Abraham Joshua Heschel School (NYC)

Mission: Founded in 1983, The Abraham Joshua Heschel School (AJHS), www.heschel.org is an independent school named in memory of one of the great Jewish leaders, teachers, and activists of the 20th century. Unaffiliated with any single movement or synagogue, The Heschel School sees as essential the creation of a community with families from a wide range of Jewish backgrounds, practices and beliefs. The Heschel School is dedicated to the values and principles that characterized Rabbi Heschel's life: integrity, intellectual exploration, traditional Jewish study, justice, righteousness, human dignity, and holiness. It regards the texts of the Jewish tradition and the history of the Jewish people as fundamental resources for developing ideas, beliefs, behaviors and values to shape and inspire the lives of individuals.

FINANCIAL EFFICIENCY EVALUATION:
According to Charity Navigator
(http://www.charitynavigator.org/),
America’s leading charity evaluator, AJHS has an overall
rating of four stars (four stars is the highest rating.)
Charity Navigator provides the following financial
breakdown of AJHS based on 990 tax returns through
2006:
Overall Rating: Four Stars ****

Organizational Efficiency:
Efficiency Rating: 3 Stars ***
Program Expenses: 77.9%
Administrative Expenses: 19.3%
Fundraising Expenses: 2.6%
Fundraising Efficiency: $0.15
(AJHS spends $0.15 to raise $1)

Organizational Capacity:
Capacity Rating: Four Stars ****
Primary Revenue Growth: 14.5%
Program Expenses Growth: 21.1%
Working Capital Ratio: 1.23
(AJHS can sustain itself for 1.23 years
without generating new revenue.)
Organizational capacity refers to an organization’s
ability to sustain itself over time. Charities that exhibit
consistent revenue and expenses growth are more
likely to sustain their programs and services over the
long haul.

Compensation for its Head of School, Roanna Shorofsky,
was $401,880 which represents 1.71% of expenses.
For comparison purposes, compensation for the
Head of School of the Dalton School, Ellen Stein, was
$438,600 which represents 1.01% of expenses.

As of 2006, AJHS had net assets of $60,897,802. Of this figure, AJHS had investments of publicly traded securities of $14,403,396 and savings and temporary cash investments of $7,650,699 and cash non-interest bearings investments of $133,572. AJHS had fixed assets of land, buildings and equipment less accumulated depreciation of $40,532,811.

As of 2007, AJHS had net assets of $77,362,414. Of this figure, AJHS had investments of publicly traded securities of $9,971,728 and savings and temporary cash investments of $10,479,580 and cash non-interest bearing investments of $567,217. AJHS had fixed assets of land, buildings and equipment less accumulated depreciation of $57,024,601.

Discussion:
AJHS is a financially efficient and effective non-profit institution and is in excellent financial shape to weather the present economic downturn. This conclusion is based on the following facts:

1) AJHS was prescient about the financial crisis of 2008. Between 2006 and 2007, it reduced its exposure to publicly traded securities and concomitantly increased its investments in both savings and temporary cash investments and in fixed assets.
2)Between 2006 and 2007, AJHS increased its net assets by over 25%.
3) AJHS has received an overall four star rating from Charity Navigator. It has a working capital ratio of 1.23 years. AJHS’s working capital ratio of 1.23 years is a measure of its reserve of liquid funds in excess of current liabilities that is available as a margin of safety against future financial uncertainty.
4) AJHS had no exposure to Madoff investments.

Recommendations: The recent financial turmoil, caused by the Wall Street and Madoff scandals, has also affected the relationship between donor and non-profit. The turmoil has caused donors to become uncertain and more selective in giving to non-profits. Non-profits that are transparent about their finances will regain the lost trust of its donors sooner than those non-profits that are not transparent about their finances. In order to reach out to more selective donors,AJHS should be more transparent about its finances.
AJHS should provide the following information on its web site:
1) It has received an overall four star rating from Charity Navigator.
2) It should provide its investment philosophy and a breakdown of its investments on a semi-annual basis.
3) It should provide its three most recently filed tax returns.
4) It should provide information about its exposure to Madoff investments; AJHS had NO exposure to Madoff investments.

How Charities Can Regain Lost Trust (part III)

The present system of charitable giving entails an informal
agreement, between donor and charity, that is based on trust.
A donor gives to a non-profit and trusts that the non-profit will
use that gift to support a mutually agreed upon person in need.
Non-profits have functioned on a business model based on that
trust. The recent financial turmoil caused by the Wall Street and
Madoff scandals have caused a breakdown in the agreement
between donor and non-profit. The environment in which non-
profits have functioned has changed. The new environment of
uncertainty requires non-profits to change their business model.
The new business model must reflect the changed environment.
The present system of giving, based on trust, must be transformed
to a system based on transparency. Those non-profits that
make their finances transparent will regain the trust of
donors; those non-profits that do not make their
finances transparent will lose support.

Recommended Non-profit Actions:
1) The non-profit should make sure that it is rated by Charity
Navigator http://www.charitynavigator.org/. Charity Navigator
is America’s premier Charity evaluator and it rates charities based
on their financial efficiency.
2) The non-profit should provide it’s Charity Navigator rating on
the home page of its website. The non-profit should also explain
what the rating means.
3) The non-profit should provide its three most recently filed tax
returns on its website.
4) The non-profit should provide a breakdown of its liquid and
fixed assets. This can be found by examining the non-profit’s
investment-securities assets (Line 54b of 990 tax return) and its
fixed assets of land, buildings and equipment less accumulated
depreciation (line 57c of 990 tax return.)
5) The non-profit should provide the same type of investment
information that mutual funds provide. Specifically, the non-profit
should provide its investment philosophy and a breakdown of its
investments on a semi-annual basis.
6) The non-profit should provide donors and others with access
to an employee who can respond to financial questions upon
request. If the the employee is unable to answer the question,
the employee should promise to get back to the questioner within
24 hours.
7) The non-profit should provide information on its home page
about its its recent financial losses. It should provide information
as to weather it had direct exposure to Madoff investments. The
Jewish Communal Fund,
http://www.jewishcommunalfund.org/ provides
information about its exposure to Madoff investments on its home
page; it had NO exposure to Madoff investments.
8) The non-profit should provide information on its website about
any cutbacks it will be making. It should be specific about where
it is making its cutbacks – program expenses, administrative
expenses or fundraising expenses.

Conclusion:
Nobody likes bad news. However, hiding the bad news only
compounds the problem. Non-profits that are transparent about
their finances will regain the lost trust of its donors sooner than
those non-profits that are not transparent about their finances.
The economy runs in cycles. Today’s economic downturn will
eventually end. Those non-profits that choose to be
transparent today will benefit far more in tomorrow’s
economic upturn than those non-profits that are not
transparent. Rahm Emanuel, President Obama’s Chief of Staff,
famously said, “You never want a serious crisis to go to waste.
And what I mean by that is an opportunity to do things you think
you could not do before.” Today’s crisis in the world of Jewish
philanthropy is really an opportunity for those non-profits that
choose to be ahead of the curve. Providing financial transparency
today will allow non-profits to be more effective in supporting
their brother and sister Israelite in the future.

Next Week's Blog: Abraham Joshua Heschel School (NYC)

How Charities Can Regain Lost Trust (Part II)

In order to continue supporting our “brother Israelite” in times
Of need, both donors and non-profits must transform their
relationship. Donors and non-profits have an informal agreement
in which donors give money to specific non-profits with the
expectation that the non-profits are effectively supporting their
brother Israelite. This agreement is based on trust. At present,
this trust has been lost. The Wall Street meltdown and the Madoff
scandal have caused donors to feel uncertain; donors no longer are
certain that their dollars are being used effectively. The present
system of giving, based on trust, must be transformed to a system
based on transparency. Those non-profits that highlight
their transparency will regain the trust of donors; those
non-profits that highlight their mission, without providing
financial transparency, will lose support.

Following are recommendations for transforming the donor-charity
relationship. This week’s blog will discuss actions that the donor
should take. Next week’s blog will discuss actions that non-profits
should take.

Recommended Donor actions:
1) Be personally responsible with the dollars you give.
Do rigorous due diligence when giving money charity.
This entails looking beyond the mission statement of the
charity you give money to. Examine the charity’s financial
efficiency, its ability to survive an economic downturn, and
its investment practices.
2) Access the following resources:
a) Charity Navigator (http://www.charitynavigator.org/)
provides comparative efficiency ratings based on the most
recently filed tax returns.
b) Guidestar (http://www.guidestar.org/) provides the actual
tax return filed by the non-profit.
3) Communicate directly with your target charity. Ask the charity
about their finances. Ask the charity how financially efficient it is.
Ask the charity about their investment practices. Ask the charity
if it had invested money with Madoff. A reluctance to answer your
questions should give you caution about donating to this charity.
4) Use donor advised funds to park your charitable money while
doing your due diligence. Donor advised funds are intermediate
vehicles that allow you make a tax deductible contribution, that
allow you to maintain control over your money, and allow you to
keep your money in a safe place. Examples of donor advised
funds are:
a) Jewish Communal Fund
(http://www.jewishcommunalfund.org/) has been helping
individuals, families, corporations and communal groups achieve
their philanthropic goals for over 36 years. It had no exposure
to Madoff investments.
b) Jewish National Fund
(http://www.jnf.org/) provides donor advised funds in addition
to being a vital part in helping the State of Israel develop its land.
c) Jewish Federations in the following cities offer donor advised
funds: Atlanta, Baltimore, Boston, Chicago, Cleveland,
Detroit, and San Francisco.
d) Fidelity Charitable Gift Fund
(http://www.charitablegift.org/) is the largest donor advised
fund in the nation. Since 1991, it has helped more than 55,000
donors recommend more than $9 billion in grants to over 129,000
nonprofit organizations.

Next Week's Blog: Recommended non-profit actions

How Charities Can Regain Lost Trust (Part I)

Intrinsic to the precepts of Judaism is the act of giving.
A verse in the Torah states, when a “…man (is) reduced
to poverty and cannot support himself in the community,
you shall uphold him…” (Leviticus 25:35) The real
tragedy of the Wall Street meltdown / Madoff scandal in
the Jewish community is not a loss of money, but a loss
of trust. Our ability to help our brother Israelite has been
harmed. Though we still seek to support our brother Israelite,
we are now afflicted with fear and uncertainty on how to
give effectively.

First, let us examine the facts:
1) The troubles in the housing and financial markets have a
far greater impact on charities than the troubles caused by Madoff.
2) Jewish non-profits, like all non-profits, have been harmed.
However, very few have been devastated.
3) According to Gary Tobin, the President of the Institute for
Jewish & Community Research, “thousands of (Jewish)
organizations generally have sound fiduciary control in place,
and in the constellation of Jewish communal life, very few of them
have been affected in a serious way by Mr. Madoff’s cheating.”
(Chronicle of Philanthropy: page 46; Januray 15, 2009)

The breakdown in trust caused by Fannie Mae, Freddie Mac,
Lehman Brothers, Merrill Lynch, AIG has instilled fear and
uncertainty in the people trusting them with their money.
The breakdown in trust caused by Madoff has instilled fear and
uncertainty in donors to Jewish non-profits. As a result, donors
may cut back on the amount they donate to charities, or at least
put off their donations for a while.

It is understandable that people withdraw when confronted with
uncertainty. This lack of trust has a bright side. It will lead to a
discussion about transparency in American philanthropy. Charities
that are transparent, efficient, and follow good practices of
accounting should be rewarded. Charities that do not follow these
practices should mend their ways. Finally, donors need to be more
personally responsible for their giving. They should do rigorous
due diligence when giving their money to charity. Donors should
look beyond the mission statement of the charity they give money
to. They need to examine the charity’s investment practices, its
efficiency, and its ability to survive an economic downturn.

The tragedy of Wall Street / Madoff may actually be a watershed
moment in time. In the future, donors will look back upon this
moment as a time when we learned how to better support our
brother Israelite.

American Jewish Congress

Mission: The American Jewish Congress (AJ C), www.ajcongress.org is an association of Jewish Americans organized to defend Jewish interests at home and abroad through public policy advocacy - using diplomacy, legislation, and the courts. Five subjects comprise the core of our agenda: safety and security of Israel and the world Jewish community, especially in the face of worldwide terrorism; fighting to eradicate the new anti-Semitism; preserving religious freedom in the United States through separation of Church and State; energy independence and stopping the flow of petrodollars that fund terrorism; and supporting moderate Muslim countries and prominent individuals who oppose radical Islam and believe in "enlightened moderation" as the message of Islam.

FINANCIAL EFFICIENCY EVALUATION:
According to Charity Navigator
(http://www.charitynavigator.org/),
America’s leading charity evaluator, AJC has an overall
rating of one star (four stars is the highest rating.)
Charity Navigator provides the following financial
breakdown of AJC based on 990 tax returns through
2006:

Overall Rating: One Star *

Organizational Efficiency:
Efficiency Rating: 0 Stars
Program Expenses: 59.8%
Administrative Expenses: 8.1%
Fundraising Expenses: 31.9%
Fundraising Efficiency: $0.57
(AJC spends $0.57 to raise $1)

Organizational Capacity:
Capacity Rating: Two Stars **
Primary Revenue Growth: - 0.7%
Program Expenses Growth: 1.8%
Working Capital Ratio: 2.93
(AJC can sustain itself for 2.93 years
without generating new revenue.)
Organizational capacity refers to an organization’s
ability to sustain itself over time. Charities that exhibit
consistent revenue and expenses growth are more
likely to sustain their programs and services over the
long haul.

Compensation for its Executive Director, Neil Goldstein,
was $206,232 which represents 3.33% of expenses.
For comparison purposes, compensation for the President
of the American Jewish World Service, Ruth Messinger, was
$191,000 which represent 0.79% of expenses.

As of 2006, AJC had net assets of $17,125,899.
Of this figure, AJC had investment-securities
assets of $16,035,469 and fixed assets of
land, buildings and equipment less accumulated
depreciation of $294,019.

Discussion:
AJC’s working capital ratio of 2.93 years is a measure
of its reserve of liquid funds in excess of current
liabilities that is available as a margin of safety
against future financial uncertainty and such random
shocks, as the Wall Street meltdown and the Madoff
affair, to which its flow of funds is subject. It is important
to note, however, that there is no direct or established
relationship between balances of working capital items
and the pattern that future cash flows are likely to assume.
The AJC acting co-executive director, Marc Stern, was
quoted in Jewish Week (12/19/08) as saying that the
AJC “…took a loss that we would rather have not taken.
It’s not trivial, but it’s not fatal.” Stern said that the
AJC had two endowment funds invested with Madoff,
but its “…operating funds were safely invested elsewhere.”
Normally, a working capital ratio of 2.93 years is a
Sufficient cushion for a non-profit to fall back upon;
However, the reliability of this figure is now in question.
Depending upon the severity of its Madoff investments,
the AJC may not be in good position to weather the
present economic downturn.

Recommendations:
On the home page of its website, the AJC provides
access to its annual report of its accomplishments in
2008. This report, however, provides no financial
information. Due to the lack of financial transparency
on Wall Street, and by Madoff, the public has become
more selective to giving to non-profits. As the AJC has
received low ratings from Charity Navigator, the AJC
should re-issue its annual report and include financial
information. In addition, the AJC should also provide
easy access to its financial statements and tax returns.
The AJC should provide access to this information on
the homepage of its website, http://www.ajcongress.org.
Negative information is better than hidden information.
In order to keep the trust of its donors, the AJC needs to
be become more transparent about economic matters.

Next week’s blog: Just One Life

Yeshiva University

Mission:
Now in its second century, Yeshiva University (YU),
http://www.yu.edu/, ranks among the nation's leading academic
research institutions. It embraces the heritage of the best
of western civilization, along with the ancient traditions of
Jewish law and life. YU's undergraduate schools and
divisions include Yeshiva College, Stern College for Women,
and Sy Syms School of Business. We bring wisdom to life
by combining the finest, contemporary academic education
with the timeless teachings of Torah. Our 7,427 students
can choose from a full spectrum of undergraduate and
advanced degrees, at any of our four U.S. campuses or our
campus in Israel.

FINANCIAL EFFICIENCY EVALUATION:
According to Charity Navigator
(http://www.charitynavigator.org/),
America’s leading charity evaluator, YU has an overall
rating of four stars (four stars is the highest rating.)
Charity Navigator provides the following financial
breakdown of YU based on 990 tax returns through
2006:

Overall Rating Four Stars****

Organizational Efficiency:
Efficiency Rating Four Stars ****
Program Expenses: 94.5%
Administrative Expenses: 2.9%
Fundraising Expenses: 2.5%
Fundraising Efficiency: $0.06
(YU spends $0.06 to raise $1)

Organizational Capacity:
Capacity Rating Four Stars ****
Primary Revenue Growth: 5.6%
Program Expenses Growth: 9.4%
Working Capital Ratio (years): 0.75 years
(YU can sustain itself for 0.75 years
without generating any new revenue.)
Organizational capacity refers to an organization’s
ability to sustain itself over time. Charities that exhibit
consistent revenue and expenses growth are more
likely to sustain their programs and services over the
long haul.

Compensation for its president, Richard Joel, was
$689,124 which represents 0.11% of expenses.
Percentagewise, this is a very low figure.
As of 2006, YU had net assets of $1,902,047,022.
Of this figure, YU had investment-securities
assets of $1,511,846,995 and fixed assets of
land, buildings and equipment less accumulated
depreciation of $427,654,364.

Discussion:
YU’s working capital ratio of 0.75 years is a measure
of its reserve of liquid funds in excess of current
liabilities that is available as a margin of safety
against future financial uncertainty and such random
shocks, as the Wall Street meltdown and the Madoff
affair, to which its flow of funds is subject.
According to a letter sent to the YU community from
President Richard Joel, the damage caused by these
“random events” has caused the YU endowment to
drop; it was $1.7 billion in January and is now
$1.2 billion. Most of the loss was due to the
Wall Street meltdown, NOT from the Madoff scandal.
As YU has received four star organizational efficiency
and organizational capacity ratings, YU is well
positioned to weather this economic downturn.

Recommendations:
Due to the lack of financial transparency on Wall
Wall Street, and by Madoff, the public has become
more selective to giving to non-profits. Since
YU has received the highest ratings from Charity
Navigator, YU needs to publicize this favorable
information. YU should publicize that its president
receives compensation that is very low percentage
wise.In addition, YU should also provide
easy access to its financial statements and
tax returns. YU should provide access to this
information on the homepage of its website,
http://www.yu.edu/.

Next week’s blog: The American Jewish Congress

Hadassah, The Women's Zionist Organization of America

Mission: Hadassah, the Women's Zionist Organization of America (HWZOA) http://www.hadassah.org/, was founded in 1912 by Henrietta Szold. Since its inception, Hadassah has remained unwavering in its devotion to Judaism, Zionism, and American ideals. As the largest volunteer organization and the largest women's organization in America, Hadassah is committed to strengthening the unity of the Jewish people. In Israel, we accomplish this through progressive healthcare, education, youth institutions, volunteerism, and land reclamation. In the U.S. we reach our goals through Jewish and Zionist education programs, Zionist Youth programs, and health awareness programs, as well as by advocating for issues of importance to women and to the American Jewish community.

FINANCIAL EFFICIENCY EVALUATION: According to Charity Navigator (http://www.charitynavigator.org/), America’s leading charity evaluator, HWZOA has an overall rating of four stars (four stars is the highest rating.) Charity Navigator provides the following financial breakdown of HWZOA based on 990 tax returns trough 2006: Overall Rating: 4 stars **** Organizational Efficiency: Efficiency Rating 4 stars **** Program Expenses: 82.8% Administrative Expenses: 11.1% Fundraising Expenses: 6.0% Fundraising Efficiency: $0.07 (HWZOA spends $0.07 to raise $1) Organizational Capacity: Capacity Rating 4 stars **** Primary Revenue Growth: 6.9% Program Expenses Growth: 6.1% Working Capital Ratio (years) 4.0 (HWZOA can sustain itself for 4.0 years without generating new revenue.) Organizational capacity refers to an organization’s ability to sustain itself over time. Charities that exhibit consistent revenue and expenses growth are more like to sustain their programs and services over the long haul.

HWZOA has net assets of $674,007,498. Compensation for its Executive Director, Morlie Levin, was $275,000 which represents 0.2% of expenses. For comparison purposes, compensation for the President of the American Jewish World Service, Ruth Messinger, was $191,000 which represent 0.79% of expenses.


Recent News: In October, HWZOA announced that Intel and Hadassah College Jerusalem are collaborating with education departments in various municipalities to create ‘The Best in Education’, an innovative program which utilizes quality resources by enabling volunteers from the private sector to contribute to science and technology education. Volunteers will offer their experience and personal leadership in an institutionalized fashion as part of an academic team at various schools. This month, twenty-seven engineers from Intel began preparations for teaching. They are currently receiving training for an ‘Instructional Support’ role in the fields of science and technology. The curriculum for the training program has been developed by Hadassah College Jerusalem, and is currently in session at the Intel campus in Petach Tikva.

Recommendation: According to Charity Navigator, HWZOA is a highly efficient non-profit with consistent revenue and expenses growth. It is likely to sustain itself over the long haul, especially in difficult economic times like now. It has a working capital ratio of four years, thus HWZOA will be able to sustain its programs even if there is large drop-off in donations.

Next week’s blog: Yeshiva University will be re-evaluated in light of the recent Madoff financial scandal