New Economic Challenges, New Opportunities: The Unfolding of the Third American Jewish Revolution

by Prof. Steven F. Windmueller

Over the past year, and more directly over the course of these past months, we have been witness to the unraveling of the global economy and more directly the American enterprise. This economic “tsunami”  will lead to a fundamental reordering of the structural and financial well-being of many core institutions. In particular, this upheaval will have a profound impact on the American Jewish community.

Over the past quarter-century the Jewish community experienced extraordinary institutional growth and communal innovation. The “Second American Jewish Revolution” which this writer has written about in other contexts, represented the confluence of new wealth and technology in alignment with the emergence of a generational renaissance of Jewish activism. That “revolution” encompassing the twenty year period, 1985-2005, sparked the largest growth of new Jewish institutions since the period of the 1880’s-1920. The result of this global Jewish revolution set into play an array of innovative efforts to reinvent the Jewish experience. This new model would stimulate institutional experimentation and correspondingly, result in the unraveling of traditional organizations. Jewish institutional life has been undergoing a profound transformation, moving from the parochial to the global, from fixed ideological religious movements to trans-denominational institutional models, from ponderous multi-dimensional structures to efficient single-issue activities. “Causes” such as the environment and LGBT rights emerged to compete with and challenge the “core” structures of the communal enterprise. New generations of Jews moved past their parents’ traditional affiliations, creating their own expressions of Jewish belonging. This Second American Jewish Revolution has now ended, and in its place a Third Revolution is emerging.

New Paradigm: American Jewish Institutions and the Third Revolution

As a result of these new and changing economic and social realities, a different institutional scenario is now being scripted. This Third Revolution represents an amalgamation of some of the attributes from both the first and second revolutions, in addition to taking on the unique characteristics that will define this current environment.

Three elements seem clear:

  1. Not all of America’s 6,000 Jewish non-profits will survive this economic trauma;
  2. Those institutions that survive will need to operate differently; and
  3. Mergers and collaboration will be code words that may well define this era.

The outcome of this economic crisis will lead to a reduced, more-streamlined communal and religious system.

One of the significant casualties will be the weakening and possible demise of key national umbrella institutions and religious denominational groupings. The politics of “localism” emerges 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. As a result, some of the anticipated services that such national groups traditionally provided will need to be replaced or downsized. 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.

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

Downsizing will be evident everywhere, with profound implications for the ability of institutions to deliver critical services. Institutions without multiple streams of funding will be the most directly imperiled. Organizations will be exploring alternative and creative models of managing their resources as they strip away significant elements of their infrastructure in order to gain economic viability.

Transitioning from One Revolution to the Next:

There would appear to be a series of questions that challenge conventional thinking as the institutional world confronts this new reality:

  1. How do we learn to do more with less? And, at times, doing less with less?
  2. For those that operate in this new paradigm- do they believe that one can continue to move from “good” to great?
  3. What are the essential elements for governing and managing from the “narrow” places?
  4. Can we offer donors something particularly compelling in such a market environment that secures and sustains their trust?
  5. Are the stakeholders different in this scenario or do they now play a different role?

Unpacking the New Paradigm

Refer to this pdf file – 3rd-revolution-table.

Assessing the Conditions on the Ground

In these times, many new realities can be felt both on the personal and institutional level. In this context, we are experiencing fundamental life-style changes where the “givens” and expectations once central to our lives, are no longer. In such an environment anger and fear take on a heighten proportion, as people seek avenues for their expression of frustration. The psychological and social impact will be felt by many at all levels of the economic strata; the level of uncertainty creates a heightened concern of one’s financial welfare and social well-being. As a result, emotional paralysis can overpower individuals, in addition to the presence of medical problems and/or physical symptoms. Depression, and even family violence, is certainly a potential outcome.

Social commentators are suggesting that the decline of social capital will further weaken the personal and institutional ties that individuals have with their communities and correspondingly, key associational networks are likely to unravel or weaken. A few others have suggested that the loss of confidence in the economic system to successfully recover in rapid and sustained fashion will undermine for some an abiding belief in the achieving and maintaining the “American dream”.

The scope (depth) and focus (particular industries or businesses) of the recession in part defines the populations most directly affected and the corresponding impact on the social fabric within the broader society.

Correspondingly, charitable institutions with more restricted resources will be forced to curtail vital services and specific programs and re-prioritize their organizational focus. Such downsizing may have a significant impact on the most vulnerable populations in the society. 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 PR value, as a way to promote their value to donors. The current setting will also impact organizational membership, as families make critical choices pertaining to the use of available dollars.

Revisiting the Depression Years

In the context of understanding both the events surrounding the Depression of 1929 and the current global economic crisis, it may be of value to examine other similar trends, shared challenges, and potential opportunities that shaped the lives of America’s Jews and its communal institutions.

Unprecedented synagogue growth would accompany the period of the 1920’s. Between 1916 and 1926, for example, the number of congregations in the United States would double, and numerous congregations prior to the Depression were involved in major building fund efforts. These same patterns of expansion are not dissimilar to the data covering the past number of recent years, involving the growth of synagogues, the development and expansion of day schools, and the establishment of capital campaigns to upgrade facilities.

During the 1930’s there was an acceleration of management and labor disputes along with 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 and options to the existing crisis involved Jewish activists supporting various ideological causes.

Based upon 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 would witness a 44% decrease in its membership, while the Brooklyn Jewish Center reported the loss of one-half of its 1,500 families. While the Jewish community has yet to assemble information on the fall-out from this current economic crisis, the loss of congregational members, indications of unbalanced budgets, and the necessity of budgetary and program reductions are being cited by synagogues across the country.

The Depression would spark, in fact, 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 created “Loyalty Days” designed to reach out and attract synagogue participation, employing the slogan, “Every Jew Present and Accounted For”.

Drawing upon the events of this period, the American rabbinate saw a unique opportunity to inspire and galvanize Jews to engage in volunteer service not only with reference to the needs of the Jewish community but also in connection with the larger society; to employ for the first time radio broadcasts and newspaper advertisements as a way to reach out to encourage Jewish learning and synagogue involvement and to speak out on behalf of public policy matters and social justice concerns.

Similarly, fund raising on the part of Jewish charities in the 1920’s achieved extraordinary results; this is not so dissimilar to the recent success of American Jewish institutions covering the past quarter of a century.

As a result of 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 case loads of families in crisis. This new reality would create a debate over the “Stuyvesant Promise,” namely that dating back to the first arrivals of Jews to New Amsterdam (New York); the community had committed itself to the task of caring for its own to the then-Dutch Governor Peter Stuyvesant. The onset of the 1930’s would launch the first partnerships where government agencies working in conjunction with Jewish social service institutions would provide relief services.

Implications within the Jewish Community

Similarly, this economic crisis may well have specific implications for Jewish families and individual Jews, as a result of the prevalence of Jews employed in the financial markets, real estate, and allied fields. Particular segments of the Jewish population will be adversely affected by these market conditions. The poor and near-poor, especially those on fixed incomes, may face particularly difficult times over the course of the months and even years ahead. Students will face rising tuition expenses, while at the same time confronting a shrinking job market.

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 being adversely impacted or whose investment portfolios no longer provide a basic safety net. In addition, there will be families who are unable to maintain their mortgage payments, due to the loss of income as unemployment increases.

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, delaying or altering retirement or forcing individuals and families to make difficult choices.

Similarly in such periods of economic dislocation, there has been historically a corollary rise in anti-Semitism. Historically, there has been an acceleration of hate crimes and the emergence and growth of anti-Semitic organizations. While this nation, and more directly its Jewish community, is in a far different place than in the 1930’s, the economic fall-out can still contribute to heightened social tensions within the society.

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 be experiencing the level of dislocation as the Jewish community as a direct result of the Madoff affair.

Samuel Freedman commented on the particular nature of the intricacies of the Madoff phenomenon noting:

“Their leaders and members overlap like a sequence of Venn diagrams. They bound by religious praxis, social connection, 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.”

The impact of this scheme on the overall health and viability of certain institutions is profound. The larger fall-out related to donor confidence and future non profit business procedures will be significant. The possibility of government intervention, designed to monitor and even regulate investment policies and setting management practices for non profit organizations, could result in the aftermath of this scandal.

Planning for a New Moment in Time

As we brace for the full impact of this transformational period, the long term implications would suggest a far weaker, less-cohesive and well organized American Jewish community. In turn, a communal system weakened by scandal and experiencing economic dislocation will inevitably be less powerful. The results of these structural changes will be profoundly significant as the Third American Jewish Revolution unfolds. Such internal and organizational changes will recast the role and place of Jews within the larger society, as well.

Steven F. Windmueller, Ph.D. is Dean of the Los Angeles campus of Hebrew Union College-Jewish Institute of Religion.