Tag Archives: Jewish Community Association

12 REASONS WHY MOST IF NOT ALL MEMBERS OF THE JEWISH COMMUNITY ASSOCIATION BOARD SHOULD GRACEFULLY RESIGN

20 Sunday Jul 2014

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Here’s a question for all members of the Board of Directors of the Jewish Community Association and a question for the broader Jewish community to reflect upon as you think about the abject failure of the JCA.  Mr. or Ms. JCA board member, are you a valuable, valued and responsible member of the JCA board?  If not, your immediate and graceful resignation may be good for you, the JCA and the Greater Phoenix Jewish Community.

12 REASONS WHY JCA BOARD MEMBERS SHOULD CONSIDER GRACEFULLY RESIGNING:

1.  You’re serving on the board more for personal benefit than for public benefit.

Do you or your business stand to gain financially because you are on the board?  For example, does your firm sell a product or service to the JCA such as health insurance?  Is the prestige you get from your board service helping to promote you in the community?  Was being a member of the board helpful for your wife to become the interim CFO?

2.  You have a material financial interest in a transaction with the organization that would be damaging if known by the public. 

See #1

3.  The organization’s values or activities are inconsistent with your personal values.

Do you believe in maximum transparency, high organizational effectiveness and efficiency, treating all employees with respect, demanding complete professionalism from the CEO, making maximum positive impact on the community, having an organizational brand that makes you feel proud and one that the majority of the community knows and admires?

4.  You are unable to support the organization when a board action is taken contrary to your vote.

Have you asked yourself why you continue to serve when the JCA board continues to bring shame to the organization because of errors of omission or commission?

5.  The organization is not operating consistent with the law and/or its own governing documents or policies despite your efforts to insist on compliance.

Have you ever read the bylaws of the organization that you serve?  Are you fully aware of the governmental laws and policies that govern the JCA?

6.  You’re not informed about the organization’s current activities and/or mission-oriented results, and you’re not informed about the performance of the organization’s executive.

Do you believe the JCA is well served by Stuart Wachs as its executive?  Have you provided direct feedback to Mr. Wachs about his performance or the way he is seen and talked about in the community?  Can you explain to supporters in specific terms what the JCA is accomplishing to improve the community – not in platitudes but in very specific terms? Do you believe that it is acceptable that 46% of the discretionary money raised by the JCA should be used for its overhead and undisclosed programs rather than being allocated to the Jewish agencies in the community?

7.  You don’t review the organization’s financials on a regular basis.

Do you have a good working knowledge of the JCA’s financial position?  Do you regularly review the profit and loss statement and the balance sheet?  Are those financial documents regularly reported on and discussed at the JCA’s board meetings?  Do you have significant questions or concerns but are afraid to raise them or ask them at the board meetings?

8.  You’re missing a significant number of board meetings and therefore unable to actively participate in governance-related planning, deliberations, and actions.

Do you regularly attend at least 80% of the board meetings and the meetings of the committees to which you are assigned? When you leave a JCA board meeting do you leave with a sense of pride and accomplishment knowing that your time was well spent and that it will make a positive difference in the community?

9.  You’re not contributing resources (money, time, connections, or other valuable assets) to the organization apart from the time to show up at meetings.

Are you making a significant annual financial contribution to the JCA?  When there is an additional appeal such as for Israel during a crisis do you make an additional financial contribution?  Are you actively soliciting support on behalf of the JCA’s annual campaign?  Do you regularly talk proudly to your friends about your association with the JCA as a member of its board?

10.  You don’t spend significant amounts of time thinking hard about whether the organization is effective at advancing its mission and how the organization could be more effective at advancing its mission.

Have you offered any input or suggestions about ways in which the JCA could be more effective in its fundraising, grantmaking, community planning, and reputation building?  And are you satisfied with all of these things? Do you wonder why there has been so much hiring, firing and resigning at the JCA staff?  Do you have any idea what current or past employees think about the organization and its leadership?

 11.  Your conduct at board meetings is viewed by the majority of other board members as disruptive, and you’re unable to work collaboratively with the other board members in a productive manner.

Are you a constructive board member at the JCA meetings either by refraining from disruptive comments or, perhaps even worse, by sitting quietly and not saying much if anything about the operations and condition of the JCA especially when you have something on your mind?  Do you wait until after the board meeting to vent your frustration in the parking lot or later with other board members who are also frustrated?

 12.  You intervene/interfere with the executive’s management of the organization by personally directing the executive and/or staff and falsely asserting rank (because a board member has no individual authority and no inherent rank in the organizational hierarchy as an individual).

 Do you do this? Or, to the contrary, do you avoid offering constructive ideas and input to the CEO or to the Chairman of the Board about their performance, the board’s performance and the overall performance of the JCA?

If your honest answers to most of these questions runs counter to these 12 questions then you should seriously consider gracefully stepping down from the JCA board.  Because the JCA is in VERY serious condition and as a board member the ultimate responsibility rests with you.  Not with Stuart Wachs.  Not with Joel Kramer.  But with each of the elected members of the board individually and collectively.  The buck (and the lack of bucks) stops with you.  If you are not part of the solution then you are part of the problem and thus you must consider gracefully exiting the board.

If you’re unable to meet your fiduciary duties of care and loyalty to act with reasonable care in good faith in the best interests of the JCA, you’re failing to meet your legal responsibilities. While personal liability may be extremely rare for volunteer directors of nonprofits (absent some kind of intentional wrongdoing, fraud, self-dealing, or unpaid taxes), you’re also putting yourself at greater risk, including from claims that may not be protected by your JCA’s Directors and Officers liability insurance. Further, your failure to meet your duties may be holding back the JCA from better advancing its charitable mission and serving its intended beneficiaries.

If you’re able to meet your fiduciary duties but the majority of the board is not, and such deficiency results in an organization with serious compliance issues and values that don’t align with yours, you may also be putting yourself at greater risk. In such case, you may need to balance your duty to still meet your individual legal duties with your obligation to do what’s best for the organization and your interest in protecting your personal interests from possible legal and/or reputational harm.

(This Blog post is based on an article written by Gene Takagi, a California nonprofit attorney who has provided corporate, tax, and governance counsel to hundreds of nonprofit clients. He has successfully helped strengthen nonprofits and social enterprises with responsive and comprehensible guidance in areas including: formation, tax-exempt status, governance, legal compliance, document review, collaborations, mergers, earned income, advocacy, international activities, and dissolution.)

 

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Two Questions of Fact: Does Israel Kill Indiscriminately? Is the JCA Killing the Jewish Community of Phoenix?

13 Sunday Jul 2014

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It is axiomatic that every time the residents of Gaza, the West Bank, or Southern Lebanon embark on a missile launching spree and Israel retaliates, that the international press agencies populate their headlines and stories with the the numbers of civilian casualties among the Arabic speaking population.  For news agencies marketing their intellectual property, this makes great sense.  There are far greater numbers of Muslims than Jews, and of course the Arab population is much larger than the Jewish population.  For the news agencies, which are part of businesses, it is prudent to market to the widest possible audience.  It is also axiomatic that every Jew you can speak to will lament the fact that the world is not examining the facts, and the press is not examining the facts, and that the stories are, of course, slanted against the Jews.

I have been encouraged to read two articles in the main stream digital press which actually address this question.  One article, which appeared in Slate, titled “Is Israel Killing Indiscriminately in Palestine?”  concludes, with an analysis of the facts, that Israel’s conduct is actually the gold standard of behavior during warfare and that all nations, including Israel, should be held to this standard.  The second article I read with interest is called “The lopsided death tolls in Israel-Palestinian conflicts” which appeared in the Washington Post.  This article provides a more clinical explanation for these factors.  This article is neutral, but certainly does not in any way praise Israel, it is just an examination of the facts. Still, I am always encouraged when facts can be examined and the truth can see the light of day.

We are confounded by a very simple truth:  Jews everywhere demand that the world question the press and carefully examine the facts surrounding the oft repeated charges of indiscriminate killing by the IDF, but we allow The Jewish Community Association to operate without an examination of their facts.  There is no willingness on their part to be transparent, only a willingness to hide the truth.  As Mr. Kramer, board chair of the JCA, so eloquently explained to me: there are things the masses must not be told.  They will have until November of this year to file their tax returns from 2013, and it will be the close of 2014 and we will have no information for two years, while being asked to give our precious resources to them so that they can squander them any way they see fit.

When this Blog addresses the question of whether the JCA is killing off the Jewish Community in Phoenix, we have only their financial reports to examine (or the lack of their financial reports to examine), what we can piece together from the incessant turnover in the executive suite, and their lack of transparency and good governance.  We also look through their historical performance as the bankrupted JFED.  It is often said that past performance is the best indicator for future performance, but this is a gross oversimplification.  This only holds true if the following is true:

  1. High-frequency, habitual behaviors are more predictive than infrequent behaviors.
  2. Predictions work best over short time intervals.
  3. The anticipated situation must be essentially the same as the past situation that activated the behavior.
  4. The behavior must not have been extinguished by corrective or negative feedback. 
  5. The organization must remain essentially unchanged.
  6. The organization must be fairly consistent in its behaviors.

So, when one looks at the JCA, every condition enumerated above, 1- 6, holds completely true for the JCA.  Their behavior is the same, the board is basically the same, the economy of Phoenix is basically unchanged since the JFED was driven into insolvency, and nothing in their behavior suggests that they care at all about feedback from the community.

1)  We have no idea how it happens that the JCA’s financial statements are not yet available to the public for 2013?  Given their past performance, will they even be in business in 2015?  How is is that 46% of every allocable dollar goes to JCA overhead and never makes it to the Jewish Community.

2)  Stuart Wachs, the CEO of the JCA, has fired or replaced every one of his hand picked executives since arriving here in Phoenix.

3) Board Governance is still a disaster.  The JCA has made a $30,000 loan to Stuart Wachs, which is absolutely bizarre considering he received a raise from $198,000 (Head of Sabes JCC in Minneapolis) to $245,833 to run the JCA. In essence, money donated to the JCA has been loaned to Stuart Wachs because his $245,883 salary is just not enough.  Review this passage from Charity Navigator’s website to learn what they have to say about loans to insiders:

Insider Transactions and Conflicts of Interest

Summary of Sarbanes-Oxley Provision

The Act generally prohibits loans to any directors or executives of the company.

Relevance to Nonprofit Organizations

Nonprofits are presently highly regulated with respect to financial transactions that take place within the organization. Private inurement, excessive personal benefit, and self-dealing all cause serious penalties for any nonprofit that steps out of line. “Intermediate sanctions” laws specifically address compensation and excess benefit transactions with “disqualified” individuals, generally meaning board members and executive staff.

Providing private loans to insiders—the specific item included in the Sarbanes-Oxley Act—is not a common practice in the nonprofit sector. However, when it has occurred, it has raised problems either from the perception of a conflict of interest or because it has not been appropriately documented as part of executive compensation. In addition, in some states, nonprofit law expressly prohibits loans to directors and officers.

Recommendation

  • Because the practice of providing loans to nonprofit executives has been a source of trouble in the past and because this practice is specifically prohibited under Sarbanes-Oxley and in some states is prohibited for nonprofit organizations, it is strongly recommended that nonprofit organizations not provide personal loans to directors or executives.

  • If such loans are provided, they should be formally approved by the board, and the process for providing the loan should be documented, and the value and terms of the loan should be disclosed.

  • To guide the board and staff in independent decision making, the organization must have a conflict of interest policy with disclosure and this policy must be enforced without fail.

4) Now we learn that the Interim CFO is the wife of a Board Member of the JCA.  When Stuart’s contract comes up for renewal in the next months, I am guessing that there will be at least one board member who is thinking that if he supports Stuart, his wife might keep her job at the JCA, and this board member is a relatively new board member who does not have that legacy connection to the disastrous behavior of the agency that many of the other long-standing board members have.

5) There is a board Member who sells insurance to the JCA.  In fact, this board member sells $329,537 worth of insurance to the JCA.   I wonder if this board member will vote to renew Stuart Wachs’ employment contact?

It is beyond obvious that the Board of the JCA is abrogating their responsibility by allowing this type of disgraceful behavior to occur unchecked.

Here is what should happen:  1) The Jewish Community should withhold their money from the JCA until answers are provided.  2) The JCF should step forward and alert their fund advisors that there are serious issues of governance and transparency at the JCA and that there is no certain way to know whether the money earmarked for the JCA or VOSJCC will be delivered to an institution that will be actually functioning. The Community must step up and demand accountability, and it would be a prudent start for the JCA to reform their Board and ask the Board Members with obvious conflicts of interests to step down.  The lives that are in the balance here are not under immediate threat like in Israel, but they are under a relentless progressive threat that all but insures that there will be little to nothing left in the way of assets to care for the most vulnerable among us.

We sincerely want to know what you think.  Scroll to the top of this page or the top of any page in this Blog and click LEAVE A COMMENT to share your thoughts.  Comments will be published either using the contributor’s actual name OR, if they prefer, they may use a pseudonym to maintain their privacy.

To view the BEST OF THE BLOG, a selection of our most widely read articles go to http://jewishnewsphoenix.com/2014/07/02/best-of-the-blog/.   Feel free to share this Blog with others by sending this URL via email or by posting to your social media site.

 

An apology and the unfortunate truth about the JCA’s 2013 Campaign and its 2014 Allocations

21 Monday Apr 2014

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When I first started this blog, it was in response to the outrageous behavior of the Jewish Tuition Organization and the manner in which they allocated money.  The blog ebbed and flowed with the vicissitudes of the mismanagement of our Jewish leaders, reaching an apex with the poorly thought out and hastily announced merger of what was left of the Jess Schwartz Academy and Pardes Jewish Day School.  My attention then drifted to the behavior of the Jewish Federation and their relentless and pernicious mismanagement of the future of the Jewish Community, highlighting the interlocking directorate that existed between the JCC and the Jewish Federation.  Now that those two poorly governed entities have merged, it will be a bit easier to shine a very bright light on what continues to be a threat to the existence of Phoenix’s Jewish Community, or at least their financial assets.  My apology is for an over reliance on invective and sarcasm which diminished the impact of my message.  The blog could have been more effective, could have really helped bring about change, and I squandered an opportunity to highlight the malfeasance of what is now the JCA, and things have gotten worse.  I will not make the same error twice.

This blog had a great following once, with readership hovering around 10,000 visits per month, and I am committed to publishing the same critical analysis with less sarcasm, less invective and opening the blog for people to contribute their own articles, anonymously or with attribution.  So without further delay, here is my first story of the “new” and “improved” blog.

The Unfortunate Truth about the JCA’s 2013 Campaign and its 2014 Allocations

I have been trying to get a copy of the JCA’s IRS 990′s to really learn what has been happening there, and they are not available on either Guidestar or Charity Navigator, so I am relying on information on the allocations by the JCA that were recently published by the Jewish News article on March 26 entitled “ $1.3M Allocated to Local Programs.” and on a Commentary published in the Jewish News on April 16 entitled “Community should increase help for Jewish day schools” both of which included data on the JCA’s 2013 annual fundraising campaign and their 2014 allocations.

ANALYSIS OF THE JCA’S 2013 CAMPAIGN AND ITS 2014 ALLOCATIONS

The JCA reported in the March 27, 2014 Jewish News that its 2013 campaign raised $3.2 million.  Of this amount, $338,208 was donor designated and thus not available for allocation by the JCA.  It should be noted that many of the donors who make designated gifts are “double dipping” by making a restricted gift to the JCA and getting donor credit for that contribution while at the same time channeling support to the Jewish causes of their choice.  Through this plan these donors are in essence getting credit or kavod from two organizations for the same gift.

It is my understanding  that approximately $500,000 of the JCA campaign total comes from  endowment funds created at the Jewish Community Foundation by donors interested in providing a perpetual income stream to the JCA.  While reported as a part of the total campaign, this amount is received by the JCA automatically each year from the Foundation resulting in no development efforts or expenses to be expended by the JCA.  This means that the actual money raised in the campaign through the current efforts of staff and volunteers is approximately $500,000 less than the amount reported.

The 2013 campaign of $3.2 million less the designated gifts resulted in $2,861,792 of allocable support over which the JCA has full grant-making discretion. From the allocable amount of $2,861,792 the JCA allocated $250,000 to Israel or 8.7% of the total allocable amount.

After the $250,000 allocated to Israel there was $2,611,792 available for the support of local causes in the Greater Phoenix Jewish Community.  This $2,611,792 was allocated as follows:

ALLOCATION % OF LOCAL ALLOCABLE DOLLARS PURPOSE
$99,000 3.80% Jewish Day School Education
($165/student)
$525,000 20.10% Valley of the Sun JCC
$78,000 2.90% Bureau of Jewish Education
$33,000 1.20% Council of Jewish with Special
Needs
$80,000 3% Hillel at ASU
$259,000 9.90% Jewish Family and Children’s
Service
$81,000 3.10% East Valley Jewish Community
Center
$3,000 0.10% Arizona Jewish Historical
Society
$1,000 0.03% Chabad ASU
$6,500 0.20% Friendship Circle
$3,500 0.10% Jewish Student Union
$7,000 0.20% Phoenix Jewish Film Festival
$5,000 0.10% Jewish Arizonans on Campus
$15,000 0.50% Jewish Free Loan
$5,500 0.10% Jewish Genetic Diseases Center
$5,000 0.10% Kivel
$7,500 0.20% Smile on Seniors
$22,500 0.80% Valley Beit Midrash
$5,000 0.10% BBYO
$50,000 1.90% Israel Center
$9,000 0.30% Israeli Camp Counsellors

Of the total allocable dollars available for JCA grants, approx. 54.2% was allocated and approx. 45.8% was retained by the JCA for its own operating costs, overhead and undisclosed programs.

COMMENTARY

I could wax on forever about the wisdom of propping up the campus and the JCC, and whether it is prudent to be spending JCA dollars to do that, but here is what it boils down to.  Give a dollar to the JCA and about half winds up benefitting Jewish charitable causes.  Presuming that donors are OK with the agencies getting allocations and the way in which the pie is divided, the idea that your dollar is diminished by so much and has such minimal impact begs the question about whether the JCA is the most effective way of supporting the community.  Another way of saying this is that it costs more than $1,196,200.73 dollars for the JCA to operate or to raise $1.6 million dollars.  Generally speaking, Charity Navigator or Guidestar would rate this performance as failing.  General and administrative expenses greater than 10% would raise eyebrows, so general and administrative expenses of 45.8% for every dollar donated means that there is only a possibility of 54.2 percent of the money you donate ever getting to the organizations who need it.  If you donated the money directly to the organizations you wanted to support, your money would go twice as far.

Consider the donor who has a Donor Advised Fund  at the  Jewish Community Foundation.  Their dollar contributed to their fund actually grew by more than 19% last year through prudent investment management.  So they now have $1.20 to give and that $1.20 can be granted to  any charitable organization where the donor feels the need is greatest.

So it boils down to effectiveness, efficiency and impact and when you look at it that way, giving to the JCA is just not a smart business decision for donors who really want to make a difference.

PS – Special thanks to my research and accounting colleagues who did the heavy lifting here – MG