Income: Out of The Box Thinking

I am often asked about non-traditional ways that synagogues can generate income.

Beyond dues and more traditional fundraising efforts like the High Holy Day Appeal or even a Gala. And “beyond the Bake Sale” thinking that I attribute to such efforts as importing corned beef sandwiches to sell to the community.  And beyond the nights staffing the food concession stand at the new baseball stadium that after a while gets old and a pain – to find volunteers and that income can be unpredictable if the game is poorly attended to do weather, or just by having a home team in a rebuilding year.

Years ago, Bingo was the way. In the 1980s and 1990s you would drive by numerous synagogues and see signs advertising Bingo on Wednesday nights. Of course Bingo, as we know it, is a form of gambling. This raises all kinds of issues for a lot of people. Today, I am startled in my travels, particularly in New Jersey, when I do see a Bingo sign in front of a synagogue.

And there are synagogues who rent out their building as it sits empty on weekdays to a pre-school or even a private school.

What some might consider “out of the box” thinking is what I am talking about:

  • Like entering a lease agreement with a cell phone company for them to place a cell phone tower on the synagogue’s property.
  • Like entering into an exclusive agreement with a caterer who will advance the funds to make improvements in the social hall and kitchen with the hope of attracting more B’nai Mitzvahs, weddings and other celebrations of members and non-members to the synagogue.
  • Or even the large synagogue that received a bequest of a 50% share in a downtown hotel in its city in an area going through redevelopment and an economic boom. Rather then sell their share in this endeavor and deposit the proceeds in the endowment fund, the synagogue’s leadership decided to form a for-profit organization, market investment opportunities of zero coupon bonds in $50,000 allotments with the goal to further the development of the hotel.

The cell phone tower raises community and environmental concerns. We all want better cellphone reception. We just don’t want a cell tower in the back of the parking lot or on the roof of our synagogue. You might be interested to know that this is a hot topic for churches. There are a number of churches who enter into an agreement to house a cell tower within the bell tower on the church, or that put a cell tower on the property that is disguised as a Cross.

Partnering with a caterer sounds like a good idea. I don’t know if there is any qualitative data on this, but weddings seem to be more likely to be held at venues like hotels or country barns than at churches or synagogues. Same is true for B’nai Mitzvah celebrations. For parents, it just seems easier to do it at a place where the details are taken care of. And besides, I have heard some awful stories of lawsuits between caterer and synagogue when the initial expectations, while well intended, don’t pan out.

And the synagogue’s hotel redevelopment: while well intentioned, I think it goes a bit far afield of the mission of the synagogue. Besides being a bit questionable about how the very significant bequest that should end up in the synagogue’s endowment fund is being used, according to investment best practices.

I would love to hear about any “out of the box ideas” that are working for your synagogue, or are ones you are considering.

Posted in News

Fistfight or Celebration

I love telling this story about an annual congregational meeting.

At the first one I ever attended more than 20 years ago, my friend Lanny Katz, who was the synagogue’s president at the time, prevented a fistfight from occurring. I doubt that “Fight Referee” is found in any synagogue president’s job description that might exist.

Jonathan was the Treasurer and was presenting the budget for the next year. And Max, an older gentleman, had some questions regarding the Rabbi’s salary. It didn’t seem to bother him that the Rabbi was among the 80 or so people in attendance. The questions and answers between these two grown men became a little heated, and Lanny asked Max to leave. On his way out, Max, standing in a boxer’s pose with fists clenched, asked Jonathan if he wanted to step outside. Lanny encouraged Max to move along and go home.  And the meeting continued.

Certainly an eye-opening experience for a new congregant. Whatever happened after that would be a bit of a let down. And some people might not feel so enthusiastic about coming again next year

Most congregational Annual Meetings are held due to legal requirements. The By-Laws often state that an annual meeting must be held by a certain date – within 30 days of the start of the new fiscal year. And that a quorum of the members of the congregation be present to vote on a new budget for the coming year. The specifications for what determines a quorum are also detailed in the By-Laws.

Our synagogue’s fiscal year starts on June 1st. While May is kind of a crazy time for everyone with end of year school activities, sports, and everyone’s anticipation of summer and vacation plans, our Annual Meeting is most often held during the week before Memorial Day.

Maybe we should rethink this?

Getting a quorum is often a challenge. We have tried ice cream as an enticement. Held the meeting during Religious School.  It takes an hour and several phone calls to congregants to reach the magic number so the meeting can be held so we remain in compliance with the laws of the Garden State.

To me, celebrating accomplishments and sharing excitement for the plans for the future should be the goals for any annual meeting. Recognizing leadership for the time they have devoted to the board and other committees, projects, and programs is also right up there in importance. This is a time for special recognition of the outgoing President as well as long time serving board members. Such acknowledgement might bring out friends and perhaps some family members who might not normally attend. It is also an opportunity to have a well-known speaker who again might appeal to a segment of the congregation’s membership that wouldn’t normally make attendance at the Congregational Annual Meeting a priority.

And good food – even ice cream – always helps, too!

Posted in News

Be In The Last Will

How many Wills will you have during your lifetime?

Well, according to one recent survey by USLegalWills.com, 63% of all Americans, adults 18 and up, have no will at all. And another 9% have a will, but it is out-of-date. And only half of those 65 and over have an up-to-date will in place.

But back to my original question: Probably 3 or 4. When my wife and I had our first child, we went to a lawyer friend to write our first will. We updated it a few years later when we had our second child. Recently, we consulted another lawyer friend and wrote our second will. Our children are on their own and we are at what is certainly a different stage of life. We also included Living Wills and medical directives, which is more common when one consults an attorney about a Will today then it was 25 years ago.

While that is where we are, I can share my parents’ experience for what might be coming. By their early 60s, they, too were on their second Will. Then, after several years of retirement in Florida, and with health and aging challenges, they consulted a Florida attorney to write a third will talking into account their evolving situation.

And what does my family’s Will history have to do with anything related to synagogue life?

Well, firstly to illustrate to you the number of wills people might have. And for those synagogues with Legacy Societies and active bequest programs, to emphasize the importance of being sure to be in a congregant’s last will.

According to actuarial tables, many congregants in their 50s and 60s who join the synagogue’s Legacy Society will live into their 80s, and some into their 90s. I often say that everyone should live and be well to 120 and beyond. But the same actuarial tables tell us that some people will also pass away.

Hopefully, as congregants age, they will remain engaged in synagogue activities throughout their life.

But what happens when they are no longer engaged in synagogue life? Friends move away, or pass away. Synagogue leadership changes. The people who asked them to name the synagogue in their will are no longer a part of synagogue leadership. There are new clergy – much younger. You go at the High Holy Days, and a few times for Shabbat when there is a Yahrzeit, but that is it. You recognize a few people with whom you exchange pleasantries, and the rabbi, cantor and a few others always say Shabbat Shalom. But that is the extent of the conversation and it doesn’t feel like the warm heymish place it once was.

This is a problem at so many levels.

Aging and medical challenges are now in the forefront of your life, and in conversations with your adult children. When you meet with your lawyer to redo your will and she asks you whether the charitable organizations you named in your last should be included in the next one, will the synagogue still be among them?

It shouldn’t just be about the money. Regardless of age, you want people to not only feel “warm and welcoming”, but that people at synagogue are interested in what is going on in their lives.

If this is the normative synagogue experience for everyone throughout their lives, being in the last Will won’t be a concern.

Posted in News

Tax Changes-Maybe

Do you think the proposed changes to the tax law will affect contributions – and dues/annual commitments – to synagogues?

Probably not.

In 2016, U.S. taxpayers earning between $50,000 and $75,000 in Adjusted Gross Income (“AGI”) averaged $2,970 in charitable contributions.

For those earning income between $75,000 and $100,000 AGI, average contributions were $3,356.

Those earning between $100,000 and $200,000 averaged $4,130 in charitable contributions.

And for those earning between $200,000 and $500,000 AGI, charitable contributions averaged $7,426.

There is of course no way to know this, but I will bet the income categories described above cover more than 90% of synagogue members.

President Trump’s proposed changes really focus on lowering the tax rates. Regarding charitable deductions, he is proposing to limit total deductions to $100,000 for individuals and $200,000 for couples. The proposal from the House of Representatives limits deductions to just mortgage interest and charitable deductions.

As an aside, today I read an interview with Steve Ballmer, the former CEO of Microsoft. He is funding a project to track all government spending. He felt that deductions for employer provided health insurance, state and local taxes or mortgage interest deductions are really subsidies for the affluent.

For another day.

Currently, there is no limit on overall deductions, but a person can only deduct charitable deductions up to 50% of their adjusted gross income. The “1%” that is always talked about, those at the very top of the income pyramid, in theory, might have some disincentive regarding charitable donations due to such limits.  But I think they contribute because they are asked and because they want to.

“Donative intent” remains the most important reason why a person makes a contribution. At all levels of giving. Regarding the synagogue, people make a contribution for a host of reasons, mainly because they are obligated to fulfill their dues/annual commitments. And hopefully, they believe in their hearts and in their heads that the synagogue is important to them as an institution is meaningful in their lives.

Don’t get me wrong. Deductibility of charitable contributions is certainly helpful to those who itemize their tax returns. If the tax code was to change so that contributions were no longer deductible it would certainly have some effect on contributions.

But let’s not be so concerned about this hypothetical situation. Churches and synagogues, hospitals, colleges and universities as well as human service organizations, and their representative advocacy and lobby organizations, would fight this tooth and nail.

Posted in News

13 Questions About Synagogue Finance*

Most synagogue leaders are immersed in budget preparation for next year. For others, this process is just a few months away and will be here before you know it.

And too often, the budgeting process is simply to add funds – 2 to 3% – to the budget lines from last year and move on.

Here are 13 questions for you to ponder which I know will help your budget planning for the coming year:

  1. If you were to start your synagogue from scratch today, would the budget look differently than it has in recent years?

The biggest expense is personnel. Do you have the right staff to best fulfill the synagogue’s mission and vision?

  1. Do you have programs that, if they were discontinued, would have little negative impact on the synagogue or the community?

No congregation will get rid of Shabbat Worship. But maybe there are other programs that are poorly attended that are worthy of an evaluative conversation about effectiveness and impact. And maybe it is worthwhile to think about new programmatic offerings to better engage congregants.

  1. How much of the synagogue’s expenditures reflect “the way we have always done it”?

Increase the budget by 2-3 percent and be done with it. Would you do it this way in your business?

  1. Are there clear lines of accountability for spending at every level?

Of course people should be accountable for each expense by getting approvals beforehand as well as receipts. More importantly, are staff setting goals and creating work plans for the year to achieve such goals? Do they have a performance evaluation? If the synagogue is spending $15,000 for a part-time youth engagement staff member, how do you measure its effectiveness?

  1. How much of the synagogue’s funds are used to impact the community?

Social Action, interreligious activities with local churches and mosques. Are you having a conversation about the impact of such work?

  1. Is the synagogue spending its personnel dollars in the most effective way?

This relates to the mission and vision of the synagogue and the goals you have to carry it out. And whether you have the right staff to do such work.

  1. Who are the true decision makers as to how synagogue funds are spent?

Is there a full review and discussion of the budget by the synagogue board? Or does the board just rubber-stamp the budget that is created and offered by the synagogue president, rabbi and a few others?

  1. Is debt hindering your congregation from doing programming you would like to do?

Check out my recent blog about debt. The $90,000 a synagogue is paying annually towards a mortgage would certainly be better spent for a youth engagement person, executive director, or even just a $200 reduction in annual dues.

  1. What are the potential unintended circumstances of making significant changes in the budget and its expenses?

A significant budget change might be uncomfortable to some congregants. This is where transparency helps.

  1. Does your synagogue spend too little or too much on facilities?

Keeping up with capital improvements is an integral part of the budgeting process.

  1. Do you share the state of the synagogue’s finances once each year at the time of the synagogue annual meeting, or is there ongoing transparency by sharing budget updates periodically?

This is self-explanatory. The more on-going transparency there is regarding the budget, the better.

  1. Does the synagogue have adequate funding for training and development of staff, board members and other volunteers?

Providing funding for training for everyone has short and long term benefits to the synagogue.

  1. Does the synagogue budget reflect faith (Jewish values), futility, or foolishness?

A budget that directly relates to the mission and vision of the synagogue and its goals reflects Jewish values.

(*Adapted from posts at ThomRainer.com)

Posted in News

Discretionary Funds

Maybe it is something in the water, or because it is Spring.

I have been asked a few questions recently about the Rabbi’s Discretionary Fund. One synagogue leader inquired about auditing his synagogue’s discretionary fund. Their rabbi had been at the synagogue for many years and the fund has not gone through an audit.

Another question came from a rabbi who asked me about what happens to the discretionary fund upon retirement.

Synagogue leaders must remember that the Rabbi’s Discretionary Fund – and a similar fund for a Cantor – is a fund that belongs to the synagogue. So ultimately, the synagogue board is a “fiduciary” for this fund, like all of the various funds of the synagogue.

What is a fiduciary anyway? The definition from “Investopedia” states that a fiduciary

“might be responsible for general well-being, but often it involves finances – managing the assets of another person, or of a group of people, for example. Money managers, bankers, accountants, executors, board members, and corporate officers can all be considered fiduciaries.”

Synagogue board members are the “fiduciaries” for the community’s money. And when you think about it, this is truly an awesome as well as a sacred task.

So what about auditing the fund? While it is really a good practice for a synagogue to undergo a comprehensive financial audit annually, I know that this can get kind of pricey. The Rabbi’s discretionary fund should be audited separately and shouldn’t be that expensive.

My blog from September 2012 on this topic holds true today:

“The best thing for both the clergy and the synagogue board is for the discretionary fund to be audited on an annual basis. A report can be made to the board as to how the funds were distributed noting amounts by category (people in need, $5,000; community organizations, $1000). Confidentiality regarding recipients is certainly important.”

The audit protects both the rabbi and the board and demonstrates that synagogue leaders are true fiduciaries of the community’s funds.

It is also essential to have guidelines for the use of the discretionary fund that are agreed to by the rabbi and board and memorialized through a board resolution. This will of great help to the person conducting the audit of the discretionary fund. Check out the proposed guidelines from the Central Conference of American Rabbis.

And it is always good practice for a synagogue to consult with a CPA or Tax Attorney when creating such guidelines.

So what happens to the fund when the rabbi retires or leaves the synagogue for another job? The practice in many synagogues is to spend down the fund – all for purposes described in the guidelines- before the date of retirement or last day of employment. When the new rabbi begins, a new discretionary fund will be established by a board resolution in the name of the new rabbi, and a new bank account established.

 

Posted in News

Just Care

Engagement. Relational Judaism. Mission and Vision. Welcoming. Theory of Social Change. Metrics. Social Media. These are but a few of the buzz words of synagogue life – that is stuff that thought leaders talk and write about a lot. And if you do them – integrate into the operations of your synagogue – make the synagogue experience better for everyone.

What about Torah and Jewish Study? Social Justice and Acts of Loving Kindness? And how about Worship? Oh, those things, too.

Synagogue leaders certainly have much to think about to encourage people to be part of your sacred community. And then for them to be generous through annual giving and dues to support all of the activities that happen as an expression of the buzz words noted above.

There is some overlap among some of these important principles of synagogue life. If you are thinking about all of these things and acting upon them in some way through leadership practices, that is great. But what synagogue leaders can say that their activities consciously encompass all of these things, or even some of them? This can get quite overwhelming for synagogue leadership pretty quickly.

Recently, I read a blog where the authors were encouraging congregational leadership (churches and synagogues) to think about engagement as an organizing principle. The suggestion here is that engagement as an organizing principle frames every interaction, in-person and online.

Oftentimes, many synagogues focus on programming as the primary principle with attendance being the measurement of success:

How many people attend Shabbat worship on any given day? And how many attend when there is not a Bar or Bat Mitzvah?

How many people attended last weekend’s Purimspiel, or other special events?

How many people attended the Adult Education series?

Regarding the metrics principle, I often have wondered who might be keeping track of such data. Taking attendance at Shabbat worship is a foreign concept. We talk about Shabbat attendance anecdotally. We know that there were a lot of people last Friday night, perhaps due to the guest speaker, but we don’t track who attended.

While the numbers might be important to know, it is just as important to know who attended. I have written before about metrics, but I will table further analysis on this issue for another day.

The program might have been great and a lot of fun. But did the leadership have a game plan at the event – before, during and after – to engage everyone so that they feel a part of the synagogue community?

What about post-event engagement? Did you post a picture of the event on the synagogue’s Facebook page? Did you send a short personalized email thanking everyone for coming and asking for participants to share thoughts about the program? On Facebook or even in an email to the organizers?

Perhaps the most important principle of synagogue life is to care about each other. Make synagogue membership a very personal endeavor – synagogue leaders displaying interest in the lives of every congregant. Showing up is important. But make the effort to speak to those who show up. Like you do with family and friends.

Posted in News

Sad

We can all agree that the closing of a synagogue for any reason is just sad.

Changing demographics and economics throughout North America have contributed to the closing of both synagogues and churches since the turn of this century. Synagogues in small towns have been impacted by the closing of factories, as well as the fact that young people are just not moving back home to the communities where they grew up. In metropolitan urban and suburban areas, the outlook on religion and community by Millennials, and even the evolving views of religion by baby boomers nearing retirement have also impacted synagogue affiliation. Churches, too, throughout North America have also not been immune to these phenomena.

But when it happens to a synagogue in a highly Jewish area that seemed to be thriving not too long ago, and for reasons of financial challenges based on mortgage obligations, it is a shock to the system.

Recently, I read about the closing of Temple Emanu-El. It is a synagogue with a nearly 60-year history. The number of life-cycle events that have occurred in that time span, and the lives they have impacted is huge.  The article notes that if the congregants gathered at a town hall meeting did not vote to merge with a neighboring synagogue just over 6 miles a way, the synagogue would be in default on its mortgage.

I have written before about mortgages and debt. If you want to refurbish your building or buy and build a new one, it is best to do all of this and pay for it without taking out a mortgage. Many synagogues have come up short in their campaign goal and have gone ahead with their original building plans by mortgaging the difference between what was raised and what the project costs. The thinking goes that new members will help maintain the debt payment, and/or another campaign will be planned and implemented in 10 years to pay off the mortgage.

Changes in demographics and even clergy can certainly impact membership. As synagogue leaders, what would you do if the membership was slowly declining, and what was a 425 family size congregation 10 years ago was now hovering at 300 families? That is a loss of about $250,000 in annual income.

There is only so much you can cut back on expense wise in order to provide the same level of programming to meet the needs of a smaller congregation. And the nearly $90,000 – or whatever the 5 or 6 figure amount is – debt remains regardless of the congregation’s size.

And it is the primary financial obligation of the synagogue, even before staff salaries.

Today, synagogue board members have a tough job. You have to have broad shoulders just their fiduciary responsibility – to be sure that they manage the synagogue finances responsibly and to to ensure that the synagogue has enough money to carry out its mission to meet the spiritual needs of congregants as well as to fulfill its financial management and obligations.

It is just sad. Merging with a neighboring synagogue so that congregants have a sacred community to be a part of is certainly might ease the pain. But for those in the Temple Emanu-El community and those of us who care about synagogue life, sadness will remain for a while.

 

Posted in News

Bazar Bazaar

Concerts. Deli Night. Art Auctions. Casino Night. Bingo.

These are just some of the fundraising event ideas that have become a staple for several synagogues, and local community organizations across North America.

And there was the annual bazaar at the local Armenian Church that was down the street from us that had the best Shish Kebab I ever tasted.

I have been reading several Blogs that have been discussing fundraising events. Which reminded me of a blog I wrote last year at this time.  Last year’s blog was inspired by our synagogue’s Mishloach Manot project for Purim, which continues this year as well. Two weeks ago, I filled out the contribution form ($10 a greeting, with graduated amounts for increasing the number of greetings). The Purim package should be at our door early next week.

After last year’s effort, I asked my friend who is responsible for organizing everything what the results were in terms of income for the synagogue: $11,000 in gross income with $4,000-$5000 in expenses. And a lot of volunteer time on a Sunday to put together the packages, as well as for delivery.

So the return on investment (“ROI”) from this effort was $.45 – the synagogue spent $.45 for every dollar raised. In addition to volunteer and staff time.

People like receiving the packages. You see who sent you a greeting. There is candy and Hamentashen. This gives people good feelings, but doesn’t raise a ton of money.

I have to wonder if the synagogue would be better off in terms of fundraising by asking one person to give a gift of $10,000 to underwrite the costs of this program.

I received an email yesterday from Ken asking me what I thought about peer to peer fundraising. Ken’s synagogue has an enhanced dues program and like many synagogues, they are low key in the approach to asking congregants to participate – mailings, emails, occasional gatherings with a pitch with “soft-sell” emails as follow up.

Whether it is called peer to peer, or face to face, the more personalized – and in person -fundraising approach, the more effective it will be. Such personalized efforts should not be seen as a one shot deal. You don’t want the congregant who gave you $1000 or $5000 to participate in an enhanced dues effort to not hear from anyone at the synagogue about this special support until you approach them again next year. Calls from and meetings with clergy and synagogue leaders, special emails targeting those participating in the enhanced dues program, and even “by invitation only” thank you events should also be a part of this overall strategy.

As I have written before, events should be fun, and should be about building community. When preparing the budget 15 months before the end of the next fiscal year, the fundraising number you plug in for events will always just be a projection.

A donor, congregant centered approach where congregants are asked for in person for specific support is not only more predictable, the ROI will be far less than an approach reliant on events.

 

 

Posted in News

Prayer Breakfast – Really?

Two weeks ago, at the annual National Prayer Breakfast, President Trump stated he would “destroy” the Johnson Amendment.

As a Senator in the 1950s, LBJ wrote legislation that when passed, was attached to the IRS regulations that impact not-for-profit organizations as well as houses of worship. One of the IRS rules created by this legislation was to prevent religious leaders from endorsing candidates “from the pulpit”.

This is always an issue around election time. Movements like “Pulpit Freedom Sunday” have encouraged ministers to give a sermon on a particular Sunday in support of a presidential candidate.

Clergy acting as individual citizens as opposed to leaders of a house of worship are allowed to endorse candidates. Think back to “Rabbis for Obama”, “Rabbis for Hillary”, and even “Rabbis for Trump”. It is certainly something that can be a bit of a blurry issue.

In the scheme of things, introducing legislation to get rid of the Johnson Amendment seems to now be a low priority. Events in Washington in recent days will not only dominate the news cycles in the coming days, but also no doubt push “destroying” the Johnson Amendment to the back burner.

But it will emerge again as an issue as the 2018 Congressional and state elections are in full swing. No doubt, according to current reports, there will much resistance in Congress by both Democrats and some Republicans.

Should the discussion ever move forward from the press and blogosphere to the floors of the U.S. House of Representatives and Senate and become law, regulatory requirements may become more stringent for synagogues and all houses of worship. Right now, religious organizations are not required to complete a 990 for the IRS, a tax return form for not-for-profit organizations. Whether an audit is conducted is completely by choice. When synagogues become more involved in politics where clergy are allowed to endorse candidates, official financial filing rules may become more of the norm.

This may be a minority view, but I actually think more financial regulatory requirements will be of benefit to synagogues. Houses of worship get a pass in terms of 990 IRS filings, unlike not-for-profit organizations, due to the separation of church and state. Unless a synagogue is applying for a grant from a foundation, no one is making a synagogue undergo an annual audit.

Board members actually have the same fiduciary responsibility regarding the management of the synagogue’s fiscal affairs as board members do for other not-for-profits. So an annual audit is a good thing. And in the spirit of transparency, it is something that can be shared with the congregation via email and even posted on a synagogue website website.

There are synagogues and other houses of worship that are multi-million dollar endeavors. The neighboring YMCA with a $2 million budget has to file a 990 to the IRS and engage a CPA to complete an annual audit. The church or synagogue down the street with a similar-sized budget is exempt from such requirements.

Completing an annual audit and sharing it lets congregants know that you are good stewards of the community’s funds. Put aside the possibility of submitting a grant proposal to a foundation for a moment. Good stewardship will lead to good dues/annual commitment collections as well as successful future capital and endowment campaigns.

Posted in News