Fee for
Service
There is a great
fear both in synagogue leadership and at Federations, about adopting
a “fee for service” approach to finances. What would happen to
American synagogues and to the rest of the structure of the Jewish
community if Jews were allowed to pay only for the programming and
services that they need? Could a synagogue exist without dues? If we
pause to think about this question we should see how absurd it is.
Why should it be that Jews should pay for programming they don’t
need or want? Are we so paternalistic that we know better what Jews
“should” want? Unless we sell them on a program, why should we
require them to pay for it? And yet, this is the way we run most of
our Jewish organizations. I have heard communal leaders say over and
over, “Why don’t young Jews care about us anymore?” Just
because it was important to a previous generation, if we can’t
convince a new generation of its importance, then we can’t expect
them to pay to keep it running.
Synagogues are
not doing all that well with a financial program that relies on dues.
Shrinking memberships and increasing expenses are forcing
congregations to look to other means of fundraising to make up the
shortfall in dues. Dues used to represent just about half of a
congregations budget. Today, it can be as low as one quarter to one
third of the budget. It is also a number that is shrinking so fast
that calculating the amount a congregation will collect in dues can
be somewhat of a guess at the beginning of the year. Often this
budget line falls below expectations.
Synagogues do
charge fees for Religious School, Bar/Bat Mitzvah and a variety of
other services but often these do not cover all the costs involved.
Dues are used to make School and other services more affordable for
families, in effect charging those without children to help cover the
cost of education so it will not be too expensive for those who might
not be able to afford to pay.
Even in the best
of times, fundraising can represent at least half of the annual
budget. Most of this is pretty mundane stuff. It is collected from
dedications that are in memory of the departed or in honor of special
life cycle events. Many congregations have an annual fund raising
event that the whole congregation gets behind to make is successful.
This portion of the budget is often estimated low and when all goes
as planned, there may be extra monies raised. I know of congregations
who just assume that whatever the shortfall will be in other areas,
they will make up in fundraising from large donors in the
congregation. Sometimes this works, sometimes the shortfall is so
large that no one person can cover the debt.
This model of
dues, fees and fundraising clearly is not working. There are way too
many variables and without an endowment, often synagogues find
themselves running serious deficits. Congregations that have been in
existence long enough to have an endowment fund, find themselves in a
better situation as the restricted funds cover most standard
programming as well as capital expenses and the unrestricted funds
cover innovation and new ideas. But the recent financial crisis in
the world showed us, that endowment are also subject to falling
interest rates and sometimes the principle has to be raided to cover
unexpected problems.
I recently heard
of an organization that did financial audits on synagogues and
discovered that the dues model was not as effective as once believed.
There are so many “hidden” costs in a synagogue that some of the
programs that were thought to be carrying the budget, in fact were
losing money if all the real costs were put together. Synagogue
budgets often list staffing costs, insurance costs, publicity costs,
maintenance costs and utilities in other parts of the budget
effectively hiding the real cost of running a religious school, a
preschool and even High Holy Day services. It turns out that these
programs are not as cost effective as we usually believe.
A fee for service
model, if priced according to real costs, could resolve many of the
issues caused by hidden expenses. In much the same way that costs are
factored into the price of a restaurant meal or the retail price of
groceries, so too we can determine the cost of a Shabbat Dinner, A
Bar or Bat Mitzvah or the cost of educating a pre-school student and
set the fees accordingly. In this manner everyone who is in need of
what synagogues offer will pay their fair share of the expenses. In a
capitalistic approach, this makes a lot of sense. If the congregation
does not create services worth the cost, then Jews will go elsewhere
and the synagogue will have to improve or close up. Good
organizations will rise to the top and those who are being
mismanaged, will either have to reconstitute or merge with a more
successful neighbor.
In a fee for
service model, expensive annual dues are reduced since everyone only
is paying for what they use. This could create substantial savings
for Jewish families.
This model also
has its pitfalls. Already, the real cost of a Jewish education is
almost beyond the reach of middle class Jews. Would the actual cost
of hiring a Rabbi or Cantor, using a synagogue building or buying
Kosher meals be so great that they would be undercut by untrained
practitioners, hotel ballrooms and treif catering? How could a
synagogue justify high costs when similar services are found in the
secular world at substantial savings?
Toward a New
Financial Model
Next Dor, a
synagogue renewal project of Synagogue 3000, insists, as part of its
program that congregations first “engage young Jews” in the life
of the synagogue and only later bring them into the congregation as
dues paying members. The focus is not, at first, on membership.
Membership is for those Jews already engages and committed to the
work of the synagogue.
Next Dor already
recognizes the new realities of synagogue commitment. This approach
also has financial ramifications. By concentrating on the
relationship between Jews and the synagogue first, these newly
engaged Jews will come to see the importance of all the congregation
does and will be more willing to invest in the ongoing program. To
pay for the outreach, we could use a fee for service approach. As
newly engaged Jews become involved in study, social action and
ritual, they will come to value membership and have the desire to
make want to be a part of the organization and invest in their
mission. This engagement brings with it eventually dues and
donations. These Jews are less “members” and more “investors”
in the mission of the synagogue. The return on investment is in the
educational advancement, the feelings of having a meaningful life and
the spiritual feelings that are all part of what a commitment to the
new synagogue model should look like. Don't get me wrong, Dues and
donations to a synagogue are not “real” investments (This is not
a place that the SEC should need to investigate) but rather than
asking people to pay dues first and only later become active, this
will encourage all to become active and then to join others who
believe in the mission.
This kind of an
approach to membership should not only stabilize income but should
create larger groups of volunteers willing to donate time and effort
to further the synagogue mission. Would everyone who came to our
programs eventually become a member? Probably not. There will be
those who only have a short term need and will, in the end, only pay
for what they use. But they are still a valuable asset to the
congregation. As “alumni” of a synagogue program, they walk away
with feelings of goodwill and are grateful for the efforts of the
synagogue when they had a need. This can translate into future
donations word of mouth publicity that are very valuable in today’s
“social network” economy. I don't know if Angie's List has a
section on Synagogues but to have a number of satisfied former
“clients” posting good “reviews” of our services (in both
meanings of the word), is another way we can capitalize on our good
works. It is not a perfect system but one that can be a viable
financial model.
I know that there
are some who say that if we really want to bring in Jews, we need to
offer them learning and activities for free. I respectfully disagree.
If we are offering the public something important, they will have no
issues about paying for what it is worth to them. Nobody, in this day
and age expects something for nothing (and when offered something for
nothing, they usually consider it a scam.) Let them pay a small price
for their activities today, and later, if when they are fully engaged
in the community, they will want to join and invest in dues and
ongoing charitable giving.
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