On slowing the rise in the price of Jewish life

How per unit cost controls, multi-year price planning, and price transparency could drive demand and make Jewish organizations more socioeconomically inclusive

Hi, Ari here. Welcome to my ✨ free bi-weekly ✨ newsletter called The Business of Jewish. Every two weeks I provide an insider/outsider's perspective on the management of professional Jewish organizations.

If you’re not a free subscriber, here are a few of my other articles:

1. How price transparency could spur demand for Jewish institutions

2. Addressing a few roots causes of Jewish institution failure

3. Increasing Jewish retention in an episodic future

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Last week the following post appeared on the Jewish Families of Greater Boston Facebook page.

Although this post refers to Jewish education, the same sentiment could easily be applied to Jewish camps or synagogues. In Boston, the full pay price point for day school can be more than $30,000 per year, day camp can cost $700+ per week, and synagogues typically cost more than $2,000 per year to join. The overwhelming communal response to these price points has been to raise philanthropy to support financial aid. While philanthropy, and the resulting aid it provides, will always be a critical device to drive socioeconomically diverse demand, we focus too little on other sensible levers that can be used to control prices. 

Mechanisms for driving socioeconomically diverse demand

If we believe that access to Jewish life is part of the responsibility of our institutions it's worth asking how leaders and their boards can hold themselves accountable for socioeconomic outcomes that will ultimately drive more volume into their institutions. Here are a few ideas we can experiment with.

Collect and report on socioeconomic diversity

There is a relatively simple thing boards could do to create accountability for socioeconomic diversity - they could ask management teams to report on it. At minimum, there is participant income data gathered through the financial aid process. At most organizations I’ve been affiliated with this data is strictly used to assess financial aid awards. We could quite easily anonymously repurpose that same data for general reporting, but we still have the issue of missing data from the rest of our families who are not receiving aid. To address this gap we could survey all families anonymously in the name of increasing socioeconomic diversity and collect income data. If families knew that anonymous data would be used to improve the organization in this way I suspect they would be open to providing it. Armed with this data each organization could report to its board annually on its efforts to promote socioeconomic diversity.

Accountability for year over year cost per unit increases

In a typical budget process the most substantive form of year to year cost increase analysis consists of looking at last year’s line items side by side with the upcoming year’s line items. This is a step in the right direction. When boards scrutinize line by line individual item increases it serves to create accountability for management teams to control those costs.

The challenge is that line by line cost reporting doesn’t tell the full story. We need to look at how costs increase or decrease together with the amount of people who participate in order to understand how the organization is doing controlling costs.

For example, food costs at an overnight camp may have stayed flat year to year, but if camper counts decrease by 10% the board should be made aware that effective food costs actually increased by 10%. What if we included cost per unit (campers in this case) metrics in our annual budgeting processes as a means of having a conversation about true cost control?

If we know that cost drives price and our boards believe in access for our institutions, we should hold management teams accountable for apples to apples cost increases that incorporate the rise and fall in demand.

Funders set incentives for cost controls

A way of setting cost controls that have more teeth involve funding that is predicated on them. There is a well-studied case study out of Toronto where a set of funders gave a large enough sum to the day school network that enabled all participating schools to cut their tuition in half. The less publicized part of the story, however, was that schools were given cost per student benchmarks that they were required to hit in order to receive the centralized assistance. The funders in this case only had the clout to do this due to the overwhelming size of their gift, but one could imagine a gift of significantly smaller size given to an individual camp that is large enough to ask for these stipulations. This kind of condition on a gift could be seen as an overreach by funders, but if one believes that cost increases drive socioeconomic homogeneity, insisting on controls seems sensible. 

Multi-year price increases

Annual price increase conversations with boards tend to rely on 3 types of arguments:

1. Our competition is raising prices too.

2. This increase is in band with previous year increases.

3. In the next year we’ll talk about moderating prices, but that’s a longer conversation and we’re short on time for this year’s budgeting process.

All three of these arguments tend to lead to price increases that compound year after year after year. They are all seen as reasonable statements that management teams use to get through the annual pricing conversation.

The problem is that controlling price is hard, and typically involves multiple years of deliberate cost control planning and other strategies to possibly pull off. If an organization’s pricing conversation takes place in a short time period and is rushed, the tactics available to the organization to create a breakeven budget are limited.

What if instead of the typical process, organizations decided on multi-year pricing strategies? This would allow the board to hold the management team accountable for moderating price increases in the name of socioeconomic diversity, while giving them a more reasonable timeframe to institute these changes. Cost structure changes take time and management teams should be given more rope to adjust to the demands of moderated price increases.

Price transparency

Perhaps the most obvious and least painful way of increasing socioeconomic diversity is to broadcast the existence of the mechanism used to promote it - financial aid. In a previous Substack article entitled “How price transparency could spur demand for Jewish institutions” I spoke about the demand generation opportunity and ethical obligation associated with marketing financial aid. I made the argument that it makes for an odd buying experience when you don’t know the price of the product you are buying, which is often the case for institutions like camps and schools who bury the lead with their financial aid.

In order to encourage full pay families our institutions often hold back information on financial aid, but they do so at the expense of opening up their funnel as widely as possible to claim socioeconomically diverse demand.

In the article I cite simple solutions like marketing aid programs, more standardized formulas for aid, and building out calculators like www.dayschoolcost.com that collect anonymously simple inputs from prospective families and estimate probable aid ranges.

Conclusion

If we believe the cost of Jewish life is outside of reach for many Jewish families every institution in our ecosystem needs to be part of the solution. If left unchecked this problem will continue to get worse. The alternatives to institutions like day school, synagogue, and even summer camp are either free or significantly cheaper than their Jewish alternative. This means that without action 5 years from now the price of these premium alternatives will be an even greater deterrent and socioeconomic diversity will have likely decreased even more in our institutions. While a generous network-level funder may step up on this theme, there is a more sensible and actionable approach we each can take to extend our institutional mission to as many people as possible.

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