‘Genuine Emergency’ For Charities, Agencies

Fed Chairman Ben Bernanke, right, and Treasury Secretary Henry Paulson testifying on Capitol Hill Tuesday. getty images

Fed Chairman Ben Bernanke, right, and Treasury Secretary Henry Paulson testifying on Capitol Hill Tuesday. getty images

by James D. Besser and Tamar Snyder

As one former Jewish official called for a national emergency summit of Jewish leaders to deal with the fallout from the market meltdown, Jewish charities were grappling this week for an appropriate response to a fast-moving crisis few fully understand.

The problem could be especially acute in New York City, where a tax base heavily dependent on Wall Street and the financial sector is already starting to feel the effects of the crisis.
On Tuesday Mayor Michael Bloomberg ordered spending cuts of $1.5 billion over two years. Those cuts could prove just the tip of the iceberg as the crisis deepens.

A key indicator of the impact on high-end philanthropy could come on Thursday, when the UJA-Federation kicks off its annual campaign with

a cocktail reception hosted by former Bear Stearns CEO Alan “Ace” Greenberg.

Last year, the event, which brings together an elite group of mega-givers, resulted in more than $40 million in pledges.

A day before the annual Greenberg event, 70 percent to 80 percent of the attendees, who contribute $125,000 or more to the campaign, have matched or increased their gifts, UJA-Federation executive vice president and CEO John Ruskay told The Jewish Week.

“This will be a tough year,” he noted. “When we closed our 2008 campaign, there were donors that could not make gifts because of the impact of the tumultuous economic events. If that were true in May and June, I would expect that as the year continues to unfold, there will be other donors who are not able to stand with us as they have in the past.”

Mark Talisman, a longtime Jewish activist who helped guide Jewish charities through the Wall Street meltdown in 1987, has proposed an emergency national summit of Jewish leaders to respond to a crisis he said is fast becoming “many times worse.”

The former Washington director for the Council of Jewish Federations (which merged with the United Jewish Appeal to create the United Jewish Communities) told The Jewish Week “our organizations face a potential emergency with donors, who are heavily concentrated in real estate, banking and finance.”
At the same time, he said, the unprecedented federal bailout of financial institutions, with a price tag that could reach $1 trillion, and the nation’s involvement in two expensive wars, will squeeze already tight government social and health service budgets as the agencies they fund face an onslaught of needy clients.

“Kosher food pantries around the country have been out of food since July,” he said. “That’s the first time in memory that’s happened. That’s just one indication this is a genuine emergency.”
“It hasn’t hit home yet,” said Hadar Susskind, Washington director for the Jewish Council for Public Affairs (JCPA). “People still don’t grasp what this means in terms of philanthropy. And in terms of policy, there’s no real consensus yet. Jewish groups are not really weighing in on the bailout package.”

Susskind approved of the idea of a national summit, but for it to succeed it would have to include service providers — “people on the front lines,” he said.

Most Jewish groups — stunned by a crisis that has been building for more than a year but which seemed to spiral out of control in the past two weeks — have been slow to react, some officials say.
“Since all this started, I haven’t gotten a single e-mail or heard about a single conference call from national UJC or any other group,” said a big-city federation executive who asked that his name not be used. “There’s a lot of uncertainty about we should be doing, but nobody’s offering any guidance. I’m still hearing more about Israel and Iran than what we may be up against at home in the coming months.”
There is a sense that charity officials are waiting to see the immediate results of the battle between Congress and the Bush administration over a plan that critics in both parties say could reward the high-rollers who helped cause the financial bust and ignore its less affluent victims, but which the Bush administration insists is the only way to stave off a worse disaster.

Rabbi David Saperstein, director of the Religious Action Center of Reform Judaism, said that his group has not weighed in on the debate roiling Capitol Hill despite its traditional focus on domestic and social justice issues. But he added that on Tuesday the group began examining an alternative bailout plan proposed by Sen. Chris Dodd (D-Conn.), the chair of the Senate Banking Committee.

“What we are doing is communicating about the need not to forget the poor and the vulnerable,” he said, “not forgetting the individual homeowner while addressing the broader mortgage crisis. But beyond that, there hasn’t been much engagement in the last few days because things are moving very swiftly.”
The entire voluntary sector, Rabbi Saperstein said, is having a hard time getting its hands around the crisis “because there are so many unknowns. We know the impact on our synagogues, on social service agencies, on all our communal institutions, will be significant. But until things shake out, it’s really difficult to have a productive conversation.”

William Daroff, UJC’s vice president for public policy, said that “at this stage we are engaged to ensure that the package, however it is designed, includes some of our top priorities.”

That includes an increase in the Federal Medical Assistance Percentage (FMAP), the formula used to reimburse states for Medicaid expenditures, and expanded tax incentives for philanthropic giving.
But those are longstanding UJC concerns. The only difference, Daroff said, is “they have become more urgent as the economic downturn becomes more pronounced.” And UJC, like most other Jewish groups, is not addressing the bailout package itself.

There are no plans for any kind of Jewish summit on the crisis, several Jewish leaders said on Tuesday. But the feeling of urgency is palpable among Jewish social providers.

The intensifying crisis represents “the perfect storm,” said William Rapfogel, executive director of the Metropolitan Council on Jewish Poverty, citing mounting financial losses among traditional donors to Jewish social service agencies, expected declines in government grants and the growing desperation of many who now find themselves slipping — and in some cases careening — into poverty.

“Given the anticipated lowering of the amount of money the city and state will get in taxes, it clearly indicates that hard times are ahead,” said Rapfogel, whose agency serves more than 100,000 people each year in the New York metropolitan area. “We have to tighten our belts.”

In July, Met Council laid off more than 20 workers due to budget cuts —five of whom were re-hired following fundraising efforts. But with the budget squeeze certain to tighten in Washington, Albany and at City Hall, the pressure is almost certain to grow rapidly, most analysts say.

Last week the UJA-Federation of New York gave the Met Council an emergency grant of $400,000 to keep food in its pantries, but that could be a drop in the bucket as demand for services increases.
On the eve of the Greenberg campaign launch, there was much concern about the annual drive. UJA-Federation’s Wall Street division has become increasingly important in recent years as the charity focuses more intensively on a financial sector that last year provided almost 30 percent of the $153 million raised by the group.

What is far from clear is the extent to which the ravaging of the markets and the demise of giants like Bear Stearns and Lehman Brothers will affect this critical group of givers. While giving by small donors tends to drop quickly when times get tough, several analysts said this week, it may take longer for very affluent donors to feel the pinch enough to cut their contributions.

The crisis has prompted a change in UJA-Federation’s fundraising focus, he said.
“The underlying theme this year is ‘for those who can,’” Ruskay said. “We recognize there are some donors who will not be able to make gifts. A few have lost their jobs; others have lost significant financial assets.”
To encourage donors to increase their gifts despite the roller-coaster events of recent weeks, UJA-Federation’s campaign leadership initiated a challenge grant of approximately $2 million, which will run until the fund is exhausted. Made up of additional contributions from top givers, it will match new pledges and provide additional funding to those who contribute 10 percent or more over last year’s pledges.
UJA-Federation officials noted that it might be more difficult to have honorees at dinners this year, a normal fund-raising staple, because people will be sensitive to being cited publicly for their contributions at a time of belt-tightening, and less willing to ask friends and business associates to “buy tables” in their honor.
Officials of the charity stressed that philanthropies can never substitute for government when it comes to providing financial aid, but that they will do “as much as we can for those most in need, recognizing that middle class families will need more help as well.”

Since the passage of the state budget in April, UJA-Federation agencies have lost about $15 million in government funding, according to Ron Soloway, managing director of governmental relations for the group. Given the severity of the crisis in the financial sector, that could balloon to $75 million within the next 12 months, he said.

“We’re being vigilant and doing everything we can to understand what the impact will be on our agencies,” Soloway said. “We’re looking for areas where we can make a difference. Obviously we can’t make up dollar for dollar what the government has cut.”

James D. Besser is Washington correspondent. Tamar Snyder is a staff writer.

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