Friday, October 25, 2013

Funding Jewish Education

Gershon Distenfeld, who is a regular reader here has written an op-ed in the New Jersey Jewish Standard that may eventually become a milestone for positive change if implemented. He has come up with some excellent ideas about solving the tuition crisis. It is somewhat lengthy article but well worth the time taken to read it.

He explains the faults and absurdities in the current system of allocating financial aid to parents and suggests a plan that will go a long way towards solving the problem. I think his ideas have a lot of merit. But as with all good ideas... the devil is in the details.

Let me briefly outline his suggestion. He wants to take the religious schools out of the scholarship business. Instead of every school having its own scholarship committee that decides who will receive aid and how much –  a central charitable tax entity  should be  created that will determine for parents of all schools who will get aid. Donations made to this entity will all be tax deductible - unlike tuition dollars which are not.

This will standardize the process and make it more objective. The incentive of tax deductible donations will make donations for scholarships in their schools more affordable and attractive to parents. The current system of tacking on extra dollars to tuition bills to help subsidize scholarships is not tax deductible. The tuition charged in  each school will then be reduced to the cost per child.

While I applaud Gershon’s efforts and think his suggestions are worthwhile - I am not sure it is possible to implement for reasons he suggests in his article. I have been involved with fundraising for schools and the idea of implementing radical change like this is probably more difficult than crossing the Red Sea (to borrow a Talmudic phrase).

Getting something like this off the ground is an impossible task. People are just used to the system as is. Individual schools are very unlikely to give up control over who in their school gets scholarships and how much they should given to them.  Furthermore, as difficult as fundraising in a school might be - no school is going to suddenly reduce their tuition and completely rely on an outside entity to fund their scholarships. They are going to be extremely reluctant to give up entrenched successful  fundraisers like banquets and concerts.

That said, I think it might be possible to get support for implementing some of what he advocates. The idea of a central fund dedicated toward allocating financial aid to parents in all the schools is a good idea. Schools can retain their own scholarship committees - deciding on their own who does and doesn't need scholarships... and how much. And then apply for those funds from the central fund. In order to assure some form of standardization, this funding entity can decide the parameters that’s should be used as a general guideline – but leaving ultimate discretion to each school. The central fund should provide its own non parent independent member to each school’s scholarship committees to assure that those guidelines are indeed being followed.

But even doing this is not so simple. As I indicated - currently each school has its own fundraisers supplementing the budgets that are shorted by scholarships. If the schools are out of the fundraising business, then the central fund will have to raise the revenue that is at least equal to what each school raised independently. So for the sake of argument - if there are 10 day schools, the funds collected at a banquet for the central fund will have to be more than ten times as much to make it a worthwhile source of revenue for all the schools. That is not going to happen no matter how generous the typical philanthropist is. The result will be less financial aid to the parents who need it.

Gesrhon has spoken to many of these philanthropists and says that they would be willing to give a lot more if they saw a funding model that was sustainable. The current one is not. I have also heard many a philanthropist say that they feel some operating budgets are wasteful. I do not agree that they are – at least not in all schools. But that is perception and have said so myself in past posts on this subject. The money is there. There are wealthy people who can indeed afford 7 figure donations... and don't currently give even a small fraction of what they can afford. No one wants to pour their money into a black hole.

Despite the fact that they may be willing to give more if things are more organized and there is more accountability – I’m not sure that creating this fund will net more money overall. Talk is cheap. They may give a lot more to a central organization than they would to each school individually. But will they give one donation to a charitable central entity that will be more than ten times what they give to any other charity? I’m not so sure about that.

These are just some of my off the cuff immediate thoughts. But I do think that Gershon deserves tremendous Hakoras HaTov for having the courage to publicly spell things out and come up with some very good ideas.