
The initiative, which it calls Business Services Integration, consolidated the fund-raising and IT departments of the three organizations, a move made easier when all three moved into a new $43 million JCC campus several years ago.
According to Caller, each organization had serious financial situations. The Cincy federation had outdated software across the board, the JCC could not afford to hire a CFO and the JFS only had one staff member on its business side, with no backup. “All three agencies needed to solve these problems quickly,” Caller said.
When the recession hit, the federation enlisted 18 experts from across Cincinnati to look at cost-saving measures the entire community could take, ranging from shared insurance benefits to a food-buying consortium.
But the organization had a stroke of good luck when an informal conversation led a consultant from the Neilson Corporation to convince his company to oversee and implement the actual consolidation — for free. The consultant has provided and arranged for about $500,000 in pro-bono services, hardware and software in what Caller called “a soft merger.”
Washington, a much larger Jewish community than Cincinnati, faced a serious crisis when its campaign dropped $2.5 million in 2008, and then another $6 million in 2009 in recession-related and Madoff-incurred losses, Susan Schor, a board member at the federation, and Michael Feinstein, the CEO of the JCC of Greater Washington, explained.
The federation, which incurred significant layoffs, explored several options for further cost reductions, including shared IT among partner agencies, shared benefits and insurance, and going to a system of grant-making that would have eliminated unrestricted grants and made every gift targeted.
But none of those were possible for reasons ranging from government restrictions to push-back from partner agencies. This was all made more complicated because the federation before the recession had been in the midst of a coming up with a long-term strategic plan to change the way it allocated funds.
“We had a crisis mentality in the community that was a result confusion about what we were doing,” Feinstein said. “The agencies were well-informed in advance [of potential changes] but because the heads of the agencies could not come together… there was suspicion among agencies.
Schor and Feinstwin described a long back-and-forth that involved federations asking agencies to figure out their own priorities, but then also coming up with a second list of community-wide priorities, with the idea that the federation would triage the agencies’ needs and then use other money to make sure the broader community was healthy.
“We thought we would empower them and get them to think more collectively, but we could not get the agencies to provide this guidance,” Schor said. “They were more concerned with the individual funding of their own organizations.”
“Where you stand depends on where you sit,” said Feinstein, whose JCC is a recipient of federation money. “ From the agency perspective, agency boards are responsible for their own agency. They are not necessarily concerned with the community at wide.”
In the end, the groups compromised. The federation agreed to keep 80 percent of its allocations in the form of unrestricted funds its grantees could use in any way they saw fit, and then allocated the remaining 20 percent through targeted grants aimed at addressing what the federation felt were the greatest community-wide needs.
“We have to challenge the status quo in our funding model. It is painful,” Schor said. “But unless we do, we run the risk of hurting the community.”
Montreal, which has a Jewish population of 90,000, took the crisis as an opportunity to reform, according to the CEO of the Federation CJA, Andres Spokoiny.
“We tried to leverage the power of community to deal with the crisis and to come out of the crisis stronger,” he said.
The federation put together an ad-hoc committee of its affiliates and charged them with making difficult choices about what in the community had to be preserved, what had to be beefed up and what had to be cut.
“It became a system budget process,” Spokoiny said.
The Montreal federation created a poverty relief fund, as well as a tuition assistance program for the city’s Jewish day schools. And it started a hot meals program for those in need that was not run by just one agency, but a consortium of agencies.
The federation also used the crisis to hasten structural reform, he said, consolidating several social service agencies — its JFS, its immigrant assistant program and its Jewish employment agency into one.
Then the federation started providing shared HR and IT services for all of its agencies.
“Our HR department now does payroll for everyone. There are 80 federation workers, but we now process 900 paychecks,” he said. "We have two people doing IT for 20 agencies. There are a lot of possibilities for economies of scale.”
“We are going to break with a long-lasting tradition in our community of providing bailouts to … to organizations that cannot meet payroll or expenses,” he said. “We are not going to be the bail out anymore. Anyone that asks will have to show a plan for structural reform… If you are not sustainable, I am not going to keep feeding a dying organization.”
