Growing a Synagogue Part Six - Synagogue Finances: Part B

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.

Growing a Synagogue Part Six - Synagogue Finances: Part A

It is easy to get inspired by the creative thinking that is going on in the Jewish world today. It is easy to think of how a synagogue can be changed for the better and what that would mean for the members of the congregation and for those in the community looking for a spiritual home. I can hear the financial people in the congregation saying, “But how much is this all going to cost?”

I started out this book with the issue of financial problems that congregations are facing. I really hesitated as I started my writing because I didn't want either the Jews or the non-Jews to think that synagogues are all about money. But in some ways, that is a big part of the problem. We have become so focused on fundraising, dues and budgets we are in danger of forgetting our mission and our core principles. A synagogue is not about money, it is about people, teaching them, sharing with them and directing them on how to live better, more meaningful lives. The reality eventually hits us, however, that to do these things, we need to raise the money to make them happen. That is not a bad thing. The problem in American synagogues has been, over the past five or six decades, that money has been the main focus of our synagogues and we continue to struggle because we are so focused on the finances that we have forgotten our values. Now we are facing a future where nobody wants to buy what we are selling. We are selling memberships but we never make clear why membership is important. The value, we say, is belonging to a community, but what kind of a community and what meaning does it have in a person's life? How valuable can it be in facing life's challenges? That we never clarify.

Financial managers in the private sector teach us that money is not a value; it is the means to attain our values. If we say that we are saving money; that tells us nothing. If we say we are saving for retirement, for a special vacation, for our children’s college education, then we have stated the value. Retirement, college and vacation are values; saving is the way we attain what we value. The same applies to the non-profit world. What is it that we are trying to accomplish? If we are creating a new adult education program, if we are bringing in a Scholar in Residence, if we are planning a weekend of intensive study, we are raising money to help educate our members. If we are raising the money to create a program to help educate migrant workers, to support Habitat for Humanity in our neighborhood, to take out an ad in the local newspaper in support of Israel, it shows that we value social and political action and the money is just the tool we use to support our causes.

The same applies to membership. What are we spending the money, that members pay, on? We have many good causes in our congregations. We are paying dues in order to conduct beautiful services with the help of a Rabbi and Hazzan. We are supporting Jewish education for children by subsidizing the cost of our religious school. We are also showing our concern for those who are in need in our community, making religious services available even for those who may be suffering financial hardships. Those are also values.

All too often, we get caught up in the details of fundraising and forget the values that are important. Congregations get so upset that someone might be not paying their fair share that they begin to deny membership for those who can’t pay. High Holiday tickets must be bought if you want to pray on the Holy Days. On the one hand, seating is limited and we need to know how many will be attending the service, but we forget that we also have to be welcoming at our High Holiday services and to make those attending feel at home. All too often, we treat members and non-members as just another ticket and we wonder why they don’t connect spiritually with the service. Sometimes we get so caught up in making a building beautiful that we forget that the building is to be used, not just to be another pretty place. It is important that we don’t get disconnected from our values.

If the programming aspects of synagogue life has drastically changed, so too have the financial aspects of a congregation. We live in a world where the best intentions die due to lack of funding. All the hopes and dreams that are in this book will be useless without the financial backing to make it all happen. Let me say this right here and now; there is nothing evil or non-spiritual about raising money. Money is not the root of all evil but another tool that we can use to advance our goal of a more spiritual and meaningful Judaism. What is worthwhile is worth paying for. We must not forget this. Fund raising is not a necessary evil, but the way we prioritize the many important parts of our life. Money is not the reason a spiritual program exists, but it is one of the many devices we use to bring God into the lives of others. The Torah teaches, “Six days you shall labor and on the seventh day you shall rest.” this means that work and raising money should take up 6/7 of our time. To be sure, some things are beyond money, but an underfunded program will not help us grow either.

The usual synagogue model is to charge members annual dues. This is the fee that is required to belong. In most congregations it is one fee for the entire family. The dues for singles and those without children are often half the price. Membership does have its privileges, there are discounts on other fees and there are some programs open for members only. Only members can vote on vital matters to the community and members have a hand in selecting clergy for the congregation. When a family joins the synagogue, they are usually asked about what parts of synagogue life they would like to get involved with, but the sad story is that far too few congregations have anyone from the Membership committee who will actually read the application or contact the family about their interest. The usual story is that a new member will have to show interest in an area of synagogue life and persist in asking to be a part of the program. As I mentioned in the section of cliques and fiefdoms, breaking into a group in a synagogue can be not just hard, but almost impossible for a new member. I believe that for this reason alone, we are seeing most of the disinterest by Jews in synagogue membership. Synagogues are asking for significant sums of money but never invite new members to be a part of the inner circle. After a while, the money is not worth the expense anymore and ignored members take their money elsewhere. It is not that families are poorer today than in the past. It is rather that they are more careful where they spend their money. One financial adviser noted that if you only join a synagogue for the High Holy Days and only use your membership three days a year, it is a poor investment. But if you get involved and take part in the ongoing programming at the synagogue, it is a really good buy. A membership committee has to make sure that new members are “getting their money’s worth” from their dues.

By laying out reasons for people to get involved; in the learning program, in the social action program and in services, we give people in our community a reason to join. This is not as easy as we might think it should be. It is not a matter of creating a website, printing a membership brochure or knocking on doors. These membership activities may have worked in past decades, but they will no longer work today. Why? Because there has been a fundamental shift in how and why people join a synagogue. I noted before, that in the past, people would join and then look for a way to get involved. Today, people need to be engaged, they need to be connected to the synagogue before they will give their money and become members. This means that the first contact with our synagogue will be through events open to the community. We will have to invest in engaging Jews in Jewish activities if we hope to bring them into membership sometime in the future.

If we hold adult studies programs open to the public. If we take our ongoing study groups and open them up to all those who are searching, we will find that there is a great untapped group of Jews who will commit to an ongoing study program. If we make public our social action/political action programs, we will soon attract those from the larger community who share our goals and who will be willing to give their time and effort for the cause. Once they are engaged, they will come to pay for what they are doing. Nobody in this country really expects anything for free. If we show them the value of what they are getting, they are usually happy to pay their fair share. Once they have strong ties to our program and to the current members, they will affiliate and they will remain active. They will come to understand that the dues and other fees are worth the investment. That is how people get connected today. It is all about doing something important and making the personal connections that eventually bring in the commitment.

This is also why I believe that denominations in Judaism are not as important as they once were. My teachers once told me that there really are only two kinds of Judaism, fundamentalist Judaism, and non-fundamentalist Judaism. I believe that most Jews don't know the difference between Reform, Conservative and Reconstructionist Judaism and really don't care. Only the leadership and scholars really know and argue the fine points between movements. Once a Jew finds a group that meets his intellectual, spiritual and social needs, they will join and adjust to Jewish life in that denomination. If the congregation then fails to live up to those needs, the Jew will eventually quit the congregation and will go where they will be fulfilled. If that congregation is a different movement, they will adjust. For some synagogue leaders that may sound like heresy, but you can see the truth of this almost every day. Jews who affiliated with one denomination, will move to another community and affiliate with a different denomination because they like the programs there more that the other synagogues in their new community. Certainly there are some Jews who could not belong to a congregation, for example, that is not egalitarian, or one that does not have a social action program, or that does not have a kosher kitchen, but I believe that most Jews are looking for a welcoming place, as place where people care about causes that are important to them and who offer them some meaning and purpose in their lives, and when they find that place, they join. Christian mega-churches grow so very large by getting their membership to find meaning and purpose in any combination of the myriad choices they offer. No matter what denomination they may be coming from, they stay because they find fulfillment in their lives. If there are some religious details to observe, like dressing conservatively, eating vegetarian at events, or separate seating for men and women, then they just go along. It is the purpose that drives the commitment. Most Jews today don’t really care about the use of microphones on Shabbat, if swordfish is kosher or not, who wrote the Bible and they don’t care if there are stained glass windows or not. The real issue for these “seeking” Jews is, at the end of the day, they feel that their participation has made a difference in the world. If it does, they will pay what they can to support that program.

As I noted, for some Jews, there are some exceptions to this rule. Egalitarianism sometimes can be a big issue. While there are families that will even connect to an orthodox synagogue if it meets their intellectual, spiritual and social needs, I suspect that the women in the family will eventually be less than enthusiastic about the limited role they play in orthodox congregational life. There are families that don't mind the different gender roles, and some orthodox congregations work hard to keep the genders separate but equal. When we look at long term commitments, however, if there is an inequality of genders, it eventually will turn off members who don’t feel appreciated.

Kashrut can be another important issue. Families who already keep kosher want their synagogues to be kosher as well. This may be only a small minority of Jews, but they are adamant about Kashrut. They will be surprised and disgusted if they find a synagogue serving food that is treif. Most of the people who don't care about Kashrut will not care if the congregation is kosher or not, and if they attach themselves to a Kosher synagogue, they will easily embrace the rules and live by them, maybe not in their homes and personal lives, but certainly in their Jewish communal life. If the family has children they may keep their membership with a Kosher congregation longer so as to be consistent with the rules they have taught their children, but once the children have gone, if Kashrut is not important, than it will not be a barrier to changing communal commitments. Once again, it takes a special commitment to belong to an Orthodox community since the laws of Kashrut are far more demanding and change more frequently. One has to be current on what is considered kosher, what has been rejected, who is accepted and who is no longer accepted and a host of minutia that make keeping Kosher a challenge. Those who like that kind of detail will not be put off by this but the constant addition of new kosher regulations can put off someone who does not arrive at the door with that commitment.

Shabbat can be a third area of some concern. If there are affordable homes in the area around the synagogue where families can afford to live within walking distance to the synagogue, then those who are already Shabbat observers will feel welcome. Since most non-fundamentalist congregations allow driving, most Jews will not find this an issue. For those who want to walk on Shabbat and have a community of other walkers to share time on Shabbat afternoon, this could be an issue that will keep people away. It is a small part of the community but a vocal one. Often it is the Rabbi who is the leader in this group. If the Rabbi lives within walking distance, he or she sets a good example. If the Rabbi rides to shul on Shabbat, then it will be up to others to create this “walking community”.

But even with these few areas of concern, many Jews, especially young Jews who are just beginning to form their ties to the Jewish community, they are less concerned with the details of observance in the congregation and more concerned about getting what they need from the synagogue programming. If all they are looking for is a place to have a Bar/Bat Mitzvah for their children, these parents will not really care at all even about egalitarianism. They will have their ceremony and then go on to have a party somewhere else. They will pay for the service and move on. Such Jews have no interest in long term communal relationships. If we work to engage Jews at a younger age, when they are in their mid to late twenties, we will find them open to what we offer in their lives and eventually open to the way we connect with Judaism and Jewish ritual. If the first thing we ask from these young Jews is thousands of dollars in dues, we will find them uninterested. First we must engage them in Jewish activities and only later will they see the value in joining.