Thursday, July 14, 2005


There is nothing more dreaded than change. That is so with organizations as well as individuals. We cherish the familiar. “Better the devil you know” is a personal credo to many. The problem is, that just as individuals must evolve, so must non-profits. Leaders recognize this. What they must also be aware of is that the end result may be totally different from what was expected.
An excellent case of unexpected results was the 1992 reorganization of the Jewish Federation of Greater Clifton-Passaic, New Jersey, which merged with two of its sister agencies, the Jewish Family Service (JFS) and the Passaic-Clifton YM-YWHA (Y), and became Federation divisions. The aim of the merger was to enable the services offered by the JFS (social services, primarily counseling) and Y (recreational and educational programs) to continue to be available to the community, without increasing their burden on the Campaign that was about to suffer an $800,000 loss.
The classic definition of a Jewish Federation is the “central fundraising, planning and budgeting arm of the organized Jewish community.” In reality, as is said more often than not behind closed doors, “We raise money on the back of Israel for local needs.” In other words, putting Israel at the top of the marketing campaign, Federations receive donations which, classically, were distributed with over 50% going to Israel and the remainder being used by the Federation, local and national agencies.
In its heyday, the Clifton-Passaic Federation raised over $2.4 million. In 1991, 17.1% of the annual Campaign went for Federation expenses, its uncollectable pledge reserve, and its Joint Endowment Foundation (with the North Jersey Federation); local and regional agencies received 28.3% of the Campaign; national organizations got 1.1%; and Israel/overseas beneficiaries were allocated the remaining 53.3%. In 1997, the division was 25.7% for the Federation, 70.4% for local and regional agencies (including the JFS and Y), 2.2% for national organizations, and 1.7% for Israel/overseas. (This included deficit funding of $17,768 which was to be taken from the 1998 Campaign.)
As these figures indicate, the annual Campaign following the reorganization was focused on building mounting local needs. That was positive. The negative, from the perspective of the original goals of the reorganization was that while in 1991 the JFS and Y received 30.9% of the funds that were available for general distribution, in 1997 they received at best 63.37% or at worst 71.50%, depending on the math. The JFS and Y had taken over the Campaign.
Those agencies were located in the Jewish Community Center (JCC), which was owned by the Federation. Also present in the building were the Holocaust Resource Center and the Jewish Community News. In the year prior to the merger 40% of the annual Campaign went to agencies in the JCC (including the Federation). By 1997, that percentage had risen to over 90%.
While a multitude of interpretations can be given to any set of statistics, the important points are (a) that the result of the reorganization was to double Campaign support for the “merged” agencies, and (b) to practically eliminate any connection with Israeli/overseas activities – arguably the primary motivation for giving by a majority of donors and definitely the motivating factor behind the contributions of the largest and oldest contributors.
The above statistics are all based on Federation financial reports. Not reported in the 1995 report was that the $200,000 allocation to Israel/overseas was given to the Y to cover its deficit. Moreover, primarily because of the non-payment of pledges over a period of almost 10 years, the Federation’s Board, in accordance with the advice of its accountants, wrote off in excess of $1.3 million in debt to the UJA, through which donations are sent to Israel. (The proposed overseas allocation for 1998 – the year I left Federation, was $50,000.)
According to the Federation’s 2002 IRS Form 990 (the latest available on Guidestar), the Federation raised $1,673,997 (line 1d) and allocated $159,907 (Statement 6) to “Various Jewish Organizations.” Since salaries of the executives of the Federation, JFS and Y are reported, it is clear that the 990 represents the financials for all activities conducted at the JCC. The percentage of donations to local, national and overseas organizations was therefore 9.55%, 90.45% going to the Federation and its divisions. The distribution percentages have thus remained constant since 1996 and 1997.
Clearly, the Clifton-Passaic Federation has become a local agency that sends some money to other community organizations and abroad. It is no longer a “communal” fundraising organization, a “community chest.” While that is to be welcomed, it was not the intent of the merger, which saved local community services at the expense of the Federation’s historic purpose.
The moral is this: Be prepared for unexpected results. You never know where change will lead. And just because the end result was not what you wanted, it may still be for the best.