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President's Message
July 2004: The cost of fundraising

by Brett Borah
President, Jewish Federation of Silicon Valley

I recently read a piece in the San Jose Mercury News about a local philanthropic organization that hired a commercial fundraiser to raise $32,000. Every dollar raised went to that “for profit” fundraiser. The fund-raising campaign cost the organization an additional $5,000. Thus, the cost of raising these funds was about 115 percent. This fundraising campaign was labeled a success by the organization.

Our board of directors annually reviews our operations and seeks ways for us to reduce the cost of raising funds so that more of our money can be channeled into the agencies we represent. July begins the new fiscal year for our Jewish Federation. It would seem an appropriate time to evaluate the cost of raising funds for our Jewish community. As of this writing, the numbers are not complete for fiscal year 2003-2004 but we can get close enough to get a general idea of how we’re doing.

During the past fiscal year, our Federation raised about $2.2 million for the annual campaign, $6 million for the Cornerstone Campus Campaign and $500,000 for our Endowment Fund. We also raised $150,000 in specially ear-marked funds. This makes an annual total of $8.3 million raised to benefit our community. These funds were raised through the efforts of approximately 100 volunteer solicitors. The funds were raised from over 2,500 donors.

Our Federation’s administrative budget for the past year was $1 million. This budget includes the cost of 14 staff persons, including 6 full-time and 7 part-time. It includes such non-fundraising activities as Jewish Community Relations Council, the Community Yom Ha’Aztmaut celebration, Israeli Awareness Day, Community Mitzvah Day, our Community Chaplaincy program, the Jewish Community News, maintaining the community calendar (to avoid scheduling conflicts), Board Room Dancing (our twice-a-year program to train agency boards), Young Adults Division, administration of philanthropic funds, etc.

Simple math tells us that our cost of funds (disregarding all of the cost of producing the foregoing community activities) was about 12 percent. This is a remarkable figure considering that a 2002 study by California Attorney General Bill Lockyer found that the cost of commercially raising funds for California philanthropy ran about 62 percent. Our national organization, United Jewish Communities, tells us we should strive for a cost of funds of 18 percent. The Journal of Philanthropy recommends a cost of funds of 15 percent.

The conclusion is that our Jewish Federation is extremely efficient in raising funds for our Jewish community agencies. We continue to work to lower the cost. I think we all can and should be pleased with the work of our professional staff and the volunteers who make our local Jewish community the success that it has become.