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Fiscally, Nonprofits Strive to Stay on Target

May 21, 2009 By:
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Before the financial crisis hit, all signs pointed upward for Moving Traditions.

The national organization -- founded four years ago and based in Jenkintown -- fosters Jewish identity through the lens of gender. It had expanded its signature program, "Rosh Hodesh: It's a Girl Thing!," far beyond its local roots, establishing groups throughout the country. And donors appeared willing to help the organization carry out a range of new projects, according to its executive director, Deborah Meyer.

Then came the market collapse in September and October, followed by the Bernard Madoff scandal in December.

While the organization did not have funds invested in what everyone's been calling a Ponzi scheme, the Picower Foundation, which had pledged a $75,000 grant to Moving Traditions, had roughly $1 billion invested with Madoff.

Wiped out, the foundation closed its doors in December.

Needless to say, that funding source disappeared.

As a result, Moving Traditions has had to implement some stringent fiscal measures, including laying off one full-time staff member. (It now has a total of five full-time and one part-time employee.) It has also ceased contributing to employees' retirement accounts, and trimmed the overall budget by 20 percent, from $1.2 million to under $1 million.

"It breaks my heart to say that because we were on such a growth trajectory," said Meyer.

A Stretch of Penny-Pinching

Despite some small signs of a turnaround in the economy, Jewish organizations throughout the region -- from start-up groups to regional chapters of national organizations such as the Anti-Defamation League -- are bracing for an indefinite period of penny-pinching.

Many groups have been forced to make layoffs and institute pay cuts; others have had to scale back expectations and confront a stark environment for fundraising. Most groups insist that their work has not been substantially diminished, even if they've had to make do with less.

Meyer said her group is still expanding its Rosh Hodesh program, and is now working on a pilot program geared to teenage boys.

"The upside for us is that there is a lot of enthusiasm for the work that we are are doing," said Meyer. "We're trying to keep very focused on what's essential for us to do."

The true effects of the economy on the Jewish nonprofit world are just beginning to be felt, according to Rabbi David Teutsch, a former president of the Reconstructionist Rabbinical College, who now consults for synagogues and nonprofit organizations across the country.

Tectonic shifts that could reshape the communal landscape may be in store, with mergers becoming commonplace, he said.

"This is certainly the most traumatic time in Jewish life that has taken place since the establishment of the state of Israel," he asserted. "It is reasonable to believe that it could take two to five years for the economy to recover. That means another five years before Jewish organizations' incomes come back all the way."

The only upside, he said, was that since a lot of groups have already announced "sufficiently draconian cuts for the coming year," there is "no reason to believe there will be another round of cuts after that."

Robert I. Evans, founder and managing director of EHL Consulting, which assists nonprofit organizations in fundraising campaigns, offered a less dire assessment of the charitable landscape.

Evans -- who in the 1980s headed up the annual campaign for the Jewish Federation of Greater Philadelphia and served as regional director of State of Israel Bonds -- said that donations haven't dried up for Jewish organizations.

He insisted that, for the nonprofit sector at least, "the sky isn't falling."

But he said that there's a shift away from seeking funding for building projects -- the $150 million campaign to build a new National Museum of American Jewish History notwithstanding.

In addition, Evans noted, organizations that provide social services like job-training or feeding the hungry are having an easier time soliciting support than arts and cultural groups.

Still, the recession has forced many agencies to make tough decisions. The question each faces remains: How much can be cut without harming the core of their activities?

In interviews with a nearly dozen local groups, the recurrent theme was the need to adjust to the new reality. For example:

· The Anti-Defamation League's national office imposed an across-the-board pay cut for all employees.The ADL's Philadelphia office also decided to lay off two employees, according to Barry Morrison, ADL's regional director.

· Hadassah, which says that it lost $40 million in Madoff's alleged scheme, laid off one-quarter of its national staff, about 80 people. The Philadelphia office eliminated one position and -- before the Madoff loses came to light -- decided to downsize to a smaller office, saving the agency $15,000.

· The Jewish Funds for Justice -- which in December announced it lost $3.9 million with Madoff -- has decided to close its office in Philadelphia, laying off eight people. (Created three years ago from a merger that included the Philadelphia-based Shefa Fund, it seeks to promote social and economic equality by investing in low-income urban neighborhoods throughout the country and writing grants to help build other groups.)

The monetary difficulties faced by many of the city's corporations and law firms, including the dissolution of WolfBlock, has proved a major obstacle to nonprofits used to relying on private-sector support.

"In the past, we could look at a law firm, organization or business to sponsor us with a table" at their fundraising events, said Ilana Krop Wilensik, area director of AJC's Philadelphia/Southern New Jersey chapter. "Now, they are only able to help us out by buying a couple of seats. That's a huge difference."

So, rather than the 200 people who normally attend its major fundraisers, 85 turned out for its April 19 event featuring Pennsylvania Sen. Arlen Specter -- and that was before he made the grand announcement that he was switching parties.

The ADL's Morrison stated that its April 28 fundraiser featuring former President Bill Clinton and current Philadelphia Mayor Michael Nutter fell short of expectations in terms of dollars raised, although he declined to cite figures.

In reaching out to individuals, some organizations are trying to find way to ease the financial burden of giving during these difficult times.

"Without a doubt, donations are down for us. That is natural, because we are not immune," said Claire Winick, director of American Associates, Ben-Gurion University of the Negev's regional office in Jenkintown.

Winick noted that, in order to entice donors, her office has focused on planned giving -- an arrangement where individuals can set aside a fixed sum to go to the university after their deaths, in exchange for an annual tax break for the remainder of their lives. But that isn't even an option for donors under 65, and admittedly won't help the organization broaden its appeal to younger people, noted Winick, something it's been trying to do for some time.

A Different Set of Challenges

Small, start-up organizations face a different set of challenges than larger ones. While the ADL and Hadassah may be familiar to the broader community, fewer people know about the Friendship Circle, a Chabad-affiliated organization that runs a variety of programs for special-needs children and teens.

Rabbi Zev Baram, who heads the local arm of a national program, said that he's slowly built up a donor base through word of mouth, but supporters are now reticent to introduce him to friends and other potential donors because money has become a much touchier subject. He noted that a recent fundraiser fell $20,000 short of its goal.

"The place we have had to cut is P.R. and community outreach," said the English-born rabbi. He and his wife have been getting part-time salaries to cut costs.

Despite everything, Evans said that he expects when the data comes in, it will show that the amount Americans have given to charity during this recession will surpass many expectations.

Sounding an optimistic note for the future of Jewish nonprofits, he declared: "Americans are the most generous people on the planet." 

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