The Unfolding Economic Crisis: Its Devastating Implications for American Jewry

by Dr. Steven Windmueller

  • The full impact of the current economic crisis may not be felt for years. In the midst of it, core institutions are being fundamentally reshaped and individual lifestyles reconstructed. These economic challenges threaten the existing infrastructure of the American Jewish community, leading to a new order of institutions and leaders.
  • The changes are already having a social and psychological impact on American Jewry. For many older Jews, many of their core institutional patterns of personal engagement have been altered. For younger Jews, the dislocations may foster opportunities for further experimentation and disengagement from the traditional patterns.
  • The long-term outcome of the transformation is likely to be a far weaker, less cohesive American Jewish community. As the economy moves beyond the current crisis and as institutions adjust, a new leadership will also likely emerge that will need to draw on the lessons of this period. The “new” American Jewish scene they will inherit will display a smaller communal and religious system with fewer resources.
  • A communal system weakened by scandal and economic dislocation will inevitably be less powerful. The internal and organizational changes will recast the role of Jews within the larger society as well.

The full impact of the current economic crisis may not be felt for years. In the midst of it, core institutions are being fundamentally reshaped and individual lifestyles reconstructed. These economic challenges threaten the existing infrastructure of the American Jewish community, leading to a new order of institutions and leaders.

The nonprofit sector generates some $166 billion for the American economy. It accounts for 10.5% of the workforce or some 9.4 million individuals, in addition to engaging some 4.7 million volunteers. In 2008, 35% of all these agencies faced decreased giving but encountered a 64% increase in demand for services and assistance.[1]

The effect of this financial dislocation has significant implications for the American Jewish community in six core areas:

  1. The political and economic clout of American Jewry will be compromised by a community that will be perceived as structurally and functionally weakened by this crisis. Both as a community and as individuals, Jews appear to be adversely affected by this new reality.
  2. The impact of this economic dislocation has already generated a significant increase in anti-Semitism globally, and it may now be evident in the United States as well.
  3. The infrastructure of the Jewish communal system will be forever altered; some Jewish institutions will not survive this crisis and others will seek to merge or be acquired by stronger organizational partners.
  4. The downward shift of accumulated wealth will impact philanthropic giving, affiliation patterns, and levels of communal participation for the foreseeable future.
  5. A new class of “near-poor and new poor” Jews is one of the outcomes of this economic crisis.
  6. The Madoff affair has caused a loss of confidence and trust in the management of philanthropic institutions.

Over time, each of these conclusions will need to be evaluated in terms of how much the Jewish community has been fundamentally impaired and structurally altered by recent events.

Three additional issues directly and uniquely impact the Jewish community in connection with this economic dislocation:

  1. A new generational cohort has emerged whose views about philanthropy and marginal engagement with Judaism and Jewish life add directly to the fiscal burdens and long-term policy challenges facing the religious and communal system. Lower affiliation rates, reduced giving patterns, and less connection to core Jewish political and social concerns, including Israel, are some of the demographical trends that will reshape institutional participation among younger Jews. Over the past several decades, the emergence of new organizations and alternative religious expressions, reflecting the tastes and interests of new generations of Jews, will continue to challenge “traditional” institutions and the denominational movements at a time when these core structures are already affected by the economic crisis.
  2. Related to the generational patterns of change, a set of lifestyle choices and altered consumer practices that were underway before the current economic situation have also fostered different forms of communal participation and affiliation, further undermining the existing infrastructural system.[2]
  3. The impending leadership crisis in the U.S. nonprofit sector appears to be acutely felt within the Jewish community’s infrastructure.[3] Such a leadership crisis is evident both within professional ranks and with respect to attracting and sustaining lay leadership. The Jewish communal system has emphasized both attracting the wealthiest and most effective voluntary leadership and securing a cadre of senior professional leaders. In the current environment, there are indicators that the communal enterprise is experiencing a serious leadership deficiency. Today there are fewer qualified, informed, and engaged lay leaders for the institutions of American Jewish life.

The economic “tsunami” may well be fostering a major restructuring of American Jewish life, leading to a repositioning of institutional power among Jewish organizations along with the emergence of a new leadership cadre. Such changes will be profound and transformative.

Beyond these new structural realities, it is important to note the social and psychological impact of such changes on American Jewry. For many older Jews many of their core institutional patterns of personal engagement have been altered, while for younger Jews the changing economic picture may provide opportunities for further experimentation in creating new forms of Jewish expression and also accelerate their disengagement from traditional infrastructures.

An Assessment of the General Economic Data

The Nonprofit Finance Fund’s study of “How Nonprofit Groups Have Fared during the Recession” (March 2009) is particularly sobering and responds most directly to above-cited data on nonprofits. Extrapolating similar patterns that would apply to Jewish institutions, the following statistical data may be specifically relevant:[4]

  • 62% of charities have less than three months’ cash on hand.
  • 16% of nonprofits are in a position to pay their expenses this year and next.
  • 41% reported as having or intending to reduce personnel.
  • 39% announced plans to reduce or eliminate programs.
  • 42% have joined forces with other institutions to collaborate on programs and an additional 13% have taken steps to share administrative expenses.
  • 43% indicated the need to draw down reserve funds.
  • 65% have developed a “worst-case scenario” contingency budget.
  • 22% announced reduced employee hours and a similar number reported reductions in employee benefits.

The impact of this economic crisis can also be measured in terms of the status of individual philanthropists. One such measure involves a recent Forbes magazine assessment of the financial picture of the world’s billionaires.[5] A significant percentage (estimated at 18%) of this group happens to be Jewish. The article suggests that collectively billionaires lost over $2 trillion during this period, causing many within this group to reprioritize their charitable giving, just as they are reorganizing their business interests.

This downturn in philanthropic support is also evident in a study by the Association of Fundraising Professionals.[6] “Reflecting the toll exacted by the economic downturn, the percentage of fund raisers whose institutions raised more money last year was a new low in the eight years the survey has been conducted. In a typical year 60 percent of fund raisers report being able to raise more money.”[7]

In addition, only 28% of the 481 individuals surveyed for this study believe that their institutions will raise more money this year. Unlike prior fiscal downturns, when smaller institutions were more likely to be adversely impacted, that appears not to be the case in this recession, with organizations at all levels feeling the effects.

Beyond the welfare of individual donors, the Center on Budget and Policy Priorities estimated that forty-six states will not have enough money to cover their budgets this year and beyond. In states such as New York and California, the deficits exceed 25% of available revenues. Unlike the federal government, by law most states cannot operate with a deficit budget.[8]

Social commentators suggest that the decline of social capital will further weaken individuals’ personal and institutional ties with their communities and, correspondingly, key associational networks are likely to unravel or to be seriously weakened. Some consider that the loss of confidence in the economic system’s ability to recover in rapid and sustained fashion will undermine for some an abiding belief in the achieving and maintaining of the “American dream.”

The scope (depth) and focus (particular industries or businesses) of the recession in part determine the populations most directly affected and the corresponding impact on the social fabric within the broader society. This has created new sectors of economically displaced individuals who are suffering as a direct result of the current situation.

Yet, despite the difficult circumstances, the Chronicle of Philanthropy announced that sixteen individual donors announced gifts of $100 million or more last year, more people than have ever done so in the past twelve years. The Chronicle reported “The total amount of the donations on the 2008 list far outstripped last year’s: more than $8 billion, compared with $4.1 billion by philanthropists on the list in 2007.”[9]

In a subsequent story, the Chronicle identified five factors that have helped promote giving among some key donors during the current crisis:[10]

  1. More people are giving.
  2. Charities are getting visibility.
  3. Donors are making unusual gifts.
  4. Tax changes may prompt new gifts.
  5. Parts of the economy are thriving.

Economic Impact within the Jewish Community

A complete inventory of the impact of this economic transition is still to be determined. Nevertheless, the number of positions eliminated and the announced budgetary and programmatic reductions are particularly striking. There is substantial evidence that major structural reconfiguration is occurring at both a rapid rate and across the institutional spectrum within the Jewish communal and religious system. Downsizing has been evident everywhere, with profound implications for institutions’ ability to deliver critical services.

Correspondingly, charitable institutions with more restricted resources will be forced to curtail vital services and specific programs and reprioritize their organizational focus. Such downsizing may significantly impact the society’s most vulnerable populations. As charitable institutions compete for shrinking resources, there will be increased attention to the quality and scope of services being offered, as donors prioritize their giving options. With restricted resources, organizations often select programs or services with high public relations impact so as to promote their value to donors.

The current environment is affecting organizational memberships and donor support as individuals and families need to make critical choices about the use of available financial resources. Institutions without multiple streams of funding have been most directly imperiled. In the midst of this upheaval, organizations have been exploring alternative and creative models of managing their resources as they strip away significant elements of their infrastructure so as to gain economic viability.

In these difficult and unsettling times, many new realities can be felt both on the personal and institutional level. American Jews are experiencing fundamental lifestyle changes where the “givens” and expectations once central to their lives are no longer present. In such an environment, anger and fear intensify as people seek avenues to express their frustration. The psychological and social impact is being felt by many at all economic strata; the level of uncertainty creates heightened concern for one’s financial welfare and social wellbeing. As a result, emotional paralysis can overpower individuals, along with increased medical problems or, at least, physical symptoms. Depression, and even family violence, are potential outcomes.[11]

Impact on Individuals and Families

Similarly, given the prevalence of Jews employed in the financial markets, real estate, and allied fields, this economic crisis may well have specific implications for Jewish families and individual Jews. Particular segments of the Jewish population will be harmed by the adverse market conditions. The poor and near-poor, especially those on fixed incomes, may face particularly difficult times over the months and even years ahead. Students will face rising tuition expenses along with shrinking job prospects. In such cases, young people may elect to live for longer periods at home with their families or delay marriage or having children until they feel more economically secure.

As in previous periods of such social and economic stress, new vulnerable populations will likely emerge. These “new poor” may well include families and individuals whose businesses are suffering or whose investment portfolios no longer provide a safety net. In addition, due to the loss of income as unemployment increases, some families will be unable to maintain their mortgage payments.

As Jews are proportionately older than other sectors of the American population, retirement planning may need to be readjusted to account for the loss of investment income. For baby-boomers and others, this could entail delaying or altering retirement, or other difficult choices for individuals and families. In a recent AARP (American Association of Retired Persons) poll, Americans were asked to assess the recession’s impact on their plans. For individuals aged 55-64, these findings emerged:[12]

  • 27% had postponed their plans to retire.
  • 16% reported having lost employment.
  • 19% indicated a pay cut.
  • 24% noted reductions in health care benefits.
  • 24% said their employers had stopped contributions to their 401(k) retirement plans.

For some, the crisis may leave them unable to recover. Forgone educational opportunities, lost income, and displaced careers may typify the new generation of younger Jews.

Revisiting the Depression Years

A retrospective will help clarify the challenges now facing American Jewry.

The period before the Depression was marked by unprecedented synagogue growth. From 1916 to 1926, for example, the number of congregations in the United States doubled, and numerous congregations before the Depression were involved in major building-fund efforts. These patterns of expansion are not dissimilar to the data for recent years on the growth of synagogues, the development and expansion of day schools, and the establishment of capital campaigns to upgrade facilities.[13]

During the 1930s there was an increase in both management-labor and tenant-landlord tensions, often pitting Jews against one another over questions of employment and wages or housing and rental matters. The growth of radical political movements offering economic solutions to the crisis found Jewish activists supporting various ideological causes.

Based on a 1936 survey of 456 congregations in the Metropolitan New York City area, the synagogue community reported a collective debt of $14 million. New York’s Temple Emanu-El witnessed a 44% decrease in its membership, and the Brooklyn Jewish Center reported the loss of half of its 1,500 families. Although the Jewish community has yet to assemble information on the fallout from the current economic crisis, synagogues across the country are citing the loss of congregation members, indications of unbalanced budgets, and the necessity for budgetary and program reductions.[14]

The Depression, however, sparked a religious renewal in America. In response, synagogues of that period, joining with churches, created a national Drive for Religious Recovery, paralleling the federal government’s National Recovery Act. Congregations instituted “Loyalty Days” designed to attract synagogue participation, using the slogan “Every Jew Present and Accounted For.”[15]

In the context of this period, the American rabbinate saw a unique opportunity to galvanize Jews to engage in volunteer service in both the Jewish and larger American frameworks; to employ for the first time radio broadcasts and newspaper advertisements in reaching out and encouraging Jewish learning and synagogue involvement; and to speak out on public policy and social justice issues. Similarly, fundraising by Jewish charities in the 1920s achieved extraordinary results in a way not dissimilar to American Jewish institutions’ success over the past quarter-century.

During the Depression, Jewish social service agencies acknowledged that they could no longer meet the needs of the community’s most vulnerable, which involved a 40% increase in caseloads of families in crisis. This new reality fostered a debate over the “Stuyvesant Promise,” namely, that dating back to the first arrivals of Jews to New Amsterdam (New York), the community had declared to Dutch Governor Peter Stuyvesant that it would take care of its own. The onset of the 1930s saw the first partnerships between government agencies and Jewish social service institutions to provide relief services.[16]

Implications for Today’s Environment

No Jewish organization remains unaffected. The most vulnerable structures have or will close their doors forever, such as CAJE (Coalition for the Advancement of Jewish Education) on 27 February 2009 or the BJE (Bureau of Jewish Education) of Boston in May 2009. Other reports note the closing of schools and other educational programs.[17]

The five core indicators for assessing the impact of this economic downturn on Jewish communal and religious institutions are:

  1. Reduction in personnel and other budgetary operational savings and adjustments for communal institutions, schools, and synagogues
  2. Decline in synagogue membership
  3. Financial aid requests (day school tuition relief, summer-camp scholarships, temple-dues adjustments)
  4. Annual and capital campaign data for 2008 and 2009 compared to previous years
  5. Closure of Jewish organizations, foundations, and special projects

Some of this data has yet to be compiled or evaluated. Nevertheless, a random assessment of the available information confirms that the infrastructure of the American Jewish community is currently undergoing a significant transformation. A recent report on the top twenty-one Jewish institutions in American Jewish life reveals the extensive transitions underway. “A tide of red ink is coursing through the hallways and balance sheets of Jewish charitable organizations, leaving slashed programs, reduced allocations and large staff layoffs in its wake.”[18]

Among the major casualties are key national umbrella institutions and religious denominational groupings and their affiliated seminaries (see Table 1).

Table 1. Workforce Reductions in Jewish Educational Institutions
Institution[19] Current workforce Staff reductions
Yeshiva University 3500 60
Jewish Theological Seminary 214 25
Union for Reform Judaism 173 60

This reality has been borne out as well by cuts announced by federations and their parent organization, the United Jewish Communities. On 11 March this year, the UJA-Federation of New York announced an 11% reduction of its workforce (fifty-three positions); the same day, the Atlanta Jewish Federation laid off fourteen employees, leading to a 19% reduction in its operating budget. One week earlier, the Jewish Federation of Greater Cleveland had laid off twenty-five staff members. Facing a $3 million budget shortfall, that federation sought to trim its expenses by some $600,000. Cleveland’s annual campaign results were down $5 million, and its endowment funds’ portfolio values had decreased by 29%. Similar announcements have been made over the past three months by such communities as Denver and San Francisco among many other federations across the country.[20]

For other key reductions, see Table 2.

Table 2. Workforce Reductions in Jewish Organizations

Agency Current workforce Staff reductions[21]
Anti-Defamation League 285 18
American Jewish Committee 225 25
American Jewish Congress 12 13
Hadassah 240 80
Joint Distribution Committee 766 60

The politics of “localism” seems to emerge in such critical settings, where groups transfer scarce resources to core local or home-based services rather than sustain their support and engagement with their national systems or overseas programs. As a result, some of the services that such national groups traditionally provided will need to be replaced or downsized.[22] This is seen in announced cuts by national umbrella organizations such as the UJC (United Jewish Communities), where already in May 2008, thirty-seven positions were eliminated and its annual budget was reduced from $40.2 million to $37 million[23] and again with more recent reductions this past spring. Likewise, the URJ (Union for Reform Judaism) made significant staff and budgetary reductions in mid-March of this year, eliminating some sixty positions and reducing its budget from $25 million in 2008-09 to $20 million for the 2009-10 fiscal year.[24]

In a survey by the Los Angeles Federation of its schools, congregations, and summer camps, each of the institutions is reporting a record increase in the number of scholarship requests or tuition adjustments by families for the current year. Similar if not higher applications for such assistance are projected for next year.

The Jewish Community Foundation of San Francisco reported an immediate need for some $7 million in emergency funding. That community noted the need for resources:

  • For direct financial assistance in basic areas such as food, shelter, and medical care, with a 50% increase in services having been requested
  • For additional vocational services to assist with job placement and counseling where requests have doubled
  • For interest-free loans for emergency needs, with demand up 33%
  • For preschool, day school, congregational school, and camp scholarships[25]

As there is no comprehensive study of the impact of this economic crisis on the Jewish family, one must depend on anecdotal evidence. Federation agencies across the country are reporting increased demands for an array of services including free loans, food resources, counseling, job placement and training, housing assistance, and scholarship support.

Synagogues are one of the key barometers, and in a recently completed study by NATA (National Association of Temple Administrators) focusing on congregational fiscal health, the data is particularly significant.

  1. More than 46% of Reform congregations reported plans to lay off personnel, with 30% of the synagogues citing their intention to reduce senior staff.
  2. 50% of the reporting synagogues indicated they were considering or had imposed salary reductions or the freezing of salaries and benefits.
  3. Over 72% of the congregations projected a deficit for the current fiscal year, with 30.7% noting deficits from $100,000 to $250,000, and nearly another 7% in the range of $250,000 to $500,000.
  4. 55% reported that they were increasing their fundraising activities, and nearly 45% cited plans to increase fees.[26]

One might expect liberal congregations and their movements to be harder hit by the economic crisis. More traditional Jews view synagogue affiliation, day school education, and related activities as fundamental to their lives, whereas Jews affiliated with Reform, Reconstructionist, and Conservative institutions may feel less compelled to sustain their support and engagement.

Mark Pearlman, an experienced business strategist (including for CBS Inc. and Fox TV), used publicly available filings, primarily via the websites GuideStar and Charity Navigator, from over four hundred Jewish nonprofit organizations and focused on all financial data. The revenue data for each organization was then “compiled and categorized according to systematic service groupings” such as education, communal life, and so on.[27]

The results, Pearlman readily admits, are incomplete, in large part because religious organizations are exempt from filing tax reports available to the public. Nevertheless, his findings are noteworthy. For instance, the Jewish GDP is $9.7 billion, with most funds going to social welfare (25%) followed by education (20%). Twelve percent of services provided go for communal life, 3% for advocacy, 1% for the arts, and less than 1% for Arab-Israeli relations.

More than 25% of all funds come through the Jewish Federation system, and 33% of all revenue is concentrated among the top ten nonprofits including UJA-Federation of New York, the Jewish Agency for Israel, Hadassah, the American Jewish Joint Distribution Committee, Yeshiva University, the FEGS Health and Human Service System, and the Jewish Geriatric Center.

Impact of the Madoff Scandal

The loss to Jewish philanthropy as a whole from the Madoff fraud has been estimated from $600 million to $1 billion. As Professor Jonathan Sarna of Brandeis University told the Israeli daily Haaretz, “I consider that, if anything, a conservative estimate. It is catastrophic-there’s no other word. The Jewish community will look different when this is all over.”[28] As the Haaretz article went on to note:

“The names of organizations and individuals allegedly affected read like a Who’s Who of the rich and famous: A charity of director Steven Spielberg and a trust tied to real estate magnate and New York Daily News owner Mortimer Zuckerman. Spielberg’s Dreamworks partner Jeffrey Katzenberg and the foundation of Nobel laureate Elie Wiesel also reportedly were hit.

Countless family foundations up and down the East coast, the lifeblood of so many Jewish causes, have been devastated-among them the Shapiro Family Foundation in Boston, said to have lost $145 million.

Many don’t even know yet if they were affected. “I don’t think we’ll know the scope of this for a year,” said Mark Charendoff, president of the Jewish Funders Network, an umbrella body of family foundations.”[29]

Gary Tobin, a leading expert on Jewish philanthropy and president of the Institute for Jewish and Community Research, remarked, “It’s the biggest scandal in philanthropic life…as long as anyone can remember. There are foundations that have lost major assets, donors that have lost their ability to give, and organizations whose investments have disappeared. You add to that the psychological fallout, and it’s just devastating.”[30]

The “affinity fraud” as evidenced and practiced by Bernard Madoff has left its own profound impact on the Jewish community, its donor base, foundations, and agencies. Possibly no other community will experience the level of dislocation of the Jewish community as a direct result of the Madoff affair.

As Samuel Freedman noted regarding the Modern Orthodox Jewish community that accepted Madoff, even though he himself was not Orthodox, “Their leaders and members overlap like a sequence of Venn diagrams. They are bound by religious praxis, social connection and philanthropic cause. Yet what may be the community’s greatest virtue-its thick mesh of personal relations, its abundance of social capital-appears to have been the very trait that Mr. Madoff exploited.”[31]

The impact of this scheme on the overall health and viability of certain institutions is profound. The larger fallout related to donor confidence and future nonprofit business procedures will be significant. The scandal could lead to government intervention to monitor and even regulate investment policies and set management practices for nonprofit organizations. For donors, a culture of confidence will need to be restored among directly affected institutions.

The Rise of Anti-Semitism

Historically, in such periods of economic dislocation, there has been a corollary rise in anti-Semitism. This typically includes an acceleration of hate crimes and the emergence and growth of anti-Semitic organizations. Although the United States, and more directly its Jewish community, is in a far different situation than in the 1930s, the economic fallout can still contribute to heightened social tensions.

In response to the financial crisis, age-old anti-Semitic stereotypes about Jews or the “Zionists” controlling world events, governments and finances are emerging in Europe, Latin America and the Arab and Muslim world.  Much of the anti-Semitic material appearing on Web sites as articles or comments is from unidentified individuals who are angry and seeking to place blame for the spreading impact of the crisis. Others are written by authors who accuse Jews or Zionists of creating and benefiting from the crisis. Some are accompanied by vicious anti-Semitic caricatures and images.[32]

Yet, despite reports of an increase in anti-Semitic incidents elsewhere, the Anti-Defamation League’s report noted a different outcome for the United States in 2008:

“The number of anti-Semitic incidents in the United States declined for the fourth consecutive year, according to newly issued statistics from the Anti-Defamation League (ADL). The League’s annual Audit of Anti-Semitic Incidents…counted a total of 1,352 incidents of vandalism, harassment and physical assaults against Jewish individuals, property and community institutions in 2008, representing a 7% decline from the 1,460 incidents reported in 2007.”[33]

Yet, within the past several months, there have been a series of violent incidents against Jews and Jewish institutions along with other incidents where hatred was expressed toward Jews. These actions may signal a change in the United States that deserves further consideration. How much of this is driven by the economy, as opposed to anti-Israeli sentiment, is difficult to analyze.

Seeking Creative Solutions

The months and years ahead will demand creative fundraising solutions, organizational innovation, and corresponding structural changes. The aim must be to manage institutions and the communal agenda in a postrecession era, while also preparing the American Jewish community for a period of moderate growth.

Smaller communal systems, such as the one operated by the American Jewish community, feel the impact of such economic dislocations more keenly than larger organizational structures. This is partly because of the severity and scope of this crisis along with the fact that the Jewish communal model represents a highly integrated one, often fostering ripple effects that impact the broader enterprise. The fallout from the Madoff scandal certainly contributes to this notion of an economic “trickledown” effect. There will be fewer donors able to sustain organizations and projects; in turn, institutions will have more limited resources to expend on staff and programs.

Public intervention may well be necessary to assist nonprofit institutions in general and the Jewish communal system in particular. The passage of the Service America Act would triple the opportunities for Americans to perform national and community service. This legislation would establish a tax incentive for employers who allow employees to take paid leave for fulltime service, create “Encore Fellowships” to help retirees serve long-term, set up a “Volunteer Generation Fund” to help nonprofits organize more volunteers to meet demand, and provide support to social entrepreneurs-the innovative designers of the nonprofits.

Adopting tax incentives to expand private giving and volunteering would be a key public policy initiative. Making the tax code nonprofit-friendly would help sustain contributions from ordinary Americans. Some of the targeted incentives would also include: extending the IRA rollover[34] so that those over seventy years old can make tax-free withdrawals to contribute to charity; creating a broad-based nonprofit investment tax credit; and allowing taxpayers who do not itemize to claim a deduction[35] for charitable contributions.[36]

Short-term interventions and responses are now clearly underway.

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 their 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% 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% of their wealth, it doesn’t mean they are automatically poor, but they are less willing to donate.”[37]

In Portland, Oregon, for example, a special campaign was created. “The money raised in the effort-called Heart to Heart: A Jewish Response to Community Needs-will be divided equally between an emergency fund at the Jewish Family and Child Service, a Federation beneficiary, and the United Way’s Community Relief Fund.”[38]

A 2008 study of new Jewish organizations revealed similar financial and structural challenges:[39]

  1. The sector has grown dramatically, but new initiatives may lack the infrastructure to weather the economic downturn.
  2. Startups younger than seven years old are especially vulnerable because they do not yet have stable revenue streams.
  3. Startup leaders face challenges building sustainable models for governance and financial management.
  4. Jewish startups are already feeling the effects of the economic crisis and say they need sector-wide support to survive.
  5. Startups seek collaborative approaches to increase the effectiveness of their programming.
  6. Startups say they would benefit most from mechanisms that lower administrative and operational costs.

Yet, many institutions faced with immediate financial pressures will include longer-term issues in their calculations, introducing a deliberative planning process so as to achieve both immediate budgetary relief and strategic organizing. This moment may allow for conversations about this “shared crisis,” enabling institutions to engage each other and communal structures to adopt new ways of managing. Similarly, philanthropists and foundations are examining core priorities and underlying values in making strategic choices. This is also the time for entrepreneurship, and funders have an opportunity to invest their resources strategically. [40]

Planning for a New Moment

In the Jewish community there’s a need for new talent and new “software” at major institutions as well. One of the most serious long-term challenges is leadership and succession, particularly the need for renewed vision at senior levels. The largest communal institutions are mostly run by a generation that grew up in a very different world from the one experienced by today’s Jews under 40. Those entities operate as if the under-40 cohort will change to become more like their elders, though realistically it’s the institutions that need to adapt, not the post-1969 generation.[41]

In this context, for-profit consultants and nonprofit centers of professional managerial expertise may well replace the in-house resources of such national structures to guide institutions through this period of structural change and institutional planning.

The long-term outcome of the transformation is likely to be a far weaker, less cohesive American Jewish community. As the economy moves beyond the current crisis and as institutions adjust, a new leadership will also likely emerge that will need to draw on the lessons of this period. The “new” American Jewish scene they will inherit will display a smaller communal and religious system with fewer resources.

In turn, a communal system weakened by scandal and economic dislocation will inevitably be less powerful. The internal and organizational changes will recast the role of Jews within the larger society as well.

* * * *
Notes

[1] http://nccs.urban.org/index.cfm
[2] See Steven Windmueller, “The Second American Jewish Revolution,” Journal of Jewish Communal Service, Fall 2007.
[3] Heather Joslyn, “A Growing Leadership Gap,” Chronicle of Philanthropy, vol. 27, no. 13, 23 April 2009, 29-33.
[4] “How Nonprofit Groups Have Fared during the Recession” (excerpts from the Nonprofit Finance Fund study), Chronicle of Philanthropy, vol. 27, no. 12, 9 April 2009, 31.
[5] “Surveying the Damage,” Forbes, 30 March 2009, 84ff.
[6] “Fewer than Half of Charities Raised More Money in 2008, Study Finds,” Chronicle of Philanthropy, vol. 27, no. 12, 9 April 2009, 27.
[7] Ibid.
[8] Nathaniel Popper, “For U.S. Jewish Charities, Economic Crisis Is ‘First, Second and Third Priority,’” Haaretz, 8 February 2009, www.haaretz.com/hasen/spages/1062498.html.
[9] Mario Di Mento, “Wealthy Donate Record Sums despite the Recession,” Chronicle of Philanthropy, vol. 21, no. 6, 15 January 2009.
[10] Holly Hall, “Donors Are Plentiful: Reasons for Optimism in Hard Times,” Chronicle of Philanthropy, vol. 21, no. 9, 26 February 2009.
[11] This study, conducted by Jewish Women International, considers the impact of economic stress on family violence.
[12] The Poll, Job Scene, AARP Bulletin, 5, 4 (June 2009), 4.
[13] Beth S. Wenger, New York Jews and the Great Depression (New Haven: Yale University Press, 1996), 168.
[14] Ibid., 171.
[15] Ibid., 178-179.
[16] Ibid., 139-142.
[17] Carla Rivera, “Jewish Day Schools Facing an Economic Crisis,” Los Angeles Times, 18 May 2009,
www.latimes.com/news/local/la-me-schools18-2009may18,0,7771174.story.
[18] Anthony Weiss, “As Layoffs Mount, Which Jewish Executives Shared the Pain?” Forward, 10 June 2009, www.forward.com/articles/107575/.
[19] Ibid.
[20] Jacob Berkman, “Wave of Staff Cuts Hits Federations,” Jewish Telegraphic Agency, 17 March 2009.
[21] Weiss, “As Layoffs Mount.”
[22] Excerpts taken from Steven Windmueller, “The Third American Jewish Revolution,” Jewish Funders Network, E-Jewish Philanthropy, 3 April 2009.
[23] Berkman, “Wave of Staff Cuts,” 17 March 2009.
[24] Jacob Berkman, “Union for Reform Judaism Planning Changes to Cut Budget,” Jewish Telegraphic Agency, 12 February 2009.
[25] www.sfjcf.org/howthemoney/impact.asp.
[26] “The Budget Survey,” NATA Journal, Spring 2009, 4-5.
[27] Gary Rosenblatt, “Creating a Jewish GDP,” Jewish Week, 22 April 2009.
[28] “U.S. Jews Ponder ‘Catastrophic’ Effects of Bernard Madoff Affair,” Haaretz, 18 December 2008, www.haaretz.com/hasen/spages/1047483.html.
[29] Ibid.
[30] Ibid.
[31] Quoted in Jonathan S. Tobin, “The Madoff Scandal and the Future of American Jewry,” Commentary, February 2009, www.commentarymagazine.com/viewarticle.cfm/the-madoff-scandal-and-the-future-of-american-jewry-14640.
[32] Anti-Defamation League, “Blaming the Jews: Reactions to the Financial Crisis,” 31 October 2008,
www.adl.org/main_Anti_Semitism_International/Financial_Crisis.
[33] Anti-Defamation League, “Anti-Semitic Incidents Decline for Fourth Straight Year in U.S., According to Annual ADL Audit,” Press Release, www.adl.org/PresRele/ASUS_12/5537_12.htm.
[34] An IRA (Individual Retirement Account) is a personal savings plan that provides income tax advantages to individuals saving money for retirement purposes. In an IRA rollover, holdings are transferred from one retirement plan to another with no tax liability. See www.ira.com/faq/faq-01.htm.
[35] Itemization is explained thus:
You deduct itemized deductions by listing on Form 1040, Schedule A all tax deductible amounts you paid during the tax year for certain items such as medical and dental expenses, state income tax, local income tax, real estate tax, state personal property tax, local personal property tax,  home mortgage interest, and gifts to charity. These are called itemized deductions. The standard deduction is a fixed dollar amount that reduces the amount of taxable income on which you pay tax. The amount of the basic standard deduction depends upon your filing status on your tax return. However, if you can be claimed as a dependent on someone else’s tax return, your standard deduction amount may be different. In some cases, the standard deduction can consist of two parts, the basic standard deduction, and an additional standard deduction amount for age, blindness, or both.

See www.hrblock.com/taxes/planning/tax_courses/index.html?campaignid=Google0017&otpPartnerID=2402&omnisource=GGL|CAMP016TC-G-ITC_English|ADGP012RB-ITC+Learn|KWRD015tax+preparation.
[36] John M. Bridgeland, “What’s the Impact of the Economic Downturn on the Nonprofit Sector?” Case Foundation, 24 March 2009,
www.casefoundation.org/blog/what-impact-economic-downturn-nonprofit-sector.
[37] Natasha Mozgovaya, “Can U.S. Jewish Organizations Survive the Economic Crisis?” Haaretz, 27 April 2009, www.haaretz.com/hasen/spages/1078130.html.
[38] United Jewish Communities, Economic Crisis E-Newsletter, 4 May 2009, www.ujc.org/page.aspx?id=199345.
[39] Jewish Jumpstart, “Key Findings from the 2008 Survey of New Jewish Organizations.”
[40] Yonatan Gordis, “The Upsides of the Economic Downturns,” Jewish Week, 26 September 2008.
[41] Bob Goldfarb, “Mergers… and Acquisitions,” Jewish Funders Network, E-Jewish Philanthropy, 13 April 2009.

* * *

Steven Windmueller is a fellow of the Jerusalem Center for Public Affairs. Dr. Windmueller serves as dean of the Los Angeles campus of Hebrew Union College-Jewish Institute of Religion and holds the Rabbi Alfred Gottschalk Chair in Jewish Communal Service.

The Unfolding Economic Crisis: Its Devastating Implications for American Jewry was published by the Jerusalem Center for Public Affairs; posted with permission.

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  1. I actually think this is naive. In the US, at least, the financial debacle is not considered a “Jewish” problem. Nor is it in normal Europe (I live in Berlin). Certainly strident antisemites will use it, but they use everything.
    However, although we earn a decent living, my family could not afford to join a synagogue or send our children to a Jewish school when we lived in Westchester county NY. That with an offer of 50% off tuition. Who can afford 15,000 (after discount!) per child! With a similar discount, our synagogue dues were over $2,000. No wonder there is disaffiliation. We couldn’t afford to pay over 70% of our after tax, after mortgage earnings to be Jewish. So we went to Germany, and have a higher quality of Jewish life.

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