Can U.S. Jewish Organizations Survive the Economic Crisis?

Despite cuts, dwindling resources and growing need, some believe things aren't as bleak as they appear.

WASHINGTON - The economic crisis didn't spare the Jewish federations in the United States. Across the country, they are trimming their budgets and firing parts of the staff; introducing emergency programs to meet the growing demand for social services, coping with the uncertainty of what lies ahead and hoping it will all be over before the situation demands more serious sacrifices.

"Many federations are cutting, and it hurts for people that have been laid off and it's sad, but most organizations can stand and go through a one-time cut", said Joe Kanfer, chair of the Board of Trustees of United Jewish Communities. "But they haven't been cutting historically, so for some it might be the way to stop doing activities you probably shouldn't have been doing."

Kanfer believes that the first year of the crisis is the time to make those cuts, though if they persist into the second year, the groups may really start to feel the effects.

"I didn't hear about federations on the verge of bankruptcy," he said. "The federations are fundraisers and fund dispersers. Our income may be down 5 percent or 15 percent, maybe in some very bad cases 20 percent, but there still is plenty of money there, it has just to be spent wisely."

The Jewish social agencies supported by the federations are a different story, he admits.

"If you run a Jewish center or a school and your constituents can't afford to pay - they are in trouble. And the smaller institutions with no endowments are in trouble. So we are going to see a number of institutions close, or combine with another institutions, or restructure. But that's the way it happens in business every day - the ones that are on the edge, when there is a downturn, have to find a new way. We have to get creative; we just can't run away from this. It's hard to prioritize - we have to support Israel, we have to support Soviet Jewry, we can't say one is not important. But each community has to make their own decisions."

The United Jewish Appeal-Federation of New York, the largest Jewish federation, was hit hard twice - first by the Wall Street meltdown and then by the collapse of Bernard Madoff's Ponzi scheme.

"I won't still call it an anxiety, but there is a concern in the community", said Karen Spar Kasner, a member of the board of the directors of the UJA-Federation. "Everyone knows someone who's been laid off, or can't find another job. You see your local store going out of business, you're going to the restaurant and it's half empty. The impact of the economic downturn is huge and very stressful to New York. UJA-Federation let go 52 employees two weeks ago, and over 20 staff who left weren't replaced [a staff reduction of 11 percent]."

Kasner says the financial crisis and the effect the Madoff scandal has had on some donors' giving ability may put the federations in a bad position, one that may be compounded by the inability of the government to continue to contribute funding for nursing homes and hospitals dependent on public money.

"Our agencies are getting more and more calls - for financial help, job placement, trying to change career, calls for emergency funding for housing," she said. "UJA-Federation started a program called Connect to Care, where we've approved several million dollars to go to our social services throughout the area, so they'll be armed to deal with the people who need it. Agencies have taken steps, reduced staff. Last week there was a slight improvement and then the stock went down again, and in New York people are affected by the stock market fluctuations. But I think this crisis brought the communities together and made them look for solutions."

The Windy City plan

One of the creative solutions to come out of these difficult times was introduced by the Jewish Federation of Metropolitan Chicago - distributing the aid through rabbis.

"It's not a gimmick," explained Dr. Steven B. Nasatir, president of the federation. "It's called J-help, which we developed a couple of months ago as a response to this recession. We can't fix all the problems that exist, but sometimes middle class people don't want to go to social services, - they go to rabbi and say: 'Rabbi, we have some problems'."

Nasatir says the rabbis in Chicago's hundred-plus synagogues are given money and wide leeway to disburse it as they see fit, with very little bureaucracy.

"We are also focusing on trying to get people jobs so we have a vocational service," he said. "But it's not simple in a bad economy - and it's a very bad economy. It's more difficult to raise money at the annual campaign, when people lost their job or their wealth. The Jewish community has great wealth, but in Israel people sometimes don't realize that we have our poor too. In Chicago, about 20 percent of our population is at the federal poverty guideline. When journalists are visiting our community and we take them to places where we feed people and subsidize houses - they are stunned. Now, when some people lost 20-50 percent of their wealth, it doesn't mean they are automatically poor, but they are less willing to donate."

Nasatir says not only are people not able to donate, but more and more middle class Americans need help themselves.

"Our agencies numbers just went up through the roof," he said. "And then the state and government dollars are down. They are very slow to pay, because in Illinois essentially the state government is broke. And it's pervasive - in addition to helping people pay the bills and mortgages, you have the day schools, where suddenly there is a jump in demand for scholarships.

"The community centers, daycare - many people are struggling to pay the bills, and I'm talking about the middle class that usually make a pretty decent living and even give a gift for a federation during the annual campaign. There are reports of distress and abuse, dysfunctionality of families. What do you do with your mother that needs an additional assistance, how are you going to pay for kids' college? There is a weight on the middle class in the Jewish community. We're in the process of cutting back our own costs."

Nasatir says that although the federation ended in the black for 2008, 2009 will be a different story, even with multiple planned budget cuts and reductions in programs and social services. But he says they haven't had to close any buildings and believes the group can survive if the downturn ends soon enough.

"If we can get in and out of this recession in 18 months, we're going to be fine," he said. "If it's more than 18 months - it's a whole different world. We're in a process of trying to reorder some priorities and frankly, to go to these people who are still able to give and say: 'It's up to you, if you're able to do more.' Some are doing it and some say: 'Talk to me later in the year.' People watch the stock market."

The federations have praised President Barack Obama's economic recovery plan, which includes aid for social agencies, but they don't know if it's going to save the economy in general.

"The truth is nobody knows if the stimulus package is going to work," Nasatir said. "I hope that's great and I know there are opportunities for the federations within the package and we're going to try to be as aggressive as we can to obtain dollars for specific kinds of human services. The increase in Medicare and Medicaid is important for us, refugee assistance, the new service to take kids who graduated from college and are unable to find jobs, maybe to put them at some government service program." Meanwhile, he hopes that the federation will be able, despite the crisis, to continue sending money overseas.

"Our two major recipients are the Jewish agency and the American Joint Distribution Committee. And they both made a huge cuts," he said. "There are still people hungry in the former Soviet Union, and we care about them and our donors care about them. And then there are Masa and Birthright programs, and we're not prepared to say: 'Sorry folks, we love you, but we're going to reduce the aid by 25 percent.' Chicago is not going to do that."

He is confident that the federations will emerge out of the crisis stronger than before.

"It's going to be hard, and I don't know when we're out. But over a period of time there will be less traffic in the philanthropic marketplace. I think some of the big foundations recognized that they need a partner within the community - that it's easier to sustain things into the future".

Better off inside the beltway

At the Jewish Federation of Greater Washington there are comparatively few complaints.

"The position of this community is quite unique", said Federation CEO Dr. Misha Galperin. "It's one of the few growing communities on the East Coast, it's not that the richest Jewish people live here - but there are less poor Jewish people. It's very young and the highest educated Jewish population in the U.S., with 52 percent of the people holding post-college degrees. Most of the people are young professionals who moved here from other places - only about 15 percent were born here. So the income of the Jewish families in Washington is among the highest in the country."

Galperin says Washington is also home to less ultra-Orthodox and people below the poverty line than New York.

But last summer, he continued, "we understood that there is a serious problem. Our Jewish social service agencies finished their annual budget in seven months. Requests for help with finding a job jumped 300 percent. The fundraising went 25 percent down. In October, we cut 10 percent of our budget, and did the reorganization pretty early. Me and other senior managers cut our wages, cut the pension payments to people younger than 50, and on Pesach people are taking an unpaid leave."

A January emergency campaign allowed them to make up last year's deficit.

"Meanwhile our allocations will stay the same, and in some spheres, like the student scholarships, will be even higher, because of the demand that went up 10-12 percent," Galperin said. "We're seeking for ways to be more efficient - we've established a central computer system for the agencies, because it's cheaper. Luckily, we didn't invest much with Madoff - even if nothing comes back from his firm, it will cut the allocation by less than one percent. We have a commission now checking if we could evade it, and we took lawyers to try to recover as much as possible from what we've lost. But in our community there are as well some prominent Jewish philanthropists that lost a lot of money".

Joe Kanfer believes the crisis is not as bad as many make it out to be.

"I think it's going to take us a while to realize that it's not the end of the world", he said. "People lost some money and they don't know when it will end, but most are in a place that their wealth will increase again. It's a year for us to adjust to a fewer dollars and how to spend them. In some cases it's just a psychological effect.

"When you buy a house for $100,000, and it grows to $300,000, you feel like you have a lot, and when it goes to $200,000, you feel like poor, forgetting that you initially bought it for $100,000. Our Torah teaches us to give 10 percent of the income - no less - but no more than 20 percent. Very few people are within a range of their 10 percent. Not everyone was giving at a maximum before, and some people say well, there is more need and we have the means. In general, we don't lack wealth. So there is plenty of room for giving."