Tuesday, November 24, 2015


The monitoring organizations that evaluate non-profits, like GuideStar or Charity Navigator, do the best job that they can with information that is often inadequate, out-of-date and manipulated. Take a look at JFNA if you would (and if you can bear it)...

If you merely take a surface look at JFNA's reporting of its "income" and activities, one might believe that JFNA "raises" (as your federation and mine actually raises) hundreds of millions of dollars. The reality, of course, is something far different. As you and I know, JFNA raises maybe a trickle, has no FRD staff, and, more likely, raises nothing. JFNA does "allocate;" it is conduit of dollars. So, if GuideStar, Charity Navigator and other evaluating organizations had the staffing to do so, it would know that JFNA's actual cost is effectively close to 100% of income -- a disqualifying reality for a non-profit. 

But GuideStar and Charity Navigator, et al. don't have the staff to make inquiry of the thousands of non-profits they review annually. They can do no more than cursorily review the IRS 990 filings and compare the data they receive to other non-profits. It's truly "garbage in-garbage out" when it comes to JFNA, in any event. 

So, if you take Silverman's CEO compensation and measure that against JFNA's fictional "revenues" in excess of $184,000,000 -- measuring fact against fiction, if you will -- that comparison doesn't look so bad. Of course, most of that "revenue" merely passes through JFNA's hands on its way to others. When you take Jerry's (and his predecessors) annual compensation, against the true JFNA income, it...well, it stinks...not as badly as does that of Morton Klein at ZOA, but stinks still, And, then, if you measure that compensation against achievement...well, forget about it. I am certain that GuideStar/Charity Navigator would agree were the reporting not so impenetrable. And, further, if Guidestar/Charity Navigator were able to measure that compensation against both real income and lack of achievement, JFNA's ranking would be downgraded to the point of our embarrassment. 

We hear talk of "transparency" all the time. In the Orwellian world in which our JFNA resides, "transparency" really means "opacity." I think we all know that. There is absolutely no doubt in my mind that there are those at 25 Broadway who actually believe that they raise $184 million + per year (or that $184 million+ would not be raised without them). This kind of delusional thinking is what keeps JFNA going, doesn't it?

Doesn't it?



paul jeser said...

We should be worried about the IRS much more. When it discovers that a donors contributions are counted as income numerous times all hell will break out.

1) Donor gives to his/her Fed - they count it as income on their 990.
2) Fed allocates to local and national agencies - and JFNA - and they also count it as income on their 990s.
3) JFNA allocates to other organizations and they also count it on their 990s as income.

Anonymous said...

Let's not get carried away with this....what's the big deal, other than JFNA marketing themselves with 'inflated' numbers for the 'outside' world, while reporting to the IRS the much lower number than the $3 Billion that was touted (for the North American Federation system) at the GA?
Is it a legal issue, as far as the IRS is concerned, that JFNA, as either the 'umbrella' or 'trade association', takes credit for what the 'North American Federation System' allocates/distributes/passes through?
Mr. Jeser, you are a former CEO of a Federation: Was the reporting by UJA and CJF any different? And if not, did you bring it up during your tenure?

Anonymous said...

Paul, I am really surprised that you used the argument as you did. While I certainly don't think JFNA "raises" any money there is absolutely nothing wrong with their claiming it as income while the federations also claim the income as do the beneficiaries. In the federation(s) you headed, didn't the federation claim the income which it passed to its agencies which also filed 990's and claimed the money from the federation allocation as income. How is this any different?At least the CEO's of the federations and the beneficiaries can be evaluated based on how much they have increased the revenue to their organization be it the federation or a beneficiary. At the same time I agree with Richard - paying Silverman the enormously inflated salary that they do when he doesn't do much to increase the revenue to JFNA (read - increased allocations to overseas partners or to help federations increase their own income which would allow JFNA to claim even more income) is outrageous.

Paul Jeser said...

My point is that I think it is illegal for more than one organization to report the same contribution on its 990. And, yes I did bring it up to both UJA and CJF colleagues during my tenure as a Fed exec.

Anonymous said...

According to you, Paul, it is time to alert the authorities and attorney general's in every state so they can go arrest all of the auditors of every United Way that ever claimed their campaign as income and then allocated those funds to an agency that also claimed the grant from the UW as income. Is that correct?

Anonymous said...

But wait, there's more, Paul. As an employee of a Jewish non-profit, am I wrong to claim income on my tax returns that my Federation claimed as income before passing it on to my agency who also claimed it as income? Wouldn't that be triple dipping?Lord help us if the original donation was made from a DAF!

As interesting as this mental masturbation excercise is, wouldn't it be far more productive to concentrate on the real question? What is, especially as the Jewish community becomes ever more transient, the value propositions of Federations in the 21st Century and what is the role of JFNA in shaping and articulating said proposition?

Anonymous said...

This is not a legal or IRS issue but an issue that gets to the heart of determining the effectiveness of Federated giving. As an illustration: A donor contributes $1000 in the hope that it will better the lives of real people.She does so through a donor advised fund who then gives it the federation who then transmits it to UIA who then passed it on to JAFI who then gives a grant to a contract agency that provides the end user services. At each point in the process legitimate administrative and fundraising expenses come into play-by analogy a kind of philanthropic VAT is at work. By the end of the road, only a percentage of $1000 directly impacts the end user client. The open question is whether the multiple layers of overhead cost truly contribute added value to the end product user and give the donor true value on her original $1000.

RWEX said...

Friends, I have once again had to reject an Anonymous personal attack. Please stop it.

Anonymous said...

anonymous 7:49 - income from salary is different from tax-deductable contributions.
anonymous 1:48 - you are 100% correct

Jeser is right - someday both the Federation and United Way systems will have problems due to their 'double' booking the same contributions.

Anonymous said...

But there's nothing new here.

Anonymous said...

Anonymous 1:48 here: I call my analogy the "chad gadya effect"

Anonymous said...

Were you sounding the alarm on this exact same practice prior to the merger?

RWEX said...

Touché. I could fall back on the reality that pre-merger there were neither 990s nor GuideStars...but I won't.

Anonymous said...

Well no. Form 990 has been around for more than 50 years. The first 990 was filed for tax
years ending in 1941. Even in my ancient time we had to file form 990s, Richard. And that was way before the merger.

And GuideStar opened its doors about 6 years before the merger.

So ... were you sounding the alarm on this exact same practice prior to the merger?

Anonymous said...

You have just described the way that 99.9% of Federation donors feel good about their philanthropy.......and I applaud you.
However, you miss the boat on a few things:
1. Those 99.9% do not care about whether 100% of their donation or 100%-whatever administrative costs are deducted along the way......The Federation is communicating to them about the impact of their philanthropy, and that is good enough for them......as it should be.
Where you miss the point is here: Those 99.9% of the donors would never take the time and effort to research, and I'm quoting you directly here, "the contract agency that provides the end user services". And that's what the 'UJA' unrestricted gift does...and has been doing effectively for the last 60 years......The value to the donor is apparent; just ask for the statistics on the retention % for major donors.
Now, if you want to talk about the 1% of mega/major donor who want to control where their dollars go, that's a different discussion.

RWEX said...

To 9:03 p.m.

Touche...again. My error and mea culpa.

Anonymous said...

So 9:04, what you are saying is that most people like our hot dogs but really don't want to know what goes into making them? And those major donors, are you looking at their retention rate in 1980 dollars or 2015 dollars? And how do you account for the poor retention rate of non-major donors-could it be that in all categories some folks are no longer satisfied with Federation giving as ritual?
I believe in Federation because I believe in needs assessment, efficient fundraising, collective responsibility, thoughtful allocations processes and program evaluation -all as a necessary use of my dollars. However I also believe that donors on all levels cannot be taken for granted and we need to devote time an effort into accountability mechanisms, transparency and repairing or transforming that which has stopped working or is inefficient. We can and must do better.
chag sameach,

Bruce A. Arbit said...

The argument about double counting income may display a lack of basic economic knowledge.

An old Yiddish parable may help to promote understanding.

A Traveller stops at an inn in a small village in the Pale of Settlement. The Traveller asks the Innkeeper how much for a room.

The Innkeeper replies 10 Kopeks. The traveller pays the 10 Kopeks and the Innkeeper shows him to his room.

The Innkeeper quickly runs to the home of the Carpenter to pay him 10 Kopeks for the carpentry work he recently did on the hotel.

The Carpenter runs to pay the Butcher, the 10 Kopeks he owes him for meat he purchased earlier in the week.

The Butcher runs to pay the Village Nafka, the 10 Kopeks he owes her for "services" rendered.

The Village Nafka runs to pay the Innkeeper the 10 Kopeks she owes him for a past room rental.

The Traveller wakes up in the morning and sees the Innkeeper. The Innkeeper inquires how the Traveller spent the night.

The Traveller complains that his room was too close to the railroad tracks, and he could not sleep all night.

The Innkeeper refunds the Traveller his 10 Kopeks.

And everybody lives happily ever after.

Anonymous said...

Anon 11:18
Regarding your hot dog analogy.....I apologize for not being clear: They do want to know that their gift makes an impact.
But check with your Federation and ask how many donors, at any and all levels, challenge how their donations are spent/allocated, etc.
I think you will find that the vast majority of them do not question at all.....and they don't for a basic reason: Their philanthropic commitment to the Federation, be it unrestricted or designated, and at any level, signifies their 'trust' in the leadership of the Federation (or all organizations to which they are philanthropic) to be fiscally responsible.......if that weren't the case, they would stop giving.
And that speaks to the effectiveness of the Federation's communication with their donors.
Can they do better, of course...all non-profits can and must.
I would also check the poor retention rate that you mention....generally it is at the lower end of the campaign, where there is the most 'churn', simply because the Federation (and most other non-profits) don't have the staff/volunteer capacity to cultivate a personal connection with that 90% of their donor base.
As before, could they do better? I believe that they are all trying.
Anon 9:04.

Anonymous said...

Bruce ... How can the innkeeper refund something he doesn't have anymore?

Bruce A. Arbit said...

Re-read the parable. The Nafka paid the Innkeeper the 10 Kopeks she owed him.

It's a good story, but sadly, it won't fix our world.