Ranking Shows Jewish Charities Compare Well to Non-jewish Ones

A Philadelphia-based foundation for social justice and the Jerusalem branch of a well-known Orthodox outreach group provide the bookends for a new ranking of Jewish charities.

The Shefa Fund and the Jerusalem Fund of Aish HaTorah sat at the top and bottom, respectively, of about 130 Jewish not-for-profit organizations among 2,500 groups rated recently by Charity Navigator, a new philanthropy watchdog.

Independent analysis of charities and philanthropies remains relatively rare, so many in the Jewish philanthropic world welcome the extra focus.

Such data “should serve as a reminder to donors that it is not enough to find a cause that tugs at your heart strings,” said Mark Charendoff, president of the Jewish Funders Network. “We have to hold charities we care about to higher standards of efficiency, effectiveness and transparency.”

In the 1990s, a scandal over hazy accounting practices at the United Way and reports that the Jewish National Fund was spending only a quarter of its income on Israeli tree-planting and environmental efforts led to increased scrutiny of Jewish philanthropies.

This latest examination of philanthropic causes, at www.charitynavigator.org, is based on the Form 990 tax returns that all not-for-profit charities except religious institutions must provide annually to the IRS.

Charity Navigator evaluated the groups’ overall financial health, fund raising and organizational efficiency. The goal was to equip potential donors with enough detail to “make more intelligent giving decisions,” spokeswoman Sandra Miniutti said.

Among all kinds of charities, Jewish and non-Jewish, the median fund-raising costs were about 8 cents of every dollar, she said — “pretty good” compared to the most efficient charities.

Those charities deemed the most efficient spent no more than 10 cents, or 10 percent, to raise each dollar.

“Religious charities are fairly efficient in how they raise their money and how they allocate it,” she said.

It’s estimated that there are between $25 billion and $50 billion in assets in the coffers of U.S. Jewish philanthropies, from foundations and federations to nonprofits and pension funds.

What the watchdog calls religious charities range from museums to universities to the U.S.-based fund-raising arms of Israeli institutions to Jewish federations and political groups.

The watchdog assigned each charity up to 70 points and up to four stars, with better scores going to those showing greater financial health and streamlined bureaucracies.

The Jewish groups ranked similarly to other nonprofits when it came to areas such as fund raising and program expenses, but ranked poorly regarding money in the bank.

Checked for their “working capital ratio,” or how much cash each group would have left if fund-raising dried up, Jewish charities had enough to last for only 3.6 months on average, compared to 8.3 months for non-Jewish charities.

Such “liquid assets” could be cash, stocks or easily sellable property such as real estate. The Jewish charities ranked lower because they typically raise the bulk of their money around the High Holidays and at the end of the year, but don’t have cash on hand year-round, Miniutti said.

Charities such as family foundations cannot dip into their endowment principle for emergency cash without board approval, though interest on those endowments can be considered cash on hand, she added.

Topping the Jewish charities was the Shefa Fund, which won a four-star, 69-point rating. The fund, dedicated to advancing social responsibility through grants, spent four cents to raise each dollar, according to its Form 990.

Jeffrey Dekro, president of the Shefa Fund, said his organization’s first-place ranking “is really consistent with the doctrine of our work.”

Shefa Fund calls that philosophy “a contemporary Torah of money,” he said.

“It’s not just about efficiency in an organization, but about trying to take the most progressive elements of our tzedakah tradition,” he said, using the Hebrew word for charity, “and combining them with our social activism tradition.”

In all, 33 of the Jewish groups won four stars, 51 gained three stars, 27 got two stars, 17 were given one star and three received no star.

At the bottom of the Jewish heap sat the Jerusalem Fund of Aish HaTorah, which is dedicated to Jewish education and outreach. The group garnered only 19 points and zero stars, spending 23 cents to raise each dollar.

In several cases, Charity Navigator ranked branches of the same charities separately because they were incorporated separately for nonprofit status and file different forms to the IRS.

Aish HaTorah represented one such case, with its New York branch, which it says is dedicated to “wisdom for living,” gaining 53 points and three stars, spending only 13 cents to bring in every dollar.

Irwin Katsof, the Los Angeles-based president of Aish HaTorah, said he couldn’t discuss the findings until he had studied them more closely.

“I’m not really going to comment until I’ve had a chance to analyze how they did it,” Katsof said.

Among the more visible groups knocked by a low ranking was the American Jewish Congress, which received 22 points and zero stars, spending 35 cents to raise each dollar.

The AJCongress is dedicated to protecting civil rights, defending the separation of church and state, fighting anti- Semitism and supporting Israel.

The AJCongress’ executive director, Neil Goldstein, said the rankings do not provide a true picture of each organization’s activities.

For example, he was about to fly to France to discuss anti-Semitism there with French officials.

“Am I administrative or am I program?” he asked. “In essence, we’re being penalized for being efficient. We think it’s a simplistic approach and we’re troubled by it.”

JNF, which worked to rebuild its image and organization after the controversy over its expenses, has teamed with a Washington-based watchdog called just-tzedakah.org. That group uses 990s to bring “transparency” to Jewish philanthropy, said its founder, Ira Kaminow.

This time around, JNF ranked low among the Jewish organizations, getting 41 points and two stars for spending a quarter to raise every dollar.

But JNF has “made significant progress” by cutting expenses and growing revenue, spokesperson Sarina Roffe said.

“The important thing to remember is that JNF is a grass-roots organization, and it costs the same amount of money to process an $18 check as it does a $10,000 check,” she said.

Charendoff, whose Jewish Funders Network is an umbrella group for many of the more than 8,000 private Jewish family foundations in the United States, some of which were rated by Charity Navigator, said the rankings provide useful data but miss some subtleties.

While the rankings allow one to compare a range of similar charities for their efficiency, they offer only a snapshot that does not reflect an organization’s development over time, he said.

Newer charities “may take a few years to achieve a balance between building the business and delivering the product,” he said.

The rankings also do not take into account the size of an organization, he said. A small foundation may have only one fund-raising professional, accounting for a major share of its budget, compared to bigger organizations with more money and a few more fund-raisers.

Some nonprofits also may spend more in direct-marketing vehicles such as telemarketing because of their small size or because they’re not well known, pushing up their overhead for fund-raising, Miniutti said.

The amount each charity spends to raise every dollar also may rise or fall depending on their aims, Charendoff added.

Charity Navigator’s rankings, compiled in August and updated Sept. 3, were based on federal reports from 2001 and 2002, but the group “looked back” to 1997 and 1998 to “calculate growth as well,” Miniutti said.

Other national Jewish non-profits that got ranked for overall efficiency included Hillel: the Foundation for Jewish Campus Life, which ranked 10th, and the World Jewish Congress, which was listed 112th.