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Detroit Federation Takes on UJC in Funding Standoff

One of the largest Jewish federations in the country is threatening to withhold its dues from the umbrella organization of local federations, setting in motion a conflict that could potentially lead to that federation’s expulsion.

The Jewish Federation of Metropolitan Detroit, the fourth-largest federation in the United States in terms of fundraising, has announced that it intends to withhold more than a third of its dues from United Jewish Communities, the national umbrella organization for North American federations, in protest of what it considers an unfair dues formula.

“We feel that the dues are inequitable and based on campaign and not enough on population, and that they don’t reflect today’s reality, including the drop in population in our community and the special needs that we’re facing,” said Robert Aronson, chief executive officer of the Jewish Federation of Metropolitan Detroit. “We are still paying UJC, but we are no longer in compliance, because we feel that the dues are unfair and should be recalculated.”

UJC has rebuked Detroit in writing but declined to comment to the Forward.

This is not the first time that UJC, which relies on the federations for its funding, has faced arguments with local federations over dues, but Detroit is by far the most prominent federation to confront the UJC directly.

The dispute comes amid persistent questions about the viability of centralized Jewish federations, as individual donors and their foundations have increasingly dominated the philanthropic landscape. The central role that Aronson is playing in the current dispute is particularly notable because he is both a federation executive and an adviser to major Jewish philanthropists.

UJC was founded in 1999 from the merger of the Council of Jewish Federations, the United Jewish Appeal and the United Israel Appeal, and it depends on dues from local federations to cover its budget. From the beginning, UJC has faced questions about what value it provides to local Jewish federations. The New York-based organization’s current budget is $40.2 million, up 3.7% from last year. Each federation pays in proportion to how much it has raised — about 5% of its take. Though that proportion was intended to be recalculated every year, the current levels have been frozen since 2003.

Detroit is not the only community raising concerns about the dues issue. UJC moved to expel the United Jewish Federation of Tidewater (Va.) in January 2004, but the expulsion was averted when the Tidewater federation voted to pay its dues. Tidewater had complained that dues were too high, that UJC’s services were poor and that not enough money was going to overseas Jewish needs through the American Jewish Joint Distribution Committee.

Currently, the Jewish Federation of South Palm Beach County, has requested a reduction in its own dues, citing unusually high overhead from operating its Jewish campus.

UJC is scheduled to revisit the issue of dues allocation at a special meeting of the executive committee on December 17. The meeting will feature a discussion with the Fair Share Committee, which includes representatives from Detroit and from South Palm Beach. Albert Ratner, the committee’s chairman, declined to discuss what the committee would present, saying that the meeting was part of “a process.”

William Bernstein, president and CEO of the South Palm Beach Federation, told the Forward he was hopeful that the dues issue could be worked out amicably.

“We don’t have argument at all with the concept of a national system. We believe in a national system; we think a national system is important,” Bernstein said. “But we also think a national system has to be cognizant of some of the individual differences that federations have and the circumstances they have to work with.”

It is not clear, however, that the UJC leadership feels amicably toward South Palm Beach. At UJC’s budget and finance committee meeting at the recent General Assembly, executive committee chair Kathy Manning and treasurer Michael Gellman criticized the South Palm Beach Federation for failing to meet its dues allocation, according to a large-city federation leader who attended the meeting.

The source said that the recent budget increase has made federation leaders — and UJC leaders — restive.

“Because so many federations have indicated to UJC that they won’t pay a dues increase, I think some in UJC are anxious for a fight rather than any compromise,” the source told the Forward.

Detroit is one of the most successful federations in the country, with an annual campaign of $33 million in 2007, despite a Jewish population that does not even crack the top 20 cities in the United States — and that, according to Detroit leadership, is precisely the problem. With a dropping population and a local economy that is wracked by the troubled auto industry, Detroit is protesting that it needs more for local programs.

According to the current formula, Detroit owes some $1.6 million in dues. Though the Detroit federation is currently in good standing, it has announced to UJC that it intends in the coming year to reduce its payment to $1 million and to keep the other $600,000 in escrow. Detroit has also begun sending its overseas allocation of $13 million directly to the Jewish Agency for Israel and the Joint Distribution Committee rather than through UJC, to ensure that UJC does not take the remaining dues out of the allocation. If UJC and Detroit don’t reach an agreement, the funds in escrow will also be sent overseas.

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