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February 2, 2001/Shevet 8, 5761, Vol. 53, No.18
Federation confronts growth with deficits
BARRY COHEN
Community Editor
In the past 18 months, the Jewish Federation of Greater Phoenix has raised more than $24 million for the Ina Levine Jewish Community Campus, nearly reaching its $25 million goal.
At the same time, pledges were down for the 2000 annual campaign, and federation operated at a deficit for two consecutive years.
Federation officials are working to reverse this trend to ensure funding for its own operation and its constituent agencies.
"We expected higher campaign results, based on the last number of years," said Art Paikowsky, federation executive vice president. "Obviously that was not realized, and we are disappointed."
But the community campus expectations have nearly been met. Groundbreaking for the 114,000-square-foot structure, to be located at the southeast corner of Sweetwater Avenue and Scottsdale Road, is scheduled for June. It would be ready for occupancy July 2002, said Paikowsky.
The community campus will house the federation; the Valley of the Sun Jewish Community Center, with its preschool; the Bureau of Jewish Education; the Council for Jews with Special Needs; satellite classrooms for the Phoenix Hebrew Academy; and the Jewish Community Foundation.
The campus will also include a fitness center, gymnasium, senior center, meeting rooms, a swimming pool, and baseball, softball and soccer fields.
Facilities for The King David School and the Jess Schwartz Jewish Community High School are slated for future construction.
At the same time federation officials have been meeting proposed fundraising deadlines for the campus, they raised $5,286,000 in 1999 and $5,122,000 in 2000 for local, national and international needs.
Paikowsky pointed to two factors to explain this downturn: the economy and "donor confusion," contributors thinking a gift to the Jewish National Fund, for example, or a pledge to the community campus was a gift to the annual campaign.
"We could not predict the downswing of the market," he said. "Donors had an emotional reaction to that and asked themselves, 'What can happen next?' "
Paikowsky does not blame the annual campaign downturn on the success of fundraising for the campus, nor does he believe potential donors chose to give more to the campus and less to the federation. The once-growing economy, he said, combined with "high positive community feelings," would have supported the campus campaign and increased contributions to the annual campaign.
"We hope this (downturn) will be a blip on the radar screen," said Paikowsky.
"When you look at all the activities in the community and measure that against the economic report of the fourth quarter of 2000, I am not as disappointed as some may be who only look at abstract numbers," said Howard Cabot, co-chairman of the annual campaign.
Last year, there were 5,468 annual campaign contributions, said Paikowsky, including 524 new givers, but 463 lost donors, for a net gain of 59 gifts.
Paikowsky is already hopeful about the 2001 campaign, now underway. As of Jan. 25, $2,047,344 has been pledged, including $521,000 in the week of Jan. 22 alone.
"That's the biggest week in an annual campaign I have ever seen here," said Paikowsky. Card-for-card contributors are pledging 12.6 percent more in 2001 than in 2000, he added.
Cabot said the federation's annual campaign needs to be placed in the context of the other local capital campaign projects occurring in the Valley including the community campus and the Pardes Jewish Day School. To approach expectations in this environment, he said, is an accomplishment.
The money raised by federation's annual campaign is split into three parts: one-third to overseas programs; one-third to federation constituent agencies; and one-third to cover federation's operating budget, said Ted Zinman, federation treasurer.
The operating budget is funded entirely by revenues from the annual campaign, said Paikowsky.
Zinman said operating expenses include running the annual campaign and the campus capital campaign; covering administrative expenses, in addition to expenses for the Jewish Community Foundation and the Jewish Community Day School Scholarship Fund; and programming for the community, such as the annual Yom Ha'atzmaut (Israel Independence Day) celebration.
The Jewish Community Foundation, which has collected nearly $40 million, from 1996 - 2000 distributed $12.6 million in grants to Jewish and secular organizations, said Marcia Weisberg, foundation executive director.
The day school scholarship fund raised $620,000 in 2000, a 55 percent increase from 1999.
The main reason the operating budget's deficit grew, said Mark Hoover, federation controller, was decreased giving to the annual campaign.
"We can't panic, saying federation is going out of business," he said.
Federation is acting to eliminate deficits. Part of this process involves changes in how federation funds its constituent agencies.
This is related to federation's fiscal year - Aug. 1 through July 31 - and the annual campaign year - Jan. 1 through Dec. 31. In the past, these different fiscal years have caused federation financial difficulties, with allocations to agencies, such as Jewish Family and Children's Service, based on projections of increased pledges to the annual campaign. Allocations granted on Aug. 1 would be based on projected revenues from a campaign that did not end until Dec. 31 of the same year.
This process was prone to creating deficits, said Hoover, if the annual campaign did not increase every year.
Starting in 1999, however, officials based allocations on annual campaign pledges that had already been collected. For example, allocations granted on Aug. 1, 2000, were calculated from money collected from the annual campaign that ended Dec. 31, 1999.
"We no longer allocate based on projections, but on what we have in the bank," said Hoover.
Federation "phased in" this new allocation process, said Paikowsky, in order to maintain funding levels to constituent agencies - one reason the operating budget increased from 1999 to 2000.
"The challenge is what options do we have to ease the burden," said Paikowsky.
Another result of a lower annual campaign is less money federation can allocate to agencies.
Some agencies would experience the effects of decreased federation funding more than others, he added, depending upon what percentage of funding federation provides.
Federation's constituent agencies are diverse: BJE, CJSN, Greater Phoenix Va'ad Hakashruth, Hillel at Arizona State University, Jewish Community Campus Building Fund, Jewish Community Foundation, Jess Schwartz Jewish Community High School, JFCS, Kivel Campus of Care, Kivel Guardian Fund, Phoenix Hebrew Academy, Phoenix Jewish Free Loan Association, Tri-City JCC and the Valley of the Sun JCC.
"We will also take a hard look at (federation) programming to see whether it all can continue," said Paikowsky. Funding for non-money generating programs, such as the Jewish Community Relations Council, he added, may be decreased.
Paikowsky stressed that over the last year, federation lost two key staff working on the annual campaign - Jonathan Kaufman, campaign director, and Liz Tregor-Dokken, senior campaign associate.
Kaufman is now the associate director of financial resources development/major gifts of the United Jewish Communities Western Region in Los Angeles. Tregor-Dokken is the associate director of the Arizona chapter of the American Jewish Committee.
On Jan. 24, Bryan Pearlman joined the federation campaign staff, charged with helping to get the annual campaign back on track, said Paikowsky.
At the Jewish Federation of St. Louis, Pearlman was the assistant director of development.
"He is a welcome addition," said Paikowsky. "He will be able to walk in without a significant learning curve and go to work."
"What enticed me was the challenges here," said Pearlman. "This is an exciting time to get involved."
He views the Valley Jewish community "as an untapped resource" with "tremendous potential."
Pearlman is joined by his wife Lena and their 2 1/2-year-old twins, Matthew and Samantha.
Over the next year, federation will finish fundraising for the community campus, wrap up the 2001 annual campaign and continue to address the budgeting and allocations system to prevent future deficits.
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