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Five Federations Working on Deal to Adjust Overseas Funding Distribution

February 18, 2004
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A handful of federation leaders are working on a deal on one of the most contentious issues surrounding the United Jewish Communities.

Now they have to sell it to the rest of the federation system.

In a Feb. 9 meeting at LaGuardia Airport in New York, federation executives and presidents from Baltimore, Chicago, Detroit, Cleveland and New York hammered out a plan to fund overseas needs.

The deal comes after a two-year evaluation by the UJC’s Overseas Needs Assessment and Distribution Committee, or ONAD, and a bout of politicking leading up to a decision in December.

The decision takes pressure off local federations to raise additional funds, preserves their autonomy in funding decisions and appears to benefit the American Jewish Joint Distribution Committee, one of two primary agencies working overseas that receive funds from the UJC federation umbrella system.

The battle for funds transmitted overseas by the federation system — more than $200 million in 2003 — has become increasingly politicized in recent years.

With individual federations increasingly funding local projects, the UJC’s two main overseas beneficiaries are competing for tight federation dollars.

The ONAD committee — and, in part, the UJC itself — was created to reverse that trend by galvanizing a cross- section of federations to understand overseas needs better and make the case for funding them.

In December, ONAD decided to maintain the longtime formula in which 75 percent of the system’s overseas funds go to the Jewish Agency for Israel, which runs aliyah and Zionist education worldwide, and 25 percent to the JDC, which operates relief and welfare programs in Israel and abroad.

The committee also decided it would ask federations to raise an additional $20 million to split between the two agencies, putting $6 million toward that sum from individual federations’ discretionary spending.

Before the resolution reached the UJC board of trustees for approval, however, the UJA-Federation of New York balked.

Among other concerns, the New York federation feared the plan was doomed to fail because federations were unlikely to raise additional overseas dollars. It also objected to chipping away at federations’ elective funding.

That set UJC leaders scrambling to find a new compromise, which they did at the LaGuardia meeting, according to sources close to the process.

UJC agreed to ask federations, for the next two years, to raise the same amount of what is called “core funding” — $187 million — as they raised in 2003.

Federations are asked to allocate 90 percent of their overseas funds to core funding, which is subject to the 75-25 split.

The remaining 10 percent is called “elective funding,” meaning that each federation can decide how to divide it between the Jewish Agency and JDC.

Under the “LaGuardia compromise,” elective funds would remain untouched, a response to federations’ growing desire for control of funding decisions.

However, federations would be asked to increase their entire overseas allocations in proportion to any increase in their annual campaigns.

By that logic, the LaGuardia group expects an increase of $14 million toward overseas allocations, which the UJC would split evenly between the Jewish Agency and the JDC.

In addition to taking pressure off federations to raise an additional $20 million, the proposal also would benefit JDC. Federations will be asked to preserve the amount JDC puts toward relieving hunger in Argentina and the former Soviet Union, about $6 million last year.

According to one UJC insider, the new proposal “maintains community electives and set realistic expectations.”

Jay Sarver, the Jewish Agency’s budget and finance chair, said he would withhold comment until he sees a formal proposal from UJC.

At the JDC, Steven Schwager, the group’s executive vice president, also said he had not yet seen the proposal and could not comment.

To become official, the proposal must be approved by the full ONAD committee and then the UJC board of trustees.

An ONAD conference call is scheduled for March 10 to discuss the issue.

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