Federations and Overseas Partners Reach Funding Deal

By Jacob Berkman (JTA)

Published September 22, 2010.
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The Jewish Federations of North America and its two primary overseas partners have reached an agreement in principle over how to divide the money raised by local federations.

The Jewish Agency for Israel and the American Jewish Joint Distribution Committee have been struggling with the JFNA for nearly two years over how to split the more than $100 million raised by the federation system for overseas needs. The two overseas partners have traditionally split the money using a formula that gives 75 percent of the funds to the Jewish Agency and 25 percent to JDC.

But in recent years as the pool of money has shrunk — dropping from more than $140 million several years ago to slightly more than $100 million this year — and both agencies have become strapped for cash, the JDC in particular has pushed for a larger piece of the funding pie, while the Jewish Agency has struggled to maintain its share. To compound matters, the JFNA has been pushing for the right to work with additional partners in addressing Jewish needs in Israel and other countries.

The stalemate had led the Jewish Agency and the JDC in recent months to consider upping their efforts to raise money on their own, outside of and potentially in direct competition with the 144 federations. Such a turn of events would have marked a significant blow to a system that raises nearly $1 billion per year through its local annual campaigns in part because of its ability to sell its work in Israel and overseas.

Late Tuesday, the three organizations agreed in principle to continue their relationship and work around the 75-25 split in a way that will please the groups. Top leaders from the three organizations held two days of meetings at the Manhattan offices of UJA-Federation of New York, the system’s largest federation, prior to reaching the agreement.

In a leadership briefing issued Tuesday night, the JFNA said that “The proposed framework contains four key elements: revitalization of the historic global partnership of Jewish Federations, JDC and the Jewish Agency; establishing clear goals and operational guidelines for collective overseas engagement; creating a global planning table; and establishing an enhanced overseas allocations process for Jewish Federation funding.”

Details of the agreement were still emerging following the meeting, with the JFNA spokesman declining to comment and several top officials at all three organizations awaiting internal briefings on the agreement’s finer points.

The agreement must be put into writing and ratified by the Jewish Agency and JDC boards, according to an e-mail to JTA from Steven Schwager, the JDC’s chief executive officer.

It appears that each side got some of what it wanted.

While it remains unclear how closely the system will adhere to the traditional 75-25 split, the three sides apparently will return to a process that divides the money based on merit and need, as opposed to simple mathematics. Also, the JFNA will be able to bring in additional partners in some cases, though “the bulk of the money” will still go to the Jewish Agency and the JDC, according to a source with knowledge of the situation.

The three sides will soon be hiring a consultant to set up the global planning table, and the JFNA has informed its executive board that it should be prepared to take action on the matter at the federation system’s General Assembly in early November in New Orleans.

The agreement comes two weeks after Israeli Prime Minister Benjamin Netanyahu sent a stern letter to JFNA’s chairwoman, Kathy Manning, urging her not to change the way the system allocates money to the Jewish Agency. Netanyahu is a longtime political ally of the Jewish Agency’s chairman, Natan Sharansky.

Insiders say that it is unlikely that the letter forced the JFNA’s hand in forging an agreement. Rather, they say, Sharansky’s leadership helped make an agreement possible.

The Jewish Agency has been in a yearlong process of revamping its mission, moving from an organization that traditionally focused on immigration to Israel to one centered more on building global Jewish identity.

JDC officials in recent months have used the shift as a way to argue for more money from the system, as its primary mission is providing humanitarian aid to Jews in Israel and abroad, in particular in the former Soviet Union.

But Sharansky has proven a powerful player in the federation world and a key link between the system and Israel’s government. He was a major broker in staving off a potential crisis this summer when Israel’s parliament nearly passed a controversial bill that would have formalized the control that Israel’s Orthodox-controlled Chief Rabbinate has over the conversion process in Israel.

Sharansky successfully lobbied his longtime ally, Netanyahu, to thwart the bill that many – the federation system in particular – warned would alienate Diaspora Jewry from Israel.

Sharansky’s power also has made him a formidable negotiating partner for the JDC, as he has brought a newfound credence to the Jewish Agency that many feared was becoming obsolete.

“Sharansky’s role has brought closeness with the Israeli government, he has redirected the Jewish Agency to make it more relevant, and his key role in the conversion fight has brought the Jewish Agency back to relevance in the eyes of many,” said an insider with knowledge of the situation. “He has scored a lot of points over the past year in ways” his predecessors, Zeev Bielski and Sallai Meridor, “could not.”

One JDC insider called the announcement of the agreement “very positive,” even if the 75-25 split is not ultimately abandoned.

The JFNA statement announcing the agreement quoted the organization’s president and CEO, Jerry Silverman, as saying that “We are firmly committed to working together to enhance support for the needs of the Jewish people worldwide.”

According to the statement, Silverman was speaking on behalf of the JFNA, the JDC and the Jewish Agency.

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