Can Day Schools Survive?

In describing its news-making $33 million grant to the Hebrew Union College, the Jewish Theological Seminary and Yeshiva University to train a cadre of more than 1,000 Jewish educators, the heads of The Jim Joseph Foundation were clear about where they envision most of these teachers working.

“The vast majority will not necessarily go work at day schools,” Al Levitt, president of the Jim Joseph Foundation, told The Jewish Week. “Informal education is where it is going to be.”

While the foundation has shelled out $47.6 million in emergency grants and endowment-building campaigns for day schools in recent years, supports an Israel education project in Bay Area day schools and recently pledged $5.2 million to the DeLeT Teacher Education Program (for day school teachers) the bulk of its funds are earmarked toward experiential Jewish learning initiatives such as overnight camping, Hillel, youth groups and Birthright Israel NEXT, as well as innovative communities of young adults like Moishe House and Reboot.

This reality is in keeping with the wishes of the late Jim Joseph, a San Francisco-based real estate developer who early in his philanthropic career funded many day school curriculum projects but grew dissatisfied by the lack of impact he felt he was having. “Jim realized that day schools only affected a very small portion of Jewish youth,” Levitt said. “He defined Jewish education very broadly. He wanted to provide every young Jew with a Jewish education.”

Jim Joseph, which has emerged in recent years as the largest foundation focused exclusively on Jewish education, is part of a group of large, nationally-focused Jewish mega-donors who, while continuing to support day schools, no longer see them as a top priority. Instead, they are betting a majority of their money on Jewish educational alternatives. Michael Steinhardt — a co-founder of the day school-focused Partnership For Excellence in Jewish Education (PEJE) — has openly expressed his disillusionment with day schools, calling them too expensive and incapable of reaching a broad enough spectrum of young Jews.

In recent years, while his foundation continues to be a “sustaining partner” of PEJE, Steinhardt has led the charge in promoting Hebrew-language charter schools as a viable alternative. Harold Grinspoon, while also a partner of PEJE, has been focusing his efforts on growing the PJ Library, which provides free Jewish children’s books and CDs that promote Jewish literacy in more than 100 communities around the country.

Meanwhile, the Avi Chai Foundation — a longtime advocate and funder of Jewish day schools (and a PEJE partner) — is determining its strategy as it prepares to spend down its largesse by 2020.

Asked by The Jewish Week what it means to be a PEJE partner (the Jim Joseph Foundation is one as well), the group’s executive director, Rabbi Joshua Elkin, declined to say whether some minimal (or even current) contribution is required.

“For a number of years, people in the Jewish community were justifiably excited by the growth in the day school arena and were really focused on capitalizing on what was perceived to be a significant potential for continued growth,” says Jonathan Woocher, the Jewish Education Service of North America’s chief ideas officer and director of its Lippman Kanfer Institute.

“In the last few years, what people have begun to do is step back and say, ‘There are other areas of potential growth and other areas of potential needs, as well.’”

Is the day school enterprise, which looked so promising and was considered such a magic bullet in the late ‘90s and early ‘00s, doomed?

Even more significant than the declining interest of mega-funders, day schools have been hard hit by the recession, which has not only made fundraising more challenging but has greatly shrunk the pool of parents able to pay tuition.

With the day school enterprise facing dropping enrollment and rising scholarship requests, nearly a dozen institutions will not open their doors in September and many others worry about sharing that same fate. More than ever, pressure is on day school boards and development staff to professionalize and focus on endowment building and other long-term sustainability efforts.

Who, then, will step in to champion — and bail out — Jewish day schools? Probably not the mega-funders, day school insiders say.

“The universe of donors that consider day schools a priority was rather small to begin with,” says Schick, adding that “much of day school philanthropic funding is local, not national.”

Even the larger foundations — such as the Grinspoon Foundation in New England, The Weinberg Foundation in the Baltimore area, and the Rose Foundation in Denver — “gave in an important way to day schools [within their vicinity]” but “not in a national way because it was too much for them to bite off,” he says.

Part of the shift in philanthropic focus has to do with demographics.

“Day school enrollment is overwhelmingly Orthodox and becoming more Orthodox,” says Schick, who found an increase of 4 percent in enrollment among haredi day schools for the 2009-2010 academic year, largely due to high birthrates. During the same period, Modern Orthodox schools experienced a 2 percent decline in enrollments, and Reform and Conservative day schools saw enrollment drop 4 and 6 percent, respectively.

Even community day schools, which experienced significant growth throughout the past decade, are weathering a decline in enrollment of 5.5 percent.

“More and more parents are saying [about day schools], ‘Do I really need this?’” says Marvin Schick, a consultant for the Avi Chai Foundation. “It’s a sea change.”

Most of the money that keeps day schools — a $2.5 billion operation encompassing nearly 800 schools across the country that enroll 240,000 students — humming along, comes from parents, alumni and other community members who are closely connected to the schools.

“Community conversation tends to focus on the activities of a small group of mega-givers,” says Yossi Prager, executive director at Avi Chai, which devotes three-quarters of its annual North American grant budget of approximately $20 million to teacher-training programs and curricula development at day schools. “From that perspective, day schools were never primary for most. Other forms of Jewish education, especially experiential education, have attracted their interest.”

The popularity of Jewish camping, a major interest of the Jim Joseph Foundation, has also taken a toll on day school funding. “More funders are interested in summer camping, partly because it takes less outside philanthropic dollars to get things going in the camping world,” says Prager. While summer camps are more expensive, per day, than day schools, the overall costs are significantly smaller. It’s also easier for families to pay “the full freight” [of summer camp fees], Prager says, “whereas day schools are investing 10 to 50 percent of their budget on scholarships.”

Also, because virtually all organized summer activities cost money (as opposed to the school-year alternative of tuition-free public schools or charter schools), parents may be more willing to pay for camp than for day school.

To attract additional funding, day schools should not be “hunkering down and just defending what always has been,” says Woocher. In experimenting with technology and being on the leading edge of educational change, “day schools will gain access to funders who see themselves as innovators and want to try new things,” he says.

For Harry Bloom, the key to attracting new donors is for day schools to become more transparent about their finances, while at the same time maintaining or even increasing educational quality. “The days of saying, ‘Spend more because that equates with better quality’ — those days are over,” says Bloom, director of planning and performance improvement at Yeshiva University’s Institute for University-School Partnership, which has been a leader in researching issues of day school affordability and governance.

Bloom says that he is in talks with several potential donors, many of whom are not household names, who “are businesspeople that recognize and value the tools we’re bringing to bear on problems and challenges of day schools.”

“We need to be self-critical as day school people,” he says. “We have to earn the right to generate philanthropic support. When we ramp up efforts to be transparent about day school economics and how to improve them, we will attract more philanthropic interest.”

Even with the introduction of new donors to the cause, day schools must work to assure their own sustainability, particularly in the area of professionalizing their fundraising.

“Jewish day school fundraising is often a shvitzer’s activity,” says Schick. “The principal calls up a businessman and says, ‘We have a payroll of $50,000 to meet tomorrow and we’re short $15,000. How much can you give?’ The guy says, ‘I just gave you’ and ends up giving $1,000.”

In addition to improving cash flow, day schools must engage seriously in long-term financial planning. According to Bloom’s research, only a third of day schools have a long-term financial plan in place. And fewer than 5 percent of day schools have an endowment, according to Schick. Among the day schools that do have endowments, the holdings are often “shockingly low,” he says. “The fascinating thing about the Madoff scandal, in which several affluent schools lost money, was that when you consider how much they had, it was puny in terms of the needs of the school and what the parent body could afford to contribute.”

The tides may be shifting, however, as the economic downturn has highlighted the need for day schools to achieve long-term financial sustainability.

“There’s a growing conversation that is moving into real action as relates to legacy and endowment giving,” says PEJE’s Elkin. “Day schools, as institutions, by and large are pretty young. Given how important they are to the Jewish community, to be operating hand-to-mouth is not a tenable place for schools to be in.”

Many in the day school world are looking to The MetroWest Day School Campaign as a model for launching their own endowment campaigns. To date, the campaign has raised $30 million in cash endowment gifts as well as “legacy” gifts such as bequests, with the goal of creating a $50 million endowment composed of four funds: one community-wide and separate funds for each of the area’s three day schools.

“We want day schools to be a realistic financial option for more Jewish families” — particularly middle-income families earning $150,000 to $250,000, says Kim Hirsh, a development officer at United Jewish Communities MetroWest, the Jewish federation.