What One Chabad Rabbi Can Teach Synagogues About Money

by Dan Judson

Rabbi Peretz Chein, the Chabad Rabbi at Brandeis University, is doing something completely unusual for a Jewish religious organization when it comes to money: he is completely transparent about it. On Rabbi Chein’s website, chabadbrandeis.org, below the tab to respond for Shabbas dinner, is a tab with a picture of Rabbi Chein’s smiling face marked, “Finances: See what it costs to operate the Chabad House at Brandeis, and who is supporting it.” Clicking on it brings you to a basic fiscal report, where you can learn that his revenue for FY 2012 was $260,812 and he ended the fiscal year $6286 in the red. Under payroll is budgeted $73, 604 so one has a sense of what he takes as a salary, and from other numbers you can approximate what he spends on a mortgage for the Chabad House.

A public accounting of an organization’s money may not sound like a significant act, yet I do not know of a single synagogue nor Chabad House which makes even a basic budget publicly available. Over the past year, I have spoken with over a hundred synagogue presidents about synagogue finances and have routinely asked if they would post their synagogue’s budget publicly on-line as a statement of fiscal transparency. Not a single one. Most respond incredulously the question is even asked.

At Hebrew College where I teach, we have a nonprofit management class for rabbinical students, and one of the sections of the course is on understanding budgets. Students are asked to bring in the budget of the synagogue they are serving so they could work with a real world example. Initially not a single synagogue would allow their budget to be used by their own rabbinic intern, even though it was solely to be used in a classroom setting and not seen by anyone other than the rabbinical student and the professor. There is a deep seated sense that synagogue budgets are totally private affairs.

Rabbi Chen has taken an entirely different approach. “What really drove us to make our finances public,” he said, “is that we are constantly telling people we need your support, we need your support. So we figured the most effective means of telling people that we need their support is to show them where their money is going. In fact, at the time that we first put our finances on the web, we were not very proud of showing them, because it was not a vibrant institution, we were showing a deficit. I was also initially afraid that I would have to start justifying all of my expenses, and I was worried because there was no model for making your finances public. Now I think it is one of the best things we have ever done. It gives us credibility and authenticity and gives people an awareness of what we do. It enhances their desire to support us.”

Chabad Houses typically have a different financial model than synagogues (there are no membership dues) but Rabbi Chen’s argument for transparency remains equally valid. At a time when transparency is such a pivotal value for all nonprofits and at an economic moment when synagogues have to do even more to convince members and prospective members to give financially, there could be no better statement of fiscal responsibility and credibility than to make their finances public. Most synagogues make their budget available to their membership, so they are not entirely without transparency. But there remains a substantial difference between making the numbers available at select board meetings, and publishing them proactively on a website for any to see.

The results of his transparent approach have been substantial. One success has been the added sense of responsibility felt by students who frequent Chabad. Upon seeing the financial information for themselves, students realized that they needed to increase their support of the organization. Students themselves organized an annual gala dinner of $180 plate.  “The other major impact,” Rabbi Chein said, “is that people tell us frequently that they are glad to support us precisely because we are so transparent. People’s money is their money, they could be spending it on themselves, they want to know how it is being spent, and if they know how it is being spent, they feel better about it.”

When I asked synagogue executive directors about the success of Rabbi Chein and what prevented them from following suit, two major problems were cited. The most significant area seemed to be the disclosure of salary information. While this can be ameliorated by disclosing only the general category of “personnel,” Rabbi Chein argues that if his salary cannot be substantiated publicly, then he shouldn’t be making it. “If my salary is something to be ashamed of, then I shouldn’t be publishing it, but if it is not to be ashamed of, then I should publish it.”

One synagogue Executive Director said the real problem with publishing a budget on-line is that, “simply seeing dollar amounts without context, without the ability to explain, are often misleading. Just by looking at a number, people could make assumptions either positively or negatively about who we are. I know that there are communities that spend enormous dollars on their educational programs, and congregations that spend far less, but you cannot make the assumption that congregations that spend far more necessarily have a better educational program. You have to look at quality and what they are specifically spending their money on. The numbers alone are an invitation to disaster. Its an invitation to misinterpretation at all levels.”

Would the public disclosure of numbers lead to misinterpretation? It is possible of course, but the fact is that budgets do tell something significant about an organization. If an institution spends substantially on education, it may not say everything about the quality of their educational program, but one would know this particular synagogue places education as an important value. As Rabbi Chein’s success shows, if an organization can tell a compelling financial story, they will be rewarded with greater financial support because people will feel more positive about their donations and more invested in the community.

I spoke with a nonprofit management consultant who noted that in today’s climate regular nonprofits are judged by their transparency. Charitynavigator.com, for example, bases one-third of their ratings on transparency and accountability. Philanthropists, foundations and regular donors are all looking for organizational transparency, why should this be different for synagogues?

Rabbi Chen’s results suggest that transparency is good for a religious organization’s bottom line as well as its values. “At the end of the book of Exodus, Moses constructs the tabernacle in front of the people. Ultimately,” Rabbi Chen argues, “transparency is about Jewish values.”

Rabbi Dan Judson teaches at the Hebrew College Rabbinical School and is a doctoral candidate in Jewish history at Brandeis University. He is writing his dissertation on the history of synagogues and money. He can be reached at djudson@hebrewcollege.edu.

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Comments

  1. Ellen Flax says:

    Dan,

    Thanks for the provocative piece and for sharing Rabbi Chen’s methodology.

    Financial transparency is critical, and donors need to know how their money is spent. However, getting truly accurate information, even when “complete” financials are released by organizations, is a challenging task. As someone who has spent many years reviewing non-profit budgets in the Jewish and secular sectors while working for different foundations, I have come to the sad conclusion that the budgets that we see–and shared with the public via 990s or through voluntary disclosure–are more a reflection of the non-profit’s financial/organizational sophistication than a refined picture of their spending priorities. Does an organization really have unjustifiably high overhead costs–or perhaps doesn’t know that it can–legitimately–allocate a certain percentage of their administrative costs to program expenses? Does a given shul (recognizing that shuls, like all religious organizations in the US, are not required file 990s) really care “less” about education than another shul in town with a larger education budget–or perhaps just doesn’t realize that the 20% of a rabbi’s time spent on adult education and the religious school (or whatever the percentage that it may be) can be allocated as an “education” cost rather than as an “administrative” cost? Unless, and until, there is way to ensure that organizations a) have a uniform way of recording financial information and b) this information can be placed into an appropriate context, donors/potential donors will be comparing apples to oranges to pears when they examine and evaluate the budgets of non-profits.

  2. Ari Trachtenberg says:

    So … the $64k question is: does Hebrew College make their detailed budget public and, if not, why does not Dan ask them about this.

  3. Seeking transparency on the income side is also problematic. Congregations already put congregants through all kinds of humiliating hell to get dues relief. If transparency is demanded for clergy and staff salaries, what’s to prevent a call for equal transparency on dues payments?

  4. Larry Kaufman says:

    One reason transparency is easy for Chabad is that they don’t sell anything, except their donor’s chalek b’olam habah, and thus don’t have to justify their prices. Second, of course, is that the rabbis live on a fraction of what their colleagues in the conventional congregational rabbinate are paid. With a business plan built on two pillars — love and guilt — it’s just totally a different dynamic.

  5. Peretz Chein says:

    Larry,
    Please explain your statement “Chabad (is that they) don’t sell anything, except their donor’s chalek b’olam habah.”
    Thanks,
    Peretz

  6. Larry Kaufman says:

    Part of Chabad’s success is that it’s not about the money. They give away food, they give away religious services, they give away love. Kol hakavod, all honor to them.

    But how do they finance what they give away? By astute fund-raising, much of it among people whose lifestyle has nothing in common with that promoted by Chabad, but who feel guilty about the absence of Jewish practice in their lives– and who believe that through support of Chabad they are helping to preserve Judaism — and thus earning their share in the world to come.

  7. Questions says:

    Larry,

    You suggest that “astute fund-raising, much of it among people whose lifestyle has nothing in common with that promoted by Chabad, but who feel guilty about the absence of Jewish practice in their lives.”

    Evidence of this is hard-to-come by, at best.

    Even if it were the case, how does it differ from, say, a Zionist organization fundraising from people who not subscribe to a complete Zionist ideology? Or the Yeshiva University being the recipient of contributions from many non-Orthodox Jews?

    There may be something else going on. Many Jews, not all of whom are Chabas, find a form of Jewish expression that speaks to them – at a Chabad House. I assume that college students participate in the Brandeis Chabad House, and their parents (affiliated or not) choose to support the organization that supports their children.

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