Tuition grants, endowments to benefit day schools

More than half the students in Los Angeles Jewish day schools receive financial aid to pay tuition, which runs between $12,000 and $30,000 per year. And with both tuition and the number of students requiring aid expected to continue climbing, BJE: Builders of Jewish Education is partnering with local donors and national organizations both to alleviate the immediate crisis and work toward long-term solutions for lowering the cost of Jewish education.

Last week, BJE announced that Los Angeles is one of three cities to split a $3.1 million Generations grant from the AVI CHAI Foundation and the Partnership for Excellence in Jewish Education (PEJE) that will provide seven day schools with financial aid dollars and training and resources necessary for developing an endowment capable of spinning off funds in perpetuity. BJE raised $600,000 to match AVI CHAI’s contribution to secure the grant, and is now accepting applications from elementary, middle and high schools.

“If you look at what is happening in the school world, the schools and universities that are successful and able to weather the economy are those that have big endowments. So we set that as a high priority,” said Miriam Prum Hess, director of BJE’s Center for Excellence in Day School Education.

Only a few of Los Angeles’ 38 Jewish day schools have any sort of endowment, and the Generations grant joins other initiatives that in the last few years have focused on endowment.

A Jim Joseph Foundation grant totaling $12.7 million gave five Los Angeles Jewish high schools money to provide scholarships to middle-class families who earn too much to qualify for financial aid but still struggle to pay tuition. The grant came with funds to hire and train development staff, and required schools to raise their own monies for endowment.

Now completing the second year of a six-year cycle, the five high schools have raised a combined $2.3 million for their endowments.

“It’s difficult to think endowment when you need to raise money to keep the lights on,” said Larry Gill, board president of Shalhevet, where tuition for next year is $27,250. “But the reason the Jim Joseph program has been so effective is that it has really forced discipline on us. It’s sort of like a 401(k) — it forced us to put money away for the future.”

The grant also enabled Shalhevet to hire two full-time development professionals. Gill says Shalhevet is well on the way toward securing pledges of $500,000 for the endowment to meet a June 30 grant deadline.

BJE itself has secured pledges of nearly $10 million for a community fund that, starting in 2012, will add 25 cents to every dollar schools raise for endowment. The community fund, also a requirement for the Jim Joseph Foundation grant, was seeded with a $5 million matching challenge from the Simha and Sara Lainer Family Foundation. BJE has set a target of $100 million total for the community fund combined with the schools’ individual endowments, but Prum Hess says that number will have to grow to meet the community’s growing needs. More than half of the 9,500 students in BJE-affiliated schools are projected to receive financial aid next year.

To further help schools build fundraising infrastructure, BJE set up the Leadership and Fundraising Academy (LFA), an 18-month program for administrators and lay leaders, funded by a grant from Peter and Janine Lowy.

Sinai Akiba is one of the few schools in Los Angeles to have an endowment — a $7 million fund it started in the 1980s — and participation in LFA has enabled it to broaden its fundraising activities and focus its mission, according to headmaster Rabbi Larry Scheindlin.

“The thing we have learned most from the LFA process is that it is educational quality that drives the future of the school and carries the school into a virtuous cycle of enrollment and fundraising,” Scheindlin said. “It’s a terrible mistake to think that you can cut back on educational quality in order to lower tuition and thereby sustain enrollment.”

Rather, he said, Sinai Akiba has set tuition where it needs to be — $19,400 for the lower school, $21,600 for the middle school for the 2011-12 academic year — and increased its financial aid program, going from 15 percent of students a few years ago to 27 percent this year. The school has actively recruited and offered aid to families who thought they couldn’t afford a Jewish education.

Prum Hess says the presence of the LFA and the success of the Jim Joseph grant helped Los Angeles win the AVI CHAI grant, which relies on training existing development staff.

BJE raised $600,000 to qualify for the matching grant, then raised additional money to offer each of the seven schools $52,000 over three years, rather than the $25,000 prescribed by AVI CHAI. The hope is that the scholarship money, though a modest amount compared to the need, will alleviate some immediate stress and stabilize enrollment, and allow schools to develop their capacity to raise endowment funds, Prum Hess said.

In addition to the cash infusion, each school will receive five days of coaching with an experienced fundraiser and marketing materials that schools can customize. A BJE staff person, hired with the grant money, will serve as a resource to guide schools through the process of shoring up its fundraising apparatus.

The help, according to Shalhevet’s Gill, can’t come soon enough.

“If things continue in the current crescendo of cost versus money earned, in a very short amount of time the advantage of a Jewish education will be the purview of the extremely wealthy only. And that would be a disaster,” Gill said.

Rethinking the system: How Federations might adjust

North American federations could and should be doing much better than they are. They matter. They are important. They embody the ideas of community, common cause and the ability to respond to collective concerns. They are vital institutions, and we want them to succeed.

Federations have been the hub of a vast system that involves community centers, family services, bureaus of Jewish education and so many more organizations. But this system is becoming unglued, and changes need to be made.

This call for action comes from someone who has worked for three decades with more than 70 federations, including New York, Los Angeles, Cleveland and Baltimore. I have worked as a consultant with the Council of Jewish Federations, the United Jewish Appeal and scores of constituent and beneficiary agencies. I believe that federations are essential. I don’t have all the right answers. But I think I have some of the right questions.

Telling the Truth About Endowments

Endowments are a big federation success story, but trouble is bubbling both on and below the surface. Many federations proudly promote the size of their endowments, noting how much money is under federation management.

Is it real? Touting an amazing growth of funds under the federation roof paints a not-quite-honest picture. Here are some of the key issues that need to be addressed:

  • Part of or apart from the federation? More and more federations are losing control of their endowment funds as they evolve into quasi-independent entities or completely separate organizations. Should endowments be part of the federation? Separation may not be good for federations. But is it good for Jewish philanthropy and the community?
  • Are endowments Jewish philanthropies or not? A close examination of federation endowment funds shows many, if not most, of the grants and dollars from donor-advised funds and supporting foundations go to non-Jewish causes. Is this good, bad or unimportant for federations? How much do these funds actually help the Jewish community?
  • How should endowments report their holdings? Endowment funds are really a mixed bag of unrestricted and restricted funds under federation oversight. Philanthropic funds and supporting foundations are donor-controlled, not federation-controlled. How can these funds be described more honestly and accurately? How can endowments more truthfully report their giving?
  • How do endowments measure success? Are endowments doing well if they manage more and more money, give money to secular causes or give more to Jewish causes? How do we assess what the outcomes should be for endowments?
  • Should endowments spend down? Endowment advocates will tell you that the money they hold on to is for an emergency or a rainy day. Exactly how hard does it have to rain to loosen up dollars? And where does it need to rain — and upon
  • Endowment directors and federation executives — who’s in charge? Any healthy business has to have a clearly functioning chain of command. What happens when the endowment director has more perceived power and authority than the federation executive, as is the case in a number of communities? How can federations align their professional leadership to avoid dysfunctional management?

Retooling the Broken Federation-Agency System

The federation-agency relationship, the core of the federation allocation system, is outmoded. It does not work anymore, especially in the context of a single umbrella campaign.

Most of the money that federations give away through the allocations process are entitlements, with the largest amounts going to the same agencies year after year. How can federations develop new, more flexible ways of allocating funds?
There has been an explosive growth in the number of innovative programs and organizations, only some of which now get small, leftover grants. What should the federations’ relationship be to these new and growing networks of Jewish organizations at the local, national and international level? Who should be in and who should be out? Does the constituent-beneficiary agency structure make sense any more?

One example of a regular recipient is the Jewish Agency for Israel, which is one of the major beneficiaries of overseas funds from the federation system. Many donors have no idea what the Jewish Agency is or what it does, and others are openly hostile to it.

What should the federations’ relationship be to the Jewish Agency? Are there other organizations in Israel that should be supported as well, or even substituted?

Coming to Terms With the Annual Campaign

The annual campaign is what built the federation and generates hundreds of millions of dollars annually. But in real dollars, it has declined precipitously since 1967, when adjusted for inflation. The donor base is aging, especially for the largest gifts. Among the real questions facing the annual campaign:

  • Does an umbrella campaign still make sense? Federations provide a small percentage of the annual operating budgets of many agencies. Should federations raise and distribute money to local agencies, or would it be better to simply help them raise it themselves?
    Should federations once again consider running one campaign for local needs and a separate one for Israel, as they used to? Donors increasingly want to control where their money goes. Would federations increase the number of donors and how much they give by once again splitting up the campaign?
    And what about the American Jewish Joint Distribution Committee (JDC)? The JDC is well respected by its donors and serves a particular role in helping needy Jews around the world. Is it time for JDC to go its separate way and run its own national campaign?

  • How can federations turn around their shrinking donor base?
    The number of donors to the annual campaign is down over the past 20 years. Individual federations may see small blips upward from time to time, especially after a crisis in Israel. Federations invest very little in developing, acquiring and managing donor lists. How can local federations and the United Jewish Communities (UJC) invest in a national database system?
    One potential source of new donations are non-Jews. The vast majority of Americans are supportive of Israel, and many use Jewish community centers, Jewish vocational services and other Jewish organizations. How can federations expand their donor base and annual campaign by reaching out to tens of millions of Americans, especially those who support Israel?
    Part of the problem is name recognition. The United Jewish Appeal (UJA) once was the most recognized name or acronym in Jewish life. Should the federation system reclaim the UJA name as part of its effort to revitalize its national campaign?
    The annual campaign is built on a pyramid, with the largest gifts setting the scale for all gifts. Major gifts have been stagnant at the top, and the pyramid is not high enough anymore.
    Donors capable of giving $5 million or $10 million to the annual campaign do not do so. How can UJC create national and international peer groups of the wealthiest donors to radically change the standards of giving?

Administration and Function

Federations are shooting themselves in the foot on some basic administrative issues that seriously harm their image. Some internal housekeeping measures will help them better relate to donors, other Jewish organizations and the Jewish public in a healthier way.

  • Overhead issues: Federations perform many services, including community relations, Jewish education and others, as programs within the federation that are viewed as administrative overhead and make the bottom-line fundraising costs look much higher than they really are. How can federations structure themselves so that programs and services are delivered by separate agencies or subagencies?
  • Consensus or paralysis? Federations rely on a consensus model to get things done, trying to get the most people representing the most points of view to reach some common ground. The result is often the least common denominator, with the fewest people terribly unhappy, but nobody really happy either. Is this still a good model? Is it efficient? Getting everyone to buy in may bring community harmony but also paralysis.
  • Finding the right executive: Federations often seek the impossible — someone who knows the federation business as an insider, and someone with fresh, new perspectives, who is unsaddled by the old way of doing business, i.e., an outsider. What is the mix of skills and experience necessary to run a federation? What do federations really want in their executives — besides establishing better relationships with private foundations: In a number of communities, private Jewish foundations give away more money than the federation, and in a growing number of places, a single Jewish foundation does so. Many foundations often complain that federations are too slow to respond to changing needs and are too bureaucratic.
    Federations complain that foundations start projects that they do not finish and leave the mess for federations to clean up. How can federations work closer and more effectively with private foundations?

The bottom line is that federations need to change. We will make a better system by tackling the real issues, not hiding from them. If not, federations will remain part of the Jewish philanthropic landscape but nowhere near as important as they ought to be.

While federations have evolved significantly in recent years, the change is not happening comprehensively or quickly enough for them to be the powerhouses in Jewish philanthropy they would like to be or have been in the past.

Courtesy Jewish Telegraphic Agency.

Gary Tobin is president of the Institute for Jewish & Community Research and writes frequently about American and Jewish philanthropy.

The $45 Million Question

As soon as word spread about last month’s $45 million gift to Jewish day schools in Boston, one question arose for parents and educators around the city: What about Los Angeles?

While no one is brazen enough to put a definitive number or date on such a godsend in Los Angeles, officials at the highest levels of Jewish communal structures have been incubating a plan for about a year to make day school funding and fundraising more robust.

With tuition as high as $22,000 a year for high school — and that’s not even covering increasing operational expenses — everyone from parents to community leaders recognize that something has to be done to sustain the city’s 36 schools and 10,000 students.

In all national population surveys, having a day school education has been a key factor in creating higher sustained levels of affiliation.

The top executives of the The Jewish Federation of Greater Los Angeles, the Bureau of Jewish Education (BJE) and the Jewish Community Foundation have joined forces to buck the perennial Los Angeles challenges of size and sprawl to lay the foundation for a system where money raised on a communal level will go both toward funding scholarships and toward creating incentives for the schools to develop endowments of their own.

“We have had an ongoing discussion about building a very large community endowment,” L.A. Federation President John Fishel said. “Using monies that we have available through our annual campaign and money available from the Jewish Community Foundation, we want to try to challenge large donors to come on board to help us build a significant endowment that would allow us to generate income for the operational support of schools and to keep tuition costs down.”

Fishel said that he has met with several major givers to begin discussions on what may become lead gifts for a communal pot, but no donor has come forward yet to open the floodgates.

“I think there are some things in place that if they would align themselves properly — and we are trying to push those things to align themselves properly — I think the community in the course of the next decade could develop a $25 [million] to $30 million fund,” said Marvin Schotland, president and CEO of the Jewish Community Foundation.

While the details of how such a fund would function are not yet established — and might very well be driven by a particular donor’s vision — the need for schools to increase income is undeniable.

Currently, only a handful of schools have endowments. In non-Orthodox schools, tuition covers about 85 to 90 percent of costs, with the rest raised through annual dinners, campaigns or major benefactors. Orthodox schools, which give more scholarships, operate with roughly 60 to 65 percent of costs covered by tuition.

The BJE, a Federation agency, distributes $2.25 million to schools annually — about $225 per day school child — a number many critics feel is too low.

In Chicago, a city whose community has deeper roots and whose annual campaign is proportionately much more successful than Los Angeles’, the Federation doles out $500 per child in kindergarten through eighth grade and $1,000 per high school student, in addition to funds from an endowment.

In the last 10 years, annual tuition has nearly doubled at most schools, with kindergarten through eighth-grade tuition reaching about $12,000.

Gil Graff, executive director of the BJE, worries that even comfortable professional families cannot sustain that level of sacrifice. He points to a drop in day school enrollment over the last several years, due mostly to nationwide demographic dips in school-age children, but also, Graff fears, due to the rising costs.

Graff looks toward the model of Chicago as one example of what Los Angeles can do to create new realities. Over the last few years, Chicago has developed two day school endowment programs. One is a communal fund where the income is paid out on a per capita basis to the 14 schools. The other is one where schools themselves raise the money, and the Federation kicks in an additional 10 percent, up to $100,000 per gift.

But raising communal dollars is notoriously difficult in Los Angeles, with its geographic and philosophical sprawl.

“Los Angeles does not have donors who are stepping up to endow the communal pot,” Schotland said. “What kind of individual do you need to find that has the vision, the openness and the understanding so that they are willing to put dollars into a communal pot and understand that on every level, across the board, the community is enhanced by students being educated in a Jewish environment?”

Schotland pointed to other challenges. Education in general has not been a big draw for major donors, he said, and even donors interested in Jewish education might not agree that day schools are the best way to educate future generations.

In addition, Los Angeles schools are still in a state of relative immaturity. The oldest day schools in Los Angeles are around 50 years old, and a good number of them were founded only in the last two decades. Enrollment has gone from 5,500 students in 22 schools in 1985 to nearly 10,000 students in 36 schools today, with much of the growth occurring in non-Orthodox institutions. Those newer schools, and some of the old ones, are still building their infrastructure, so many of the major gifts go to specific schools for specific projects.

Graff hopes the Boston gift will change how people view giving to day schools.

“[The Boston gift] establishes that this cause in fact elicits gifts of high magnitude, and a donor is not being some sort of idiosyncratic pioneer, but is joining others who have undertaken such initiatives,” Graff said.

The $45 million was split four ways, with $15 million going into a community fund for the 2,600 students in 16 day schools, and three schools receiving $10 million each.

Barry Shrage, president of Combined Jewish Philanthropies of Greater Boston (the L.A. Federation’s equivalent), said the gift materialized over several years after two donors, both of whom have long-standing connections to Schrage, took the lead in crafting both the vision and the donor pool.

“The day school project is enormously important, but it is imbedded in a broader vision for the creation of a new kind of Jewish community,” Shrage said. “I think it works best in an environment where the Federation is not just about raising money. The Federation is about creating a very broad, shared vision for the entire community. The donors feel comfortable as part of that shared vision.”

Does that atmosphere exist in Los Angeles, which is both bigger and younger than the Boston community?

Fishel still sees enormous challenges to achieving that level of rapport.

“I think we are at a very different level of community development,” he said. “We are grappling here with trying to forge a vision that has broad-based consensus so we can move from our historical patterns of support to something that would address contemporary realities. If I can be brutally honest, I would like to think that we would have moved further along that continuum.”

Still, Fishel vows to keep up the fight for day schools.

“It’s taken a long time for Boston to get to this point, and the challenge in Los Angeles is longer term. But that doesn’t mean you don’t undertake it and don’t try to achieve it.”

Day School Help on the Way

Beginning Dec. 1, Miriam Prum-Hess, the L.A. Federation’s vice president of planning and allocations, will move within the organization to become a consultant for operational issues for day schools through the Bureau of Jewish Education.

Her job will include helping schools identify and implement best practices, streamline their operations and improve marketing and development. She will also look for cost-saving opportunities, such as using the day schools’ collective purchasing powers for everything from supplies to insurance.

Day school principals have already set up meetings with long agendas with her, she said.

“It’s an incredible statement on the part of our Federation to take someone who is senior staff and lend me out for two years to see if there are ways to strengthen these important institutions in our community,” said Prum-Hess, herself a parent of two day school students and a self-described “passionate advocate” for schools.

To contact Miriam Prum-Hess, call (323) 761-8000.