New Economic Challenges, New Opportunities:
The Unfolding of the Third American Jewish Revolution
by Steven F. Windmueller, Ph.D.

Over the past several years, we have been witness to the unraveling of the global economy and more directly the American enterprise. This economic “tsunami” has led to a fundamental reordering of the structural and financial well-being of many core institutions. In particular, this upheaval is having a profound impact on the American Jewish community.

Harvard economist Kenneth Rogoff suggests that America is experiencing its “Second Great Contraction” (the first involved the Great Depression). In such an economic setting, output, employment, debt, housing prices, and equity can take four or more years to recover. He wrote recently: “The difference between ‘contractions’ and ‘recessions’ is that the former last much longer and requires a different medicine to cure the economy.” Rogoff sees the fiscal crisis today as more reflective of the Depression than a traditional recessionary cycle. This school of economic thought holds to the view that government must find an alternative solution than simply introducing short-term stimulus spending.

Proponents suggest that as a society we are experiencing a reordering of our core social fabric and structure. The economic outcomes and new social realities will require us to think differently about certain basic elements, including “work”, “membership” and “community”.

Revisiting the Depression Years: Insights for Our Times

In the context of understanding both the events surrounding the Depression of 1929 and the current global economic picture, it may be of value to examine similar trends, shared challenges, and potential opportunities that shaped the lives of America’s Jews and their communal institutions during this earlier period that may provide lessons for us.

Unprecedented synagogue growth would accompany the decade prior to the Wall Street Crash of 1929. Between 1916 and 1926, for example, the number of congregations in the United States would double; 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 years, involving the growth of synagogues, the development and expansion of day schools, and the establishment of capital campaigns to upgrade facilities.

Based upon a 1936 survey of 456 congregations in the Metropolitan New York 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 the complete data on the fall-out from this most recent economic crisis, the loss of members and the necessity of budgetary and program reductions are being cited by synagogues and other institutions across the country.

The Depression would spark 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” and promoted organizing campaigns invoking the slogan: “Every Jew Present and Accounted for”. Over the past three years numerous Jewish communities established special funds to assist families in crisis and to join with other civic groups in providing additional services and financial support.

The American rabbinate saw a unique opportunity during the 1930’s to galvanize and engage Jews in volunteer service not only with regard 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, not dissimilar to the recent success of American Jewish institutions covering the late 1990’s and early years of the 21st 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 the first arrivals of Jews to New Amsterdam (New York, 1654) had committed themselves to caring for their own as part of an agreement imposed by the Dutch West India Company and Governor Peter Stuyvesant. The onset of the 1930’s would witness the first partnerships between Jewish social service institutions and government agencies in jointly providing relief services.

The New Economic Contraction: Implications for our Community:

If the current economic climate reflects a national “contraction” rather than a recession, then our financial strategies and institutional planning will need to incorporate a different and distinct course of action. The strategies that employed will have a profound impact on how our synagogues, agencies and organizations will operate as part of this lengthy period of economic transition.

What are the implications for our communities?

1. Employment: As 80% of institutional budgets are related to personnel, there may well be the need for further downsizing and the freezing of non-essential positions, along with a decline in future job creation. For those entering the work force, in the near term, fewer positions will be available. In turn, we can expect employers to continue to downsize positions, reduce salaries and contain benefits. Work itself is taking on a whole different definition as a result of these fundamental economic changes, as we witness the retooling and restructuring of the American workforce.
2. Revenue: As the market undergoes further adjustment, donors will once again recalibrate their discretionary giving and foundations will reprioritize their options, resulting possibly in a loss of revenues for institutions.
3. Investments: Earnings on investments will show mixed results, while interest rates in the near term will remain low. These fiscal realities will have a direct impact on anticipated income and the corresponding need to reduce or hold operational expenditures.
4. Membership: Just as the corporate sector is reporting a decline in new purchases and business seems unwilling to expand its investments, there has been a corollary decline in new memberships, and institutions, in turn, may face a more difficult time in maintaining existing members due to competing financial pressures.
5. Operational Costs: Rising expenses will add further pressure on already stripped-down budgets.
6. Mergers and Acquisitions: In this current environment, specific conversations and actions related to mergers and collaborative ventures are re-emerging. At all moments in time, collaboration is at best difficult, but when dealing with these emerging financial complexities, the value of collective action and the promotion of institutional partnerships provides incentives for embracing this option.
7. Government Support: There will be fewer federal and state dollars available for entitlement programs and other social service delivery resources.
8. Capital Expenditures: There are noticeable delays in launching new capital campaigns, the expansion of services and programs, and the growth of institutional activities. Just as the corporate sector is reluctant to expand its base of operations, many nonprofits have reported the curtailment of new initiatives at this time or acknowledge that they are moving more cautiously into such ventures.
9. Retirement and Transition: The anticipated transition of a number of senior managers and institutional leaders may be delayed as a result of the uncertainties of the financial markets and the resulting loss of pension benefits.
   
10. Scarcity Factor: Organizations continue to retool around “doing more with less”. Increased consumer pressures will demand more of our social service and human resource institutions to deliver vital programs, especially to those most vulnerable, in a period of diminishing resources.

Five issues will impact the management of our institutions:

1. How will we lead and continue to inspire and motivate in this period of contraction and reformulation?
2. What will we emphasize by way of programs and services, in other words what audiences are we seeking to serve in an environment where such choices are critical?
3. In what ways will we work with other institutions and the communal system to ensure that core services are provided and basic needs met?
4. In this uncertain setting, how will we engage, motivate and organize our staff? In what ways ought we to be retooling and training our professionals to operate in this environment?
5. How do we sustain the commitment and loyalty of our key stakeholders, our donors, clients, board, and community partners?

Moving Beyond:

There are as well some external threats or challenges that have emerged in the course of these recent financial uncertainties. Two related themes are introduced below:

An Assault on the Collective Model:

As a people who are committed to the concept of community with its myriad of symbols and actions associated with shared action and collective obligation, how do as Jews respond to the push toward individualism and separatism that seems to have captured both the public square and the marketplace at this time?

For those in government and beyond who are opting to separate and de-couple longstanding arrangements and connections around federated systems and national movements, a second take might well be in order. How else can a society or a religious community deliver core services, address common needs, or engage the talent and resources of our very best and brightest to most effectively meet our social and communal challenges?

Beyond our commitment to encourage a sense of wholeness and unity at a time of division and distrust within our national psyche, we as religious community must advance the notion of compromise and connection. Our tradition speaks to the value of promoting and defining a course of action amidst a house divided. Consensus and compromise must trump ideology and dissent. Judaism bears witness to the process of deliberation and negotiation over the politics of rejection.

Our Stake in the American Story:

We are heavily invested as a community in this nation, as we have thrived in this environment. In prior times of general social discord, structural disarray, and economic dislocation, minorities including our own people have experienced the effects of such a crisis, as it can foster intolerance and violence.

As some core social and political assumptions begin to unwind, we could encounter a dangerous shift within the public square. Historically, when facing a vacuum of leadership and the absence of a shared vision, social systems are weakened, which allows for individuals and selected groups to emerge, often from the periphery, to target institutions and leaders for their failure to foster solutions or to place blame on particular constituencies as the cause for such loss of confidence and direction.

Historically, as a community, we were dependent on American democracy to preserve and protect our status and that of our fellow citizens, promote our interests and those of others while always advancing those social and political causes that uniquely reflect the distinctiveness that represents the United States.

In this moment where our nation has seen its governance system falter and its economic infrastructure struggle amidst global competition, the Jewish community will need to promote the values of collective engagement in an effort to reframe the American democratic model.

As Jews, we have encountered significant periods of transition over the course of our history. Clearly, these events and trends have a universal quality to them, but they would seem to hold as well some particular meaning for our community.

As a people, who are invested in the collective, maybe we can promote a sense of the value of shared obligations. Our culture is framed around the significance and centrality of community. We are invested in national and communal systems that thrive on the basis of integrative engagement. In turn, we speak a language that references such ideals as collective responsibility. It is in our interest to promote this model of civic connectivity.

During such an uncertain period, it is likely that institutions are continuing to face some of the same structural and policy challenges that were addressed initially at the outset of the 2008-09 fiscal crises. Managing and directing institutions in this transitory period will require a new form of leadership intelligence, where nimbleness and strategic creativity may be critical in managing assets, building board support, and sustaining donor engagement and support.

In such periods of transition, institutional debates over mission and focus are more pronounced. At this juncture, some management advocates will argue that organizations ought to extend their core functions, even if it might undermine the basic fiscal well-being of the agency in the short term as a means of capturing a broader segment of the market share. Possibly a wiser course involves reaffirming one’s core mission and maintaining central functions.

Branding one’s product or services in these difficult times allows an organization the opportunity to enhance its credibility and visibility. Securing market niche would seem the better strategy and institutional priority.

The impact on our community will be profound as this economic cycle is likely to produce the reconfiguration of institutional operations. In some cases, we will be witnessing the closure of certain organizations and the merger of others. In the final analysis those organizations with significant financial reserves, endowments, and a supportive membership base are more likely to succeed and survive. Institutions with a strong leadership bench will exhibit the necessary staying power to offset internal tensions, to more effectively manage financial pressures and complex policy choices, and to ensure board and staff commitment to the core elements of the enterprise. Beyond the presence of financial resource benefits, nothing would seem more critical in this setting than to have in place a quality leadership team that understands the value of effective and sustained communications with its key constituencies. Keeping board members, staff, donors and other stakeholders committed to the challenges at hand remains the central priority for the senior professional staff.

New Paradigm: American Jewish Institutions and the 3rd Revolution

As a result 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. New generations of Jews are moving past their parents’ traditional affiliations, creating their own expressions of Jewish belonging and engagement.

Over the past quarter-century Jewish community experienced extraordinary institutional growth and communal innovation. The “Second American Jewish Revolution” which this writer has addressed 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 a twenty-five year timeframe, 1983-2008, 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 and in turn reflect the demographic and social changes underway within our society. This new model would stimulate institutional experimentation and correspondingly result in the unraveling of certain traditional organizations.

As a result of these new and changing economic and social realities, a different institutional scenario is now being scripted. This 3rd Revolution represents an amalgamation of some of the attributes from both the fist and second revolution, in addition to taking on the unique demographic and economic characteristics that define this current environment.

Unpacking the New Paradigm:

Transitioning from One Revolution to the Next:

In the end the impact of this economic crisis will lead to a reduced, more-streamlined communal and religious system.

The American Jewish system is a 9.7 billion dollar annual enterprise that cannot be sustained as a result of the current economic realities. As a result, not all of America’s Jewish non-profits will survive this economic transition. There is substantial evidence that major structural reconfiguration is occurring across the institutional spectrum within the Jewish communal and religious system. Those institutions that survive these structural and economic challenges are already employing a different set of measures by which to evaluate their success.

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 often 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.

As nonprofit 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. Correspondingly, in the current setting organizational membership and donor support is being adversely affected, as families and individuals are forced to make critical choices.
Downsizing will be evident everywhere, with profound implications on the ability of institutions to deliver critical services. Institutions without multiple streams of funding will be the most directly imperiled. In response to limited financial resources, organizations are introducing alternative and creative models of managing their operations as they strip away significant elements of their infrastructure in order to gain economic viability while maintaining credibility with their donors and key beneficiaries.

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 believe that one can continue to move from “good” to great?
3. What are the keys to governing and managing from these “narrow” places?
4. In such a highly competitive and complex environment how do organizations offer donors something particularly compelling that engages and sustains their trust?
5. Are the stakeholders changing in this current scenario or will they now play different roles?

Assessing the Conditions on the Ground:

In these challenging and uncertain times, many new realities can be felt at all levels of our society. 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. 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. In such difficult settings, conflicts tend to accelerate between labor and management.

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.

Implications within the Jewish Community:

Similarly, this economic crisis has had specific implications for Jewish families and individual Jews, as a result of the prevalence of Jews in the financial markets, real estate, and allied fields. Particular segments of the Jewish population have been adversely affected by these market conditions. The poor and near-poor, especially those on fixed incomes, are facing particularly difficult times. Students must contend with rising tuition expenses; while at the same time confront 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, as we can document, there are families who are unable to maintain their mortgage payments, due to the loss of income and as property values have collapsed.

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.

Planning for a New Moment in Time:

As we brace for the full impact of this transformational moment, the long term implications would suggest a far weaker, less-cohesive and well organized American Jewish community. The results of these structural and social changes will be profoundly significant as the 3rd American Jewish Revolution unfolds. In turn, a communal system experiencing economic dislocation and a demographic reconfiguration will inevitably operate differently and must in turn manage its resources more prudently. Finally, the impact of these new realities will recast the role and place of Jews within the larger society as well.

Steven Windmueller is the Rabbi Alfred Gottschalk Emeritus Professor of Jewish Communal Service at the Los Angeles campus of Hebrew Union College. His writings can be found on his website, thewindreport.com.