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The Jewish federations in the United States exist to support charitable causes in the Jewish community and in Israel. They indeed redistribute most of the money they raise. But research into their public records shows that many don't stint with their own executives either. Furthermore, some federations have debatable organizational and financial practices involving executives present and past. [To view map please visit the Federation Files on Haaretz.]
The federations are nonprofit organizations with tax-exempt 501(c)(3) IRS status, which means donors can deduct donations from tax. They range in size from minnows to whales. For instance, the Rockford, New York federation fielded about $40,000 in contributions and grants in 2015, while the Boston, Massachusetts federation collected $390 million that year.
Click here to access all the Federations' 990 tax forms (Return of Organization Exempt From Income Tax), broken down by state and city.
Together, the 138 Jewish federations in the United States raised over $5.7 billion from 2012 to 2015, and distributed more than $3.6 billion in the U.S. and in Israel.
But plenty seems to have stayed at home. When you make a tax-deductible donation to your local federation, where does it actually go?
In Akron, Ohio, it might support the local chapter of Jewish Family Services. In Memphis? The JCC. In Boston, some of your donation might have ended up in the $1.34 million one-time bonus paid to federation president Barry Shrage, on top of his $562,802 wage cost in 2015. On its 263-page Form 990 (returns for organizations exempt from income tax), the Greater Boston’s Jewish Federation explains that the bonus is “toward Mr. Shrage’s retirement to reflect the accomplishments over the course of his career” of 28 years.
Shrage’s compensation is determined by the Organizational Development Committee, which reports to the board, explains chairman Neil Wallack, based on an analysis in 2014, by an outside consultant and a financial advisor, of his "historical compensation and to assess the resources needed to provide Barry with sufficient retirement funding within the limits of reasonable compensation... after careful review and consideration, CJP’s board of directors approved a one-time additional compensation payment towards Barry’s retirement in the amount of $1.34 million."
In general, Haaretz has found that 21 percent of the donations the Jewish federations collected between 2012 to 2015 was spent on salaries. That's a fifth. Note though that the federations' income stems not only from donations, but also from income from activities, investments, and more.
Compared to the grants the federations disburse, for every $1,000 spent on projects, around $330, a third, goes on salaries. (Note again , though, that federations support communities in various way, not only via grants.)
Altogether, between 2012 and 2015, the federations spent $1.1 billion on wages.
How does the compensation for executives compare with the charity world in general? According to a 2014 report by the Nonprofit Times, the average salary of a nonprofit CEO with an organizational operating budget over $50 million is $317,000.
Data collected from the federations' reports to the IRS reveal 20 CEOs at Jewish federations, twelve of which have budgets under $50 million, declare much higher figures. Haaretz approached the highest earners within the federations. Their various comments tell much the same story: The people in question lead huge organizations and bring in a lot of money; their income is determined by volunteer board members; and the figures at the tax reports represent not only the salaries, but also retirement or deferred compensation, bonuses and benefits.
These sums, in the tax reports, fall under the title “other reportable compensation”.
Between 2012 and 2015, Stephen Hoffman, president of the Jewish Federation of Cleveland, received a base salary of just over $2 million (over half a million per year). On top, he received over $1.2 million in "other reportable compensation".
Dahlia Fisher, the federation’s director of marketing and communications, wrote by email that Hoffman, who served at the federation since 1974, “is nationally and internationally recognized as a thought-leader in Jewish communal-life, guiding one of Northeast Ohio’s largest grant-making organizations and one of the country’s top fundraising Federations, per capita.” His supplemental plan was established over 30 years ago by a committee of volunteer lay leaders, says Fisher.
If an organization is paying more than the norm, it needs to prove why, says Lisa Runquist, an expert on nonprofit law.
“What the board needs to do,” she tells Haaretz, “is make sure that they’ve done everything they can to assure that there isn’t either a conflict of interest, or that the decision they’re making is in the best interest of the organization, for whatever reason. And if it’s more than what you normally would pay [an executive], the board needs to justify that. Is the person doing extraordinary services that would justify it?”
"As Jewish population and identity in North America has changed over the past few decades, so have the services provided by Federations," the JFNA commented. "In addition to grant making, nearly one-third of all Federations have become 'integrated;' taking on the direct responsibility for delivering programs and a myriad of community service functions which in the past might have been delivered by separate agencies. Organizations that provide such services have much higher personnel-related costs than organizations that focus on providing grants or distributing donations to individuals or other causes."