The 2008 annual campaign decreased by 3 percent – the Annual Campaign’s first decline in six years – along with a 27 percent decrease in endowment funds due to the downslide of economic markets.

“The declining economy made for one of the toughest years in our community’s history,” said Sanford Neuman, Federation Campaign Vice President and incoming Federation President, in a statement.

Barry Rosenberg, Federation Executive Vice President, said the while funds are decreasing, demand is on the rise for the social services agencies provide.

“We’re dealing in unprecedented times,” said Rosenberg. “We’ve dealt with economic dips – with the need to retrench services a little bit or pare back. It’s part of the economic cycle and you deal with it – it’s not fun, but you deal with it. This is a game changer.”

Local constituent agency executives interviewed for this story said the allocations decrease did not come as a surprise.

Sonia Dobinsky, Executive Director of Central Agency for Jewish Education (CAJE), said Federation officials kept agencies informed about the Annual Campaign’s shortfall and notified them to prepare for potential cuts. By January, agencies were made aware of the potential for allocations cuts, Dobinsky said.

“They kept us in the loop, so when the numbers came, we weren’t caught unprepared,” Dobinsky said.

CAJE and other agencies received the 2009-2010 allocations numbers after they were approved by the Jewish Federation board in mid-June.

Dobinsky said CAJE came up with contingency plans for different levels of cuts. To counter the reduced allocation, the agency has cut some non-essential expenses and will cut travel expenses by foregoing some staff development seminars and conferences. Doing so will allow the agency to avoid cutting staff positions, Dobinsky said.

Lynn Wittels, CEO of the Jewish Community Center, said the 6.43 percent allocation decrease will certainly be felt at the JCC, although the agency does not currently know where cuts will occur. Approximately 10 percent of the JCC’s budget comes from Federation.

Local core allocations

Eighteen local agencies – including five day schools – receive annual, unrestricted “core allocations” from the Jewish Federation – from $50,000 for MERS/Goodwill to nearly $1.3 million for the Jewish Community Center.

Sixteen of those agencies are reviewed on a three-year cycle (MERS/Goodwill and Barnes-Jewish Hospital are not and are given a standing $50,000 annual allocation). Six day schools are reviewed together as a pooled allocation.

Since 2006, when the three-year cycle was implemented, between three and five agencies come each year before the Federation’s Local Agency Core Allocations Subcommittee, a sub-group of the overall Planning and Allocations Committee, to discuss their agency’s mission and their results over the past three years.

Before 2006, agencies came up for review every year. Since then, agencies continue to provide ongoing financial and organizational information annually to the Local Agency Standards and Capacity Building Subcommittee, but are only fully reviewed every three years.

Rosenberg said the change to the three-year cycle was instituted to make the allocations process more effective and more efficient. With fewer agencies to review each year, the Local Agency Core Allocations Subcommittee could spend more time with each organization and better understand its mission, strategic goals and performance.

At the same time, agencies could devote fewer staff resources each year without an annual budget presentation, and agencies could better plan with a more dependable financial picture over the three-year period.

Batya Abramson-Goldstein, executive director of the Jewish Community Relations Council, agreed with that assessment.

“There are certain great benefits to this system. Going through all that’s required for a full-fledged allocations process can put a real strain on staff. You still have to submit annual reports, but it’s not the intensive effort that the annual cycle required,” she said.

According to Rosenberg, the three-year allocations process is predicated on three overarching strategic priorities set forth by Federation:

o Integration of senior services

o Jewish identity and engagement

o Global Jewish unity and peoplehood

Constituent agencies are evaluated on the degree the agency’s programs and services support Federation’s vision and priorities along with the outcomes of an agency’s services.

“It’s really a question of saying, ‘How are they meeting a vision? Are they achieving efficient outcomes? Are they working in areas we consider a priority?'” Rosenberg said.

“That doesn’t mean that if they’re not in those three areas we don’t fund them, but how you make the judgment of how much to give of limited resources has to take those questions into account. And, how do they deal with the standards in what we would call best practices?”

Understanding the process

So, is it possible to simply summarize the Jewish Federation of St. Louis’ allocation process into a few, easy-to-grasp sentences?

“The answer to that is really no,” said Barry Rosenberg, Federation Executive Vice President. “If the goal is to understand it, then it’s to understand the incredible complexity of it.”

Rosenberg said that in both a financial and policy sense, the issues are “enormously complex,” with multiple sources of revenue – annual campaign revenue, unrestricted and restricted endowment funds, special project fundraising and partnerships with other institutions – and a lay-led set of committees with a total of 50 to 60 volunteers who examine and make recommendations for local, national and overseas allocations. Those allocations can be broken down further into “core” allocations – ongoing annual, unrestricted funds – and “targeted” allocations for particular programs an organization provides, which can be awarded on a recurring annual basis or as one-time funds (such as Birthright Israel funding, or for the JCC’s Senior Nutrition program).

That’s not to mention one-time or limited-time projects funded by specific funds – like the Lifeline Fund, or the Rubin Israel Experience for adults in their 20s and 30s.

The national picture

Federations across the country are facing similar shortfalls – and similar struggles to divide a dwindling pool of funds among constituent agencies.

JTA reported last week that UJA-Federation of New York – the largest federation in the country – saw its annual campaign decline 11.5 percent, from $154 million to $136 million.

The Wisconsin Jewish Chronicle reports its local federation’s last campaign was down 15 percent.

The Jewish Federation of Greater Phoenix, serving approximately 80,000 Jews, reported its 2008 annual campaign raised about $5.2 million, down nearly 14 percent from 2007.

United Jewish Communities (UJC), the umbrella group for 157 Jewish federations, recently reported that across the country, the 2008-2009 combined annual campaigns increased 1.3 percent, but this year’s campaigns are already down 13 percent.

According to a report from the Giving USA Foundation, overall charitable giving fell 2 percent nationwide in 2008. The foundation reports that adjusted for inflation, the result is an overall 5.7 percent decline last year.

Other allocation models

In an interview just weeks before he passed away July 6, Jewish community demographer and researcher Gary Tobin told the Jewish Light that overall, federations nationwide are facing challenges of being able to adapt to changing economic realities.

Tobin, president of the San Francisco-based Institute for Jewish and Community Research, had studied philanthropy for more than 25 years.

He said that federations often find themselves locked into a constricting set of procedures that tend to apportion funds based more on the previous year’s award than on matters of need or performance. Annual figures can often become baselines for future funding which traps federations into a rigid allocations process that is increasingly unresponsive to changing community priorities, he said.

The solution, Tobin said, is a more itemized approach that hardwires funding at an agency’s specific programs rather than simply feeding cash into the organization’s general fund, thus allowing the federation a better way to target its dollars.

Something similar to Tobin’s programmatic funding idea is certainly finding a receptive audience at the Jewish Federation of Greater Phoenix. The organization, which funds 11 constituent agencies, is transitioning to a system based on priorities decided by “community think tanks.” Fred Zeidman, Assistant Executive Director/Planning Director for the organization, said that agencies receiving allocations must sign written agreements that the resources will go to certain programs.

Other federations are also seeing a shift in priorities due to economic distress as middle class families who’ve never required help before find themselves in untenable situations.

“The face of need has really changed,” said Joshua Donner, associate director, planning and funding, United Jewish Federation of Greater Pittsburgh. “Two years ago when federations talked about people in need it was all about the food pantry. Today, the need is different, the messaging is different, the way that you engage people is different.”

Serving more than 40,000 Jews, Pittsburgh’s Federation, which collected about $12.7 million last year, has set a goal of $12.85 million for 2009. The allocations process is directed by four commissions that each address a different area of focus: Israel and world Jewry, aging and human needs, Jewish learning, and Jewish community life. Decisions are then made by a funding committee composed of the executive committees of each commission.

He noted that communication is the key to a successful allocations process. “A subcommittee of our commissions meets with each agency quarterly and through that dialogue we can understand what the priorities are within our agencies,” Donner said.

Still, some federations are seeing a need to revamp their allocations process – and many are working to find just the right balance. Rebecca Skelton, Director of Community Development for the Minneapolis Jewish Federation, said her agency is redoing its system but doesn’t yet know what the final picture will look like.

One thing is certain however. Change has definitely been accelerated by the stalled economy. Last year’s campaign raised a record $16.6 million dollars to support a Jewish community of 35,000 but Skelton expects that total to drop “very significantly.”

“Previously, we allocated dollars to core allocations and primarily we saw change on the margins. We’d be up a few percent or down a few percent but the core allocations wouldn’t shift terribly significantly except over a long period of time,” she said. “Given the diminished resources available for allocations on the local side, we’ve decide to re-evaluate the core distributions that we make and try to align them better to community priorities.”

New software in Seattle

Skelton said one model they are looking at now is being used in Seattle.

That model revolves around a decidedly high-tech solution to remedy allocations issues. In 2007, the Jewish Federation of Greater Seattle adopted Dwaffler, a software tool that allows agencies to be ranked on the basis of “attributes” which are themselves weighted to reflect federation priorities.

“We were looking at how we begin to assess the needs of our community and the manner in which the agencies are meeting those needs in such a way that when we tell our donors and our community how much money we’ve given to certain agencies, we have a rationale that is based on fact versus based on historical allocations,” said Amy Wasser-Simpson, that federation’s Vice President for planning and community services. “We felt that we needed to look at a different way of viewing our agencies against one another as opposed to saying, ‘Well, last year they got $300,000, so this year we should give them $305,000.'”

Wasser-Simpson said that while the Seattle federation’s 21 local constituent organizations are guaranteed at least 75 percent of the previous year’s funding, any remaining funds beyond that floor are directed by recommendations from Dwaffler, which relies on input from 25 committee members. They assess the organizations in 13 areas ranging from how well they’ve worked with the federation and other groups to how effectively they’ve met critical needs in a specific niche to how dependent they are on allocated funds.

Eighty percent of the final figure is based on an agency’s raw score while 20 percent is judged from an “improvement score” that rewards agencies that are making strides toward meeting federation priorities.

Wasser-Simpson said the program has proven very valuable because it allows the federation to lay out objective criteria and unambiguous goals that help simplify what might otherwise be a murky decision-making process.

“It was incredibly successful for us,” she said. “We were able to sit with every agency, talk about their scores and talk about where they fell in the rankings and how they could make adjustments and potentially improve. It was really a very clear and rational way for us to make our allocation decisions.”

What’s ahead for St. Louis

“The process this year was particularly challenging,” said Robert Millstone, Planning and Allocations Committee vice president in a statement. “Here’s just one example of how challenging these decisions have been,” said Millstone. “Hillel at the University of Missouri serves 700 Jewish students with only one full-time staff person. Any budget cuts could have closed Hillel’s doors – just when the Jewish student population is increasing. Obviously, we decided not to cut Hillel’s funding. But in other cases, it was necessary to reduce allocations. The reality is our community must prioritize in order to meet the most critical needs.”

“In the meantime, the best way to keep our community vibrant and thriving,” said Rosenberg, “is to support the 2009 Community Campaign. It is the underpinning of everything we do in our community… Especially now, every contribution – even a small one – makes a significant impact.”

According to Ruth Lederman, assistant executive director and director of development, the Federation’s 2009 Annual Campaign is $2.2 million behind last year.

For agency executives, belt-tightening continues.

JCRC’s Abramson-Goldstein said while she is confident the agency will still be able to provide its core functions – and keep core staffers – it is focusing on ways to better mobilize volunteers and collaborate with sister agencies and organizations.

“We’re making every effort to be responsive and responsible,” she said.

At the JCC, part of the planning process for reducing costs is also considering what lies ahead. “When we were warned a few months before our allocation about the potential for cuts, we were also told that next year, it might be even worse,” Wittels said.

The St. Louis Jewish Light receives an allocation from the Federation. Its allocation for 2009-2010, the third year in its allocation cycle, was reduced from $102,860 to $96,246, a change of about 6.4 percent.