Today’s The Jewish Week carries an excellent editorial on the bitter, and now public, disagreement between the University of Chicago Hillel’s recently fired director and advisory board and the Jewish Federation of Metropolitan Chicago, Hillel’s owner. As eJP understands the dispute, the paper’s analysis is correct.
Several issues have come together to make this much more than just a local Chicago issue. First is the ownership model where all Hillel’s in Illinois are owned by the Federation, a situation we believe to be unique in the U.S. Whether or not this is the best possible model for UC Hillel is an important question that no one seems to be addressing.
Also, as far as we have been able to ascertain, the firing of Hillel’s advisory board by the Federation represents the first time not only in Chicago, but in the U.S., that any federation has fired an agency advisory board. Lost in the dialogue seems to be that when an advisory board has a vision that may be different than the ‘owning’ organization, no good path is available to reconcile.
Of course, in this situation it hasn’t helped that both sides have “dug in” positions they adhere to. The Hillel board, so we’re told, threatened to break away and form a competing organization if they did not get their way. Federation claims “Libenson and the Hillel board are part of the federation and have no right to break away.” Being adamant with one’s position is not a good way to resolve any conflict.
The Jewish Federation of Metropolitan Chicago is a strong, proud federation that does meaningful work not only locally but globally. They also have a reputation for being the controlling partner of all Jewish life in the region. Multiple conversations in recent weeks has led eJP to believe that many feel the federation is losing this control, is concerned by it, and frankly is not sure how best to respond. Perhaps this is why after several days of the “firings” being hush hush around their end, the federation came out with a two page memo of talking points distributed to their staff – and interestingly not simultaneously to their board – on how to respond, and defend, the Federation’s role.
In the meantime, we encourage both the Federation, and those formerly connected to UC Hillel, to begin to think about what is best for the students – something clearly absent from the various conversations we’ve had.
And, by the way, maybe find a good marriage counselor.
About: Heard Around Jerusalem occasionally appears on the scene with a look below the surface at the goings on in the Jewish organizational world.
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eJP’s understanding of the dispute is incomplete, but that’s easily remedied by reading these two relevant documents, which explain the position of the former Newberger advisory committee (http://www.uchicagohillel.org/Hillel_Website/Letter_to_Federation.html) and the Federation’s response (http://www.uchicagohillel.org/Hillel_Website/Letter_from_Federation.html), as well as that of Hillel International (http://www.uchicagohillel.org/Hillel_Website/Letter_from_President.html). The former Newberger leadership wanted out at any cost; the Federation was not going to give into an ultimatim to relinquish Jewish communal assets or responsibility. It’s a free country. The committee essentially resigned in order to pursue another project.
Aaron, thank you for making these documents available publicly. As to whether the committee “essentially resigned” or was fired is, in my opinion, semantics.
Word-smithing aside, I believe that both JUF and the Hillel folks played a power game and the potential losers are the students. And now both sides are trying to justify their actions in the court of public opinion.
I also notice no retraction to the original statement on the Jewish Daily Forward stating “Jewish federation officials in Chicago have fired the head of the University of Chicago’s Hillel and the Hillel’s entire board.”
Not sure how an organization plays a power game with itself, and it’s immaterial whether or not the Hillel ownership model in Illinois is unique, for ownership is exaclty what it it is. When people find being part of an organization either as employees or committee members no longer meets their needs or interests, they are free to leave it–no matter how they might wish to spin it.
> April 18, 2012
> Jewish Federation of Metropolitan Chicago
> 30 South Wells St.
> Chicago, IL 60606
> To the Jewish Federation of Metropolitan Chicago,
>
> We are a group of faculty members at the University of Chicago, and we write to you out of profound concern as to your purported firing of the Board of Directors of the University of Chicago Hillel, which includes prominent members of the University of Chicago faculty and administration, as well as five student representatives, and your termination of the employment of Executive Director Dan Libenson.
>
> We find your actions disgraceful and unwelcome in our community. Your having taken these actions without notice on the eve of Shabbat, a week before Passover, and during the weeks when newly-admitted students are deciding which university to attend is a profoundly un-Jewish, indeed unkind, action and is in total disregard for the interests of the University of Chicago and, most importantly, the interests of our students.
> The Hillel that Dan Libenson and the Board have built over the past six years has surpassed what any of us believed possible and has greatly enriched the lives of the students who we serve to educate. Our Jewish students – undergraduate, graduate, and professional school students alike – are greatly enriched by their experiences at Hillel. We have watched our students participate in Birthright Israel trips, Mega Shabbat, and Jewish internships and come away from those experiences with a deeper maturity imbued with Jewish values and pride. These critical experiences did not and will not happen automatically. They happened because of the innovative leadership of Mr. Libenson. We are very worried that Jewish life on campus will suffer greatly without the leadership that built the programs that are thriving today.
> The disregard for our community that you showed in treating our colleagues so disrespectfully and in the timing and manner of your actions in terminating Mr. Libenson’s employment — packing up his office and changing the locks on the Hillel doors after six years of award-winning and dedicated service to our community — shocks the conscience and demonstrates your total lack of regard for the values of the University of Chicago and for the humanity of the members of our community. Frankly, we see your actions as a total abdication of Jewish values as well. As such, we hereby request in the strongest possible terms that you agree to the board’s request for mediation with the ultimate aim of restoring University of Chicago Hillel’s independence.
>
> Recent years have seen a worldwide explosion of people demanding democratic self-governance. The recent disbanding of the University of Chicago Hillel as a result of the Board’s request for self-determination and local control strikes us as a mini-version of world events. You discredit the work you do in metropolitan Chicago’s Jewish community with your unjust actions. Your choice to rule our local Hillel in an autocratic fashion overwhelms.
>
> We urge you to reconsider and do the right thing: allow the University of Chicago Hillel to self-govern and concentrate your efforts on initiatives and programs that only you, as a metropolitan organization for Jewish life and concerns, can achieve.
>
> Sincerely,
> Peggy Mason, PhD
> Professor
> Department of Neurobiology
>
>
> Isaac D. Abella, PhD
> Professor, Emeritus
> Department of Physics
>
> Yolanda T. Becker, MD
> Professor
> Department of Surgery
>
> Daniel Brudney, PhD
> Professor
> Department of Philosophy
>
> Ethan Bueno de Mesquita
> Professor
> Harris School of Public Policy Studies
>
> Cathy Cohen, PhD
> David and Mary Winton Green Professor of Political Science
> Department of Political Science
>
> Ronald Cohen, MD
> Associate Professor
> Department of Medicine
>
> Aaron R. Dinner, PhD
> Associate Professor
> Department of Chemistry
>
> Dana P. Edelson, MD, MS
> Assistant Professor
> Department of Medicine
>
> Michal Engelman, PhD
> Assistant Professor
> Department of Sociology
>
> Benson Farb, PhD
> Professor
> Department of Mathematics
>
> Tom Ginsburg, JD, PhD
> Leo Spitz Professor of International Law
> Law School
>
> Elliot S. Gershon, MD
> Foundations Fund Professor of Psychiatry and Human Genetics
> Department of Psychiatry and Behavioral Neuroscience
>
> George Glauberman, PhD
> Professor, Emeritus
> Department of Mathematics
>
> Jill Glick, MD
> Associate Professor
> Department of Pediatrics
>
> Robert Haselkorn, PhD
> F.L. Pritzker Distinguished Service Professor
> Department of Molecular Genetics & Cell Biology
> Leo Kadanoff, PhD
> John D. and Catherine T. MacArthur Distinguished Service Professor, Emeritus
> Departments of Physics and Mathematics
>
> Greg Karczmar, PhD
> Professor
> Department of Radiology
>
> Leslie M. Kay, PhD
> Associate Professor,
> Department of Psychology
> Director, Institute for Mind & Biology
>
> Elizabeth Kieff, MD
> Assistant Professor
> Department of Psychiatry and Behavioral Neuroscience
>
> Helen H. Kim, MD
> Associate Professor
> Department of Obstetrics and Gynecology
> Director, In Vitro Fertilization Program
>
> Diane S. Lauderdale, PhD
> Professor, Epidemiology
> Department of Health Studies
>
> Kathryn Levin, PhD
> Professor
> Department of Physics
>
> Daniel Mass MD
> Professor
> Department of Surgery
>
> Martha McClintock, PhD
> David Lee Shillinglaw Distinguished Service Professor in Psychology
> Department of Psychology
>
> Martha C. Nussbaum, PhD
> Ernst Freund Distinguished Service Professor of Law and Ethics
> Law School and Department of Philosophy
>
> Carole Ober, PhD
> Blum-Riese Professor and Interim Chair
> Department of Human Genetics
>
> Angela V. Olinto, PhD
> Professor
> Department of Astronomy & Astrophysics
>
> Robert Perlman, MD PhD
> Professor, Emeritus
> Department of Pediatrics and the College
>
> Louis H. Philipson MD PhD
> Professor
> Department of Medicine
> Board of Directors, Congregation Rodfei Zedek
>
> Kenneth S. Polonsky, MD
> Richard T. Crane Distinguished Service Professor
> Dean of the Division of the Biological Sciences and the Pritzker School of Medicine
> Executive Vice President for Medical Affairs
>
> Tamar S. Polonsky, MD, MSCI
> Assistant Professor
> Department of Medicine
>
> Stuart A. Rice, PhD
> Frank P. Hixon Distinguished Service Professor, Emeritus
> Department of Chemistry and the James Franck Institute
>
> Mindy A. Schwartz, MD
> Associate Professor
> Department of Medicine
>
> James A Shapiro, PhD
> Professor
> Department of Biochemistry and Molecular Biology
>
> Alison Siegler, JD
> Associate Clinical Professor of Law
> Director, Federal Criminal Justice Clinic
> Law School
>
> Dana L. Suskind, MD
> Associate Professor
> Department of Surgery
>
> Linda J. Waite, PhD
> Lucy Flower Professor in Urban Sociology
> Department of Sociology
19 April 2012
Dear Friends,
Over the last five years, we have asked many of you to support the superb work at Newberger Hillel under the leadership of Dan Libenson. We have worked with you and enjoyed Hillel events together. Most important, we have worked together to support innovative and exciting programming that engaged the students at The University of Chicago.
In the last two weeks, much has been said by the Jewish Federation of Metropolitan Chicago (JFMC) about its dismissal of the board and executive director of the Newberger Hillel. We are greatly troubled by the accusations made, particularly those of ingratitude, fiscal irresponsibility, indifference to budget deficits, ineffective fundraising, and disregard for costs. To assure you that we have stewarded your contributions of money and time on behalf of the students at the University of Chicago, we offer a fuller explanation of some of the partial truths stated by JFMC in this regard.
1. SUPPORT OF NEWBERGER HILLEL JFMC: “Over the last decade, Federation support has increased dramatically from $213,000 in FY2002 to $483,000 in FY2011.”
OUR RESPONSE: This claim relies on a misleading calculation of “support.” JFMC’s actual cash support rose from $170,000 in FY02 to $183,000 in FY11 and fell to $172,000 in FY12.
JFMC includes three components in their calculation of support: 1) allocations from The Hillels of Illinois; 2) Newberger Hillel endowment payouts; and 3) payments for deficit reductions.
1) Allocations. We are grateful for the JFMC Hillels of Illinois allocations to Newberger Hillel, which, as mentioned above, went from $170,000 in 2002 to $172,000 in the current fiscal year.
2) Newberger Hillel Endowment Fund Payouts. JMFC includes as its support the payouts Newberger Hillel receives from its own endowment, which JMFC holds in trust for Hillel. These endowment funds rightfully belong to Newberger Hillel and should not be represented as additional JMFC support. The gifts to create these endowments were intended for Hillel in accord with donors’ wishes.
• Payouts on these endowments more than quadrupled between 2002 and 2012, from $40,000 to $170,000, for two reasons. First, during this period the Newberger Hillel endowments themselves increased by over $1 million as a result of fundraising and donor generosity to Newberger Hillel — not because of management decisions made by JFMC. Second, these payouts increased because some of these endowments are being drawn down at the potentially unsustainable rate of 9.4% per year in an attempt to compensate for the JFMC-organized capital campaign that did not reach its goal (see below).
• JFMC elected to finance building renovations in 2000 through a bond issue rather than paying for the renovation directly with capital campaign gifts. Newberger Hillel is charged approximately $55,000 per year to pay off this bond. JFMC includes the interest payout on the capital gifts in its calculation of its support, despite the fact that this element of the JFMC contribution is offset almost dollar for dollar by the bond payback expense.
3) Deficit Reductions. JFMC’s calculation of its support in FY2011 included funds to cover that year’s deficit, which we believe (and can document) includes substantial over-charges (see below).
A Note on the Building. The Newberger Hillel Center building was assigned to JFMC in 2000 for $1.00. As consideration for this asset, JFMC agreed to raise $1.6 million for Hillel in a capital campaign. They raised only $869,000. Had JFMC met their commitment, Hillel would have had substantially greater cash flows from this endowment — at JFMC’s standard 7% draw, for example, Hillel would have had an additional $50,000, an amount that would have covered the bond issued to finance the rehabilitation of the building. Instead, Hillel not only covers the bond out of other funds but also pays JFMC rent for the building.
2. FISCALRESPONSIBILITY
JFMC: “Annual budget deficits averaged $100,000 per year.”
OUR RESPONSE: JFMC’s calculation of the deficit is in error for two reasons. First, they charge Newberger Hillel above-market costs for facilities management, infrastructure services, and fringe benefits. Second, as noted above, they are charging Hillel for their failure to complete the capital campaign as agreed in consideration for obtaining the building.
• Overcharges. JFMC charges Hillel for facilities and other infrastructure expenses and also manages Hillel’s payroll, charging Hillel for fringe benefits provided to staff. As part of our negotiations with JFMC, we obtained firm verifiable quotes from outside vendors for these services that were $100,000 less per year than the comparable JFMC charges.
• Capital campaign. As noted, JFMC did not complete its end of the bargain when it obtained the building for a dollar. Had it provided the agreed upon consideration, our endowment, and thus our cash flow from the endowment, would have increased.
JFMC: “Your utter refusal to engage in any constructive discussion of fiscal responsibility.”
OUR RESPONSE: We offered to eliminate $120,000 in expenses, multiple times.
• When we developed the FY2012 budget in March 2011, we were prepared to eliminate $120,000 in expenses related to building maintenance, equipment, and personnel benefit charges (JFMC charges Hillel for benefits even for personnel that do not receive benefits), which would have achieved a balanced budget. All of these expenses were charged by JFMC, and we identified less expensive sources for these services and equipment. We found, for example, that we could purchase utilities from Commonwealth Edison and People’s Gas at lower rates than we were being charged by JFMC. Our plan to outsource these items, at substantial savings, as a means of reducing the deficit was rejected by JFMC.
• We believe that all line items in a budget contribute to fiscal responsibility, not just those selected by one party or another. JFMC, however, insisted that all the cuts be made to program or to staff rather than overhead, and did so when we were already seven months into the fiscal year.
• During the course of our discussions with JFMC over the past year, we cut costs whenever we had the opportunity to do so without affecting the student program. For example, we chose not to fill the position of the Director of Operations (who was on leave) as well as the Director of Development (who took another position in February). The savings from these two positions came to $45,000 — over and above the $120,000 we had already recommended as savings in rental, maintenance, equipment, and other administrative costs.
• Despite requests over the last several years, JFMC has been unable to provide a complete accounting of the Newberger Hillel endowment funds, including the $200,000 Rabbi Daniel Leifer Speaker and Scholarship Fund that was entrusted to JFMC in 2006.
3. FUNDRAISING JFMC: “We repeatedly offered to work with you on fundraising—something that JFMC excels at—but at no time did you accept our offer.”
OUR RESPONSE:
• Newberger Hillel board and staff members, without assistance from JFMC, more than tripled Hillel’s fundraising success between 2006, when we raised just over $100,000, and 2011, when we raised $343,000. These amounts do not include the tens of thousands of dollars in competitive grants we received from Hillel International.
• Nancy Newberger said in an email to JFMC: “I was deeply offended by the hypocrisy of JFMC in your discussion of fundraising efforts given the past 10 years of requests by NHC for such fund- raising support from Hillels of Illinois and JFMC and assistance with reducing management costs which were all met with resistance.”
• One of the root causes of current financial difficulties is that JFMC has not been able to reach its own goals for the capital campaign at Newberger Hillel. It has also not reached its capital campaign goals at Northwestern Hillel or the University of Illinois, Urbana-Champaign.
• Work with potential major donors requires considerable time and conversation so that assistance with fundraising would not alleviate the immediate budget cuts that JFMC demanded.
Newberger Hillel Center
• The claim that we did not accept offers to work together on fundraising is simply false. For example, we came prepared to discuss fundraising at the January 17, 2012, meeting that JFMC called and for which we prepared an agenda (copies are available) that included working together on fundraising.
4. IMPACT AND COST JFMC: “We have pointed out that the cost to JFMC per student at the U. of C. is twice that of any other campus.”
OUR RESPONSE:
• There are few economies of scale in running a Hillel building or a Hillel program. The University of Chicago undergraduate body is substantially smaller than at Northwestern and University of Illinois, Urbana-Champaign. Distributing the fixed costs of running any Hillel, including a building as well as unalterable events, such as Shabbat and High Holy Day services, over an undergraduate body of approximately 800 Jewish students (rather than the 3,000 at Urbana-Champaign and 1,600 at Northwestern) yields a higher cost per undergraduate.
• Unlike other Hillels in Illinois, we have also embarked on serving graduate and professional students this year which adds to our costs. JFMC’s calculation must also include these approximately 1,000 additional students, which would make the cost per student comparable to other Hillels.
• The proper denominator is the number of students touched by the program, not the number of students on campus. Given that the Newberger Hillel has, for two years running, registered more than 80 students each year in the Birthright Program (the highest proportion of students nationwide), it would appear that the program is exceedingly cost effective. Birthright Israel is a program in which both Newberger Hillel and JFMC take great pride.
5. GOVERNANCE
JFMC: “After months of negotiations to resolve budgetary and governance issues, the advisory committee and executive director of the Newberger Hillel Center at the University of Chicago issued an ultimatum: either they would negotiate a ‘separation’ from the Jewish Federation of Metropolitan Chicago under which they would retain ownership of the building and management of the Hillel program, or they and their executive director (a Federation employee) would establish a ‘new entity at a different location and with a different name.’”
OUR RESPONSE: As Jim Cherney wrote to JFMC on behalf of the Board, “We believe very sincerely that we will advance our program more rapidly and successfully as an independent entity and that Federation would be better served relating to us in a different relationship. We have never wished to be a financial burden to Federation.”
• We continue to believe that it is in the best interests of our students and the Hillel program to separate from JFMC. Decisions such as how best to balance the budget and what type of programming to pursue are best made by those directly connected to the Hillel. Had we become independent, we would have had to run a balanced budget.
• Hillel was an independent entity for most of its existence. The building and the endowments were transferred to JFMC to be held in trust for Hillel. We want to restore our traditional independence.
• We offered to resign in June because we intended to fulfill our responsibilities to University of Chicago students through the end of the academic year. We did not “issue an ultimatum,” but rather offered to resign at the end of the academic year if JFMC remained unwilling to engage in a mediated conversation with the goal of Hillel’s independence.
• Our intent was to fulfill our responsibilities without disrupting the student experience and to allow a smooth transition in June. Instead, JFMC chose to “fire” all of us at a very inopportune time— Passover and college admissions announcement week—before we were able to discharge our responsibilities to the students whose programs and interests we are bound to protect.
Finally, we believe that we were entitled to be treated respectfully, as volunteers and as donors who support a vision for the next generation, committed to the programs for students at the University of Chicago. We were treated instead with disdain, which has saddened us immeasurably as volunteers and donors within the Jewish community.
We continue our work on behalf of the students at the University of Chicago and will soon provide you with a case statement outlining our plans to continue our work over the coming years.
Sincerely,
Ruth O’Brien, President Jim Cherney, Immediate Past President Sara Segal Loevy, Vice-President for Development Adam Levine-Weinberg, Vice-President for Finance Halina Brukner, MD, Secretary Executive Committee Former Board of Directors Newberger Hillel Center at the University of Chicago Newberger Hillel Center
It would seem that in fact, Libenson and his Advisory Board indeed did and continue looking out for the best interests of U of C students. There is a reason this arrangement of JFMC owning HIllels is unique. It stems from JFMC ‘s unending need to control every aspect of Jewish life in Chicago. Old man Daley is dead and even his son is gone from office. Change has come to Chicago’s City Hall and the Jews of Chicago will likewise welcome their liberation from Pharaoh Nasatir and his henchmen!
Tango down! Too bad about Libenson, he’s a bright guy. JUF seems pretty arrogant and a quick study of the documents and responses shows why the Hillel board took this step. The financial details are an incredibly bad deal not just for Hillel for the donors to JUF as well. The savings could be found through alternative service bids, but JUF wont accept that. Over 9% drawn down on endowments in held in trust is bad stewardship, and doing it to cover JUF’s own shrinking allocation while shifting blame for bungling the capital project makes this sooooo unsavory. Bad dog!
In my view, the action taken by JFMC with respect to UofC’s Newberger Hillel (henceforth, NH) should stimulate a broad, Chicago Jewish Community conversation – maybe even debate – on this topic: What is the proper role for JFMC? I believe that there would be general consensus around an answer. And, that answer is that JFMC’s primary role should be to help Jewish institutions of Chicago fulfill their missions. Period. Not to create institutions, not to determine for institutions what their missions should be, or how to achieve them. But from its actions it seems pretty clear that JFMC has quite a different conception of its role – to shape Jewish institutions in ways that maximize their support for JFMC. In their view, the primary concern of any Jewish institution must be the well being of JFMC as JFMC defines it – so long as that happens, the institution can go about its mission, otherwise, not.
That said, I’d like also to comment on the actual financial dispute. While I haven’t been on the NH Board for recently, I was a member (and, for several years Treasurer) at the time the house was deeded to JFMC in 2000 and at the time the organization’s endowments were turned over to JFMC about 5 years later. My files contain extensive documentation of discussions and communication both within the Board, and between the Board and various JFMC officials. I’ve spent a good part of the past two weeks reviewing that material, so that I write now with refreshed memory.
So. In my opinion, every point of the ex-NH Board’s April 19 letter (posted above) in rebuttal of JFMC’s spin on the financial situation) is correct – but they left out a few more items that make their case against JFMC even stronger. These – outlined below – relate to ways in which JFMC actions and transfer-pricing policies have created the very ‘deficits’ on which this dispute superficially rests.
In the Fall 2000 proposal that resulted in JFMC receiving title to the NH building, THOI (the JFMC agency that managed Hillels in Illinois) and NH were asked to agree that income from certain of their endowment funds would temporarily be taken at a rate 2.3 percentage points in excess of the then 7.1% standard annual income ‘draw’. (This was posited as prudently safe, justified by a run of annual returns averaging around 13% over the previous several years.)
I want here to comment on three elements of this that JFMC never implemented correctly – a) the formulation of a draw in excess of standard, b) the genesis of the 2.3% figure, and c) the conditional ‘temporarily’. These elements are important, because NH’s understanding of them was critical to the majority vote in which the renovation financing Proposal (and property transfer) was accepted by the NH board.
a) While later interpreted by JFMC as a fixed, permanent 9.4% income draw against endowments, that’s not the way it was presented in the proposal. Rather, it was presented as stated above – 2.3 percentage points above the standard draw of 7.1%. This became enormously important after the 2000-2002 stock market crash, during which values of some endowment funds dropped by 25-40%. And, under the new market conditions, JFMC reduced the standard draw – but instead of adjusting the NH draw to 2.3% points over the new, lower rate, it kept withdrawals at the 9.4% rate.
b) The additonal annual income derived from the extra 2.3% was explicitly dedicated toward repayment of the renovation construction loan. In the Proposal, this was estimated to involve an annual cost of $91,400, based on a loan of $1.025M, an interest rate of 7.5%, and a 25 year term. The 2.3% number was chosen in order to meet that goal, and for no other reason. HOWEVER, when the renovation funds were obtained through a tax-exempt JFMC bond offering – at an interest rate of just 1.8% – rather than through a bank loan at 7.5%, the annual amortization expense dropped by 1/3. This should have resulted in a proportional reduction of the extra 2.3% – but JFMC didn’t do that; instead, it took the full 9.4%.
c) The extra 2.3% was not expected to be permanent. Rather, JFMC stated in the Proposal its intent to raise additional special-purpose endowment funds with the goal of incrementally reducing to zero, over time the extra 2.3% draw: as income from the additional endowments increased, the 2.3% would be reduced, to zero. HOWEVER, despite the fact that part of the intended special-purpose endowment was raised, JFMC never implemented any reduction to the extra draw.
Implemention by JFMC of these deviations from terms of the Proposal were unilateral. NH had no input. In fact, JFMC strongly resisted all requests from NH to negotiate a document governing implementation issues. NH does bear some responsibility here – in the fall of 2000, it (trusting the goodwill JFMC) deeded the property title to JFMC on the basis of the Proposal alone without any actual contract of operating agreement. In retrospect, that was a egregious error, since tt is a reasonable presumption that any more formal document would have spelled out details of the parties’ responsibilities if/when conditions changed, and would have defined the many ambiguous elements of the Proposal. (In fact, I myself requested such a document, outlining many of the items which later became bones of contention.) Without such a document, when market and finance conditions did (quickly) change well beyond the scope anticipated by the Proposal, NH was left at the mercy of JFMC. And, JFMC proved to have little mercy. Every aspect of implementation made by JFMC going forward was made in a manner than hurt NH and protected itself.
In delivering endowment draws larger than necessary for the stated purpose of making annual amortization payments, JFMC depleted NH endowments while also increasing NH operating income in the agreement’s early years; this had a side-effect of reducing or preventing operating deficits at NH in those years – essentially, kicking them down the road and contributing greatly (if not entirely) to the size of recent deficits.
JFMC’s predatory behavior wasn’t limited to implementation of the financing aspects of the Proposal. It can also be seen in its ‘professional’ management of the property, and in its failure to fully disclose in the Proposal certain expensive requirements attendant upon JFMC property management. In addition to JFMC’s requirement that NH utilize JFMC’s programs for telephony/internet, alarm system, and A/C maintenance (among others) at rates well above-market, JFMC also rapidly raised the ‘rent’ charged to NH after it took title to the building, and also repeatedly reduced the scope of services it provided as part of the rent package. Here are three examples for which I have clear documentation in my files:
a) the initial rent under JFMC ownership/management was (reasonably and justifiably) set at $42K (an approximate doubling) over amount NH had previously spent on building operations. The Proposal included a mechanism for financing that gap. However, within a 5-6 years rent increases had doubled the gap – an increase that absorbed 100% of NH interim fundraising gains, thus leaving the actual programming budget with reduced purchasing power.
b) upon entering JFMC management, the NH telephone/internet bill instantly jumped from under $2500 to over $10,500/year
c) During the first few years of implementation under JFMC ownership, services included in the ‘rent’ package included a JFMC labor crew to assemble the NH Sukkah. But, that service was withdrawn after 2004 – and JFMC requested an additional $13,000 annual payment for that task!
These are just a few examples of large and unjustified increases in NH expenses, well above-and-beyond anything disclosed prior to the NH Board’s acceptance of the Proposal and transfer of the property to JFMC. And, it is abundantly clear that such expense increases form a very large part of any ‘deficit’ shown on recent NH financial statements.
While I can assert from personal experience that none of these issues are new – I, personally, made sure that THOI and JFMC were aware of each, as it was discovered, between 2002 and 2008 – I can understand that those responsible for JFMC’s recent precipitous actions against NH might not be aware of them. However, that’s no real excuse at this point.
We all know the concept of ‘act like a mench’. That should be a guiding principle of not only personal behavior, but institutional behavior also. Dan Libenson and the NH Board met this standard in bringing to JFMC, and asking to discuss and settle, issues involving JFMC policies/procedures and actions that were disadvantageous to NH interests. However, JFMC manifestly did NOT meet the same standard. It owes Dan Libenson and the NH Board an apology, reinstatement, and a reconfiguration of policies so that it unambiguously fulfills a primary role of helping Jewish organizations meeting their missions.
The links to the letters between JUF and the previous Hillel board mentioned in the first comment seem to no longer be on the UC Hillel website.
They can be found here:
http://hilleluchicago.tumblr.com/
As shocking as this story may be elsewhere, the truth is that it doesn’t surprise anyone who has been involved as a lay leader in Chicago at an agency or project “owned” by the Jewish Federation of Metropolitan Chicago (JFMC). This is typical behavior for a professional leadership team that operates a cabal over everything Jewish in Chicago.
Just read the documents posted here (or read more related documents on hilleluchicago.tumblr.com) and you’ll quickly gain a sense of which side proceeded cautiously over many years with futile attempts at engaging the other in conversation and which side chose a strategy of denial and deceit. The problems pointed out by the Newberger Hillel Board are at least a decade years old and have been raised over and over by their staff and board (I know one of Hillel’s recent staff members who expressed his extreme frustration with JFMC employees ignoring attempts to talk about some of these financial issues).
The problems here seem definitely to be of JFMC’s making. If you know any of the usual suspects at JFMC, you know that there are excellent at deflecting responsibility and skilled at making accusations, pointing fingers, and belittling agency staff and lay leadership for having the audacity to question their judgment. It is still very unclear why a cabal of individuals who have very thin credentials and qualifications for the work they do seem to think they are above question. Just look at the tone of Aaron Cohen’s comment or read Harvey Barnett’s letter to “firing” the Newberger Hillel Board on the tumblr blog I linked above. No humility. No acknowledgment of past error. No apologies. Those I have spoken to cannot recall one time that JFMC has owned up to a mistake or issued an apology.
This is a cultural issue. This is a class of mandarin bureaucrats who are mis-managing the resources of a major US Jewish community and have been getting away with it for a long time. If you are a donor to JMFC, you may want to check to make sure that you’re endowment held at JFMC isn’t being drawn down at 9.4%. From what I understand, few if any of the Newberger Hillel endowment donors were aware of this fact, mostly because JFMC claims it is under no obligation to provide endowment reports to agencies it “owns” since it “owns” their endowments too.
What JFMC needs is an outsider to come in and clean house. What we see inside JFMC now is a culture that is corrupted from within. It has lost sight of the mission-based conversation (such as “How do we best serve the people we support?”) and has instead dwelled on how to centralize its control in terms of stewarding the community’s resources (which this dispute attests that it does so poorly in such a fashion that should give any of its donors major pause). Instead of rearranging the deck chairs at the top (JFMC has a classic promote-from-within organizational culture), which it has been doing for years in preparation for Dr. Steven Nasatir’s retirement (which for some reason has been talked about but hasn’t yet happened for 5+ years) after over 25 years of service, its Board should get serious about their governance responsibilities and supervise its staff more closely. Chairman Skip Schrayer and the JFMC Board are completely asleep behind the wheel and are losing the trust of not only current leaders in the Jewish community but also the next generation on college campuses like the University of Chicago.
Fun Fact: Dan Libenson’s “boss” is a fellow named John Lowenstein who made the decision to “fire” Dan and the Newberger Hillel Board. John was announced in this position after a big deal was made about finding the right candidate by retaining an executive search firm to conduct a national search. Instead, JFMC came up with John Lowenstein, who had no prior professional experience working in Jewish education, Hillel, non-profit organizations, or anything related whatsoever. In fact, his prior experience was working for his father-in-law’s company, SportsMart, which was a sporting goods retailer. It just so happens that his father-in-law is also a major JFMC contributor. John was on the job for about six months before making the decision to blow-up the University of Chicago Hillel.
Incidentally, I’ve heard from quite a few people in the community that John Lowenstein was happy to have a job that would allow him to “coast to retirement.” Really? This is the person who fired Dan Libenson and the Newberger Hillel Board? They certainly weren’t looking to coast to retirement. They, by all evidence above, seem committed to the students they serve – above and beyond just having a job. The students – and the Jewish future – deserve better than a patronage appointee as the professional leader of The Hillels of Illinois (if it should even continue to exist at all!)
JFMC has failed to explain how this “idiosyncratic model” or “hegemony” that it runs in Chicago provides better organizational value to the students and campuses Hillel serves. It’s clear from their point of view that it they think it provides better value to their donors. But does JFMC exist to serve its donors? If so, do its donors really understand the operating culture of the organization they support?
If you’re a JFMC donor, do yourself a favor. Next time some nice person from their campaign department tells you how important it is to contribute, ask them tough questions about how they actually “support” agencies. Today, Newberger Hillel donors are horrified to learn how JFMC had been stealing through questionable “pricing-transfer mechanisms” mentioned above by Matthew Klionsky from an organization that was near and dear to them for over 70 years.
The revelations by Matthew Klionsky, whose family is highly active in the Hyde Park Jewish community, are shocking in the level of depth of detail. JFMC’s behavior, if this is accurate, is truly appalling and should be grounds for termination for JUF leadership.
Nasatir pulls in close to $500K annually between salary and benefits. While we argue about $100K deficits annually, Nasatir annually makes Crain’s list of highest compensated NFP executives and over his career has been paid far in excess of what is reasonable. Given the lack of transparency, one can only guess as to why the 2.3% became permanent. Even if its just innuendo, JUF and Nasatir have given our community little reason to trust them.
They’re the 1% of Jewish communal life and are widely reviled. When does our community get to send a letter to Nasatir and his Board firing them?