Jewish Philanthropy Weathers the Financial Storm, but at What Price?

North American Jewry holds annual meet under giant shadow cast by twin woes of the economic crisis and Bernie Madoff.

For the Jewish Federations of North America, formerly known as the United Jewish Communities, their 2009 general assembly earlier this month was a landmark event. And why was this year different to all other years? For this was a year for fiscal stocktaking; the giant shadow cast by the twin woes of the financial crisis and Bernie Madoff permeated the annual meet and greet, dictating its tone, content and debates.

The gravity of the situation is nothing anyone was ashamed to admit at the conference. A central focus of the event was how to deal with the economic downturn and the losses incurred by Madoff. One of the major themes of the three-day get-together was "Succeeding in Economic Uncertainty," and workshops, debates and panels boasted titles such as "The Business of Philanthropy," "Fundraising in Hard Times," and "Applying Business Skills to Jewish Work."

The market will recover, now or in five years or ten years, but for some, the effects of the crash and Madoff's betrayal could shake up the world of Jewish philanthropy in a more far-reaching way.

Philanthropist Irina Nevzlin sees the twin crises as having more of a "psychological" impact than anything else. Nevzlin heads the Nadav Fund, created by her father, Russian-Israeli businessman Leonid Nevzlin, which contributes to a wide range of Jewish organizations - among them Taglit-Birthright and the Diaspora Museum in Tel Aviv. Nevzlin says that her family and the fund did not fall prey to Madoff, nor were they directly affected by the crash, but these events have made both traditional and new Jewish donors think twice before handing over their cash, and that has caused them some problems.

"Thank God, both the family and the foundation? we were not invested in Madoff

Fortunately enough, we did not feel any impact of the crisis whatsoever. We are a very conservative family even though we are a very young family," she told Haaretz.

"We do feel it however in terms of the impact on philanthropy, and everybody will tell you a 30-percent decrease. For me, more importantly, what I feel is not so much financial as psychological. I think people are just very careful of going into something new now, because they don?t see the future."

Nevzlin said that she sees philanthropy as having slipped back two decades, as now people are once again looking for a tangible sign of their charitable work, such as having buildings named for them, rather than outreach projects which have less defined results. This, she says, is down to the fear that the situation could worsen. The crash and Madoff have definitely left their scars, it seems.

"I think people start to make decisions, which are decisions of someone who was [involved in] philanthropy 20 years ago, which is people starting to go into something more substantial on one hand, which is buildings for example, and putting their names on the buildings, and not so much into the programming and the projects, because I think they feel that they won't be able to do something which will stay after them. So in fact that I think that the crisis just took philanthropy, which was developing in the last couple of years and put it back in terms of where people would want to invest. I think that is a very bad thing which is about to change - I hope it's about to change.

"I think people also have this idea, especially the older generations? there is a new form: 'I am not going to give you money now for the projects that I was involved in before, but the moment I die, my will, it will include them'."

Nevzlin sees a direct link between Madoff and the crash, and this newfound caution among Jewish donors. This link, from her perspective, has made philanthropy less creative, and that this the true dilemma facing Jewish charitable work.

"I think people just feel financially unstable and insecure, and I think it's rather than financial loss, it's a big psychological loss for us, because it put the philanthropists in a very difficult [situation]. A lot of people now lack the ability to become innovative, and I think that's the crisis, from what I see."

Personal ties

A lack of connection between donor and recipient, says Chabad's Rabbi Avraham Berkowitz, is what has made Jewish philanthropy difficult in these troubled times. Berkowitz maintains that the close ties that Chabad donors feel to the organization has cushioned the blow of the recession.

Berkowitz, who is charged with the reconstruction of the organization's Mumbai chapter house following the devastating 2008 terror attack, says this link is due to Chabad supporters' deep-seated belief in the work it does.

"Chabad's way of raising funds always works in the way of cultivating Jewish identity... One of the major mitzvot in the Jewish tradition is charity ? tzedakah," he says. "So along with helping people come closer to Judaism, a lot of people found their way to give to Jewish life was through charity and Chabad has a lot of different charitable facilities."

Berkowitz says Chabad's strength and durability during these uncertain times comes from the close link the organization has to its donors.

"My experience is of people that give to Chabad are personally affected," he explains. "It's not a disconnect from them. There are people that benefit from the services, there are people that care very much ? they were served by Chabad in some way, whether it?s through a humanitarian program or the way their children were educated in a camp, they appreciate the way Chabad takes care of those in the community that no one else takes care of."

In fact, he stresses, the financial crisis has been felt strongest in Chabad where the local community is less invested in the organization, and does not have intimate personal experience of the organization's activities, or what it stands for. He does concede, however, that the crisis has had an impact, albeit a limited one.

"I think the core funding of Chabad, that comes from the people that have been cultivated by Chabad remains, so the commitments remain," he says. "No one dropped off a hundred percent. The fact remains that the market place dropped dramatically, so that affected donors everywhere, across the board." Chabad, Berkowitz says, has been "almost surviving everywhere on individual donors that believe in the local power."

'Like Obama'

But a close connection to a charitable organization is not always a guarantee of continued funding. Robert Kern of American Friends of Magen David Adom, one of the most influential Jewish charities in the U.S., concedes that there has been a dramatic drop in funding to his organization.

However, he says, the method of asking a little of many - connecting to as wide a range of donors as possible ? has absorbed some of the impact of the downturn. It was a concept employed with startling success by the fledgling and often overshadowed campaign of a junior senator from Chicago.

"Before the crash I would say that we were probably the fastest growing brand in the American Jewish community," says Kern. "In 2004 we were basically a 10-million-dollar organization and we were approaching close to 30 million a year before the crash came.

"We were not affected immediately as much as some other organizations by the economic downturn. I think a large part of it is because, like the Obama campaign, we are an organization made up of many, many grassroots small givers, rather than large givers. The large givers, the major givers in the United States were crushed by Madoff, by the economic situation, by other factors. The smaller givers largely don't have those kinds of investment, they may maybe feeling the pinch, but it wasn?t as acute as the guys who had more money to invest."

But, warns Kern, the American public has yet to see an end to the crisis.

"I think that in the last few months, even though we're being told the economic downturn is coming to an end, I think it's come home to many Americans... that regardless of their economic situation, that everyone is feeling the pinch in one way or another. We had projected to raise a certain amount of money this year, I'm not sure that we're going to hit it - I know that we are trying very hard."

"I don't think we have felt is as strongly as other organizations, but I don't think that there is anyone in the American Jewish community that hasn't felt the pinch."

The crises have definitely had an impact that will no doubt leave scars on Jewish charitable world for many years, be it through reluctance to give, inability to donate as much as in previous years, or wariness of organized philanthropy.

What is reassuring, and what will almost certainly get the charities, organizations and foundations through, is their faith in their work, the belief in tzedakah, and the determination to make sure that they will survive, no matter what is thrown at them. Whether future American Jewish philanthropy exists in its current incarnation, or evolves to fit a new social and financial climate, one thing seems certain: exist it will.