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Jus​t How Are Federation Monies Divvied Up Among Organizations?

February 5, 2009 By:
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Representatives of Jewish federations from across the country are set to meet in Florida this weekend to weigh a potentially watershed proposal that could overhaul the system for disbursing hundreds of millions of dollars to charitable causes in Israel, the former Soviet Union and elsewhere.

But officials at the Jewish Federation of Greater Philadelphia said that the result of what could be a heated debate should not have a huge impact here. That's because for years now, the Philadelphia federation has been experimenting with essentially the same practice that many are pushing for on a national level.

Rather than following the historical practice of giving sizable chunks of money only to the two largest overseas agencies -- the Jewish Agency for Israel and the American Jewish Joint Distribution Committee -- by way of the federation umbrella system, the local federation is disbersing its funds to JAFI, JDC and a clutch of smaller organizations on a project-by-project basis.

These include an after-school enrichment program in Jerusalem, early-childhood intervention for Ethiopian Israelis and a therapeutic program for children injured in terror attacks.

According to federation officials, the impetus for this change in practice came from donors at different levels, who wanted more transparency as to how their dollars were being spent.

Philadelphia is one of very few federations that has adopted this model. "We were ahead of the curve" in terms of donor accountability, said Jeri Zimmerman, director of the federation's Center for Israel and Overseas .

JAFI and JDC are two organizations that have become practically synonymous with Jewish philanthropic causes abroad. For decades, they have divided the bulk of overseas funding allocated by the federation system.

JAFI, founded in 1929 as the Jewish Agency for Palestine, served as the quasi-Jewish government prior to Israeli statehood, and has since been charged with promoting aliyah and Zionist education worldwide.

Since 1914 and the outbreak of World War I, the JDC has served Jews and Jewish communities in need around the world. For instance, in the former Soviet Union, it provides food, medical care and winter relief to some 180,000 elderly Jews, while also funding libraries, Hillel centers and other forms of Jewish education.

Typically, JAFI receives about 75 percent and JDC 25 percent of overseas funding from United Jewish Communities, the federation umbrella; last year, this money totaled roughly $286 million for JAFI and $80 million for JDC.

Short of Funds

As annual federation campaigns have slumped, both organizations have felt the pinch. According to JTA, the federation system recently fell about $16 million short of funds that it had promised the two organizations.

Momentum is building to allow UJC to open up the process and steer monies to other organizations operating in Israel, the former Soviet Union and other Jewish communities, as well as to JAFI and JDC initiatives.

Such talk has created a brouhaha in the communal world.

"We fear that [UJC] is on the way to abandoning its obligations and responsibilities to the hundreds of thousands of Jews we serve every day," Richard Pearlstone, JAFI board chairman, wrote in a highly publicized letter to UJC executives.

In their response, Joe Kanfer, chair of UJC's board; Kathy Manning, chair of its executive committee; and Howard M. Rieger, president and CEO, wrote that the Jewish communal structures must change with the times.

That's what officials at Philadelphia's federation said they've been trying to do since 2003, when they created its three major centers: the Center for Israel and Overseas, the Center for Jewish Life and Learning, and the Center for Social Responsibility.

With the creation of this trio, federation began accepting grant applications and project proposals from a host of nonprofits.

The Center for Israel and Overseas receives about 100 applications a year and gives about 20 grants, according to Zimmerman.

Last year, federation allocated a little more than $5 million for overseas spending. About 70 percent of that went to UJC, which then transferred the funds to JAFI and JDC for specific projects approved by the local federation. In the past, JAFI and JDC basically decided how it spent those funds on their own.

Another 30 percent went to proposals brought by JAFI, JDC and other grant recipients, including groups working in areas such as hunger, at-risk children and emergency services.

Zimmerman said that the new system produces greater accountability: "I think it's a hard time to make a strong case for going back to the way things were."

The 1999 merger that created the UJC out of three distinct organizations -- the Council of Jewish Federations, United Jewish Appeal and United Israel Appeal -- was in part about ensuring that JAFI and JDC received a dedicated funding stream.

Though the Philadelphia federation's grant system appeared to run counter to the merger's goal, officials here said that there was essentially no backlash from UJC.

Unhappy With Changes

Some longtime lay leaders active with both JAFI and JDC are not happy about the proposed changes on the national level. Among them is Bennett L. Aaron, who for 12 years was a member of JAFI's board of directors. (He is also chairman of the Jewish Publishing Group, which oversees the Exponent.)

"I don't think they can treat the Jewish Agency and the Joint as just some other organization," Aaron said, referring to the role they've played in the building of Israel and alleviating of Jewish suffering worldwide. "This is unfaithful to the 1999 agreement."

Aaron said he's concerned that the Philadelphia federation might not have the staffing and resources to handle dozens of grant applications, and that a large organization like JAFI is better equipped to determine needs, especially during a crisis.

Steve Schwager, executive vice president and CEO of JDC, said that he understands the desire of donors to decide where their dollars go. Still, he argued that a steady source of funds must exist from UJC that JDC can use when a crisis unfolds.

"If you give money for a program in Israel and there is a crisis in Georgia," said Schwager, "you can't take that money from Israel and use it in Georgia."

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