26 Billion Bucks: The Jewish Charity Industry Uncovered

Part I — Donors Give More to Israel Than to Education

Kurt Hoffman

By Josh Nathan-Kazis

Published March 24, 2014, issue of March 28, 2014.
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The American Jewish community’s network of charity organizations is a font of Jewish power, a source of communal pride and a huge mystery.

We know that the network exists. We know that its federations, social service groups and advocacy organizations influence America’s domestic and foreign policy, care for the old, educate the young and send more than a billion dollars a year to Israel.

Yet until now we’ve had no idea what the network looks like.

Individual organizations file tax returns. Some umbrella groups offer information on their members’ work. But no one has measured the network as a whole: how much it spends, how much it raises, how it prioritizes causes, how much it gets from the government.

Now, the Forward has identified and reviewed tax documents filed by more than 3,600 Jewish organizations in the most comprehensive survey ever of the financial workings of this Jewish tax-exempt ecosystem. And the results are striking.

The Forward’s investigation has uncovered a tax-exempt Jewish communal apparatus that operates on the scale of a Fortune 500 company and focuses the largest share of its donor dollars on Israel.

This analysis doesn’t include synagogues and other groups that avoid revealing their financial information by claiming a religious exemption. But even without this substantial sector, the Jewish community’s federations, schools, health care and social service organizations, Israel aid groups, cultural and communal organizations, and advocacy groups report net assets of $26 billion.

Israel: Contributions to the functional agencies of the Jewish charitable network, broken down by category. Israel-related groups get the most.
Israel: Contributions to the functional agencies of the Jewish charitable network, broken down by category. Israel-related groups get the most.

That’s more than the Las Vegas Sands Corp., which owns casinos all over the world. It’s about the same as the CBS Corp. which owns 29 TV stations, 126 radio stations, the CBS Television Network and Simon & Schuster. The Jewish communal network of tax-exempt groups employs as many people as the Ford Motor Co.

And its $12 billion to $14 billion in annual revenue is more than the federal government’s 2014 appropriation to the U.S. Department of the Interior, which manages a fifth of all the land in the United States, runs the Bureau of Indian Affairs and the national parks, and administers Guam, American Samoa and the U.S. Virgin Islands.

“What exists out there is a lot of guessing,” said Eric Fleisch, a postdoctoral fellow at Brandeis University who recently completed a thesis on American Jewish giving to Israel. “Not very much has been written about this at all.”

In the coming weeks, the Forward will publish a series of articles reporting the results of its investigation. The Forward can now describe a Jewish apparatus that, despite extensive rhetoric about the importance of Jewish education, still dedicates the largest share of its donor dollars to Israel-related causes. It’s an apparatus that benefits massively from the U.S. federal government and many state and local governments, in the form of hundreds of millions of dollars in government grants, billions in tax-deductible donations and billions more in program fees paid for with government funds. And it’s an apparatus that requires vast resources to support itself, spending $2.3 billion a year on management and fundraising — and $93 million on galas alone.

The Forward’s database is based on files the IRS made available in 2013 that consist of figures from all the Form 990s and Form 990-EZs — the forms the IRS requires of all nonreligious charities — that were submitted in the 2012 calendar year. The findings in these stories reflect mostly tax periods ending in the 2011 calendar year. A more detailed explanation of the Forward’s methodology in constructing its database is included in an accompanying story.

The Contours

The Jewish not-for-profit network is shaped like a daisy.

The white petals are the functional agencies, offering concrete services like education and counseling, or public advocacy on various issues. They run the nursing homes and food banks, and advocate in Washington. At the yellow center are the communal grant makers, organizations like the Jewish federations and the large communally sponsored donor-advised funds that exist largely to finance the functional agencies.

All told, the whole daisy reports $14.6 billion in revenue in a year. Given the likelihood that a large proportion of the $2 billion that these groups report giving out in grants to organizations goes to other Jewish tax-exempt groups and is thereby counted twice, the actual revenue is probably between $12 billion and $14 billion.

This daisy structure has existed for well over a century in the United States. The Boston Jewish community founded the first federation in the country in 1895; similar groups soon followed in other cities. In 1902, the American Jewish Year Book counted thousands of Jewish organizations across the United States, including schools, clubs and fraternal lodges.

Since then, the network has grown enormously larger and more complex. “In many ways, we had a better sense of Jewish giving back then than we do today,” said Jonathan Sarna, a professor of American Jewish history at Brandeis University.

Jewish charity experts have warned in recent years that the old daisy structure is disintegrating — that major givers are abandoning the federation system in favor of giving directly to the functional organizations. Yet the Forward’s investigation shows that the communal grant-making groups in the center of the daisy still play a dominant financial role in the Jewish not-for-profit network.

Taken together, these communal grant makers have $11.6 billion in net assets, 43% of the network’s total. They also control a huge portion of the flow of donated cash.

They make $1.7 billion in grants to charities in the United States each year, while the functional agencies take in $3.6 billion in contributions. It’s fair to assume that the vast majority of the $1.7 billion is granted to other Jewish groups, and therefore that roughly half of the $3.6 billion raised by the functional agencies comes through the communal fundraisers.


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