Shrinking Coffers, Mass Layoffs Push Federations Into Crisis Mode

By: Jacob Berkman

Published: March 18th, 2009

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Three of the largest local Jewish federations in the United States announced significant layoffs during the past two weeks, raising concerns about the future health of the country’s main Jewish charitable network.

Since the beginning of March, the Jewish federations in New York, Cleveland and Atlanta have laid off between 11 percent and 25 percent of their professional staffs. Each organization cited shrinking donations because of the economic downturn as the reason behind the moves.

Nonprofits across the board have been hit hard by the recession and forced to enact similar levels of staff cuts. Hillel, Hadassah and a slew of other organizations have all made similar moves, as have Yeshiva and Brandeis universities.

Howard Rieger, the president and CEO of the federation system’s national organization, the United Jewish Communities, expressed significant concern for the system and UJC’s own well-being as an organization that relies on dues from increasingly cash-strapped federations.

“We all know what is going on in the economy, and federations are trying to adjust to the moment,” Rieger said on Monday. “Some communities have been hit harder than others and we know some communities where it looks like the status quo.

“A lot of it has to do with the mix of how leadership in those communities earn their living, and the federations that are adjusting to that and those that have been hardest hit are making the biggest adjustments. As a nonprofit organization, the overwhelming share of your cost is staff. There are other things in terms of infrastructure you can’t cut, and I think you are likely to see more” layoffs.

His comments follow a run of layoffs at major federations, among them:

On March 11, the country’s largest federation, the UJA-Federation of New York, which raised some $153 million in its annual campaign last year, announced it was cutting 52 employees – slightly more than 11 percent of its staff. The federation is 10 percent behind in its fund-raising pledges compared to the previous year and 12 percent behind on collections, and has seen its $675 million endowment shrink by 25 percent.

The same day, the Jewish Federation of Greater Atlanta laid off 14 employees in an effort to cut 19 percent from its operating budget – the second round of layoffs that the federation has faced, according to UJC staff members.

On March 5, the Jewish Federation of Greater Cleveland announced that it had laid off 25 staffers as part of a plan to trim $600,000 from its operating expenses in the face of a $3 million budget shortfall. Donations to the federation’s annual campaign reportedly are down by about $5 million, and its endowment funds have decreased in value by 29 percent.

On Dec. 19, Doug Seserman, the president and CEO of the Allied Jewish Federation of Colorado, announced that the organization was cutting staff by 15 percent.

The Jewish Community Federation of San Francisco recently laid off three staffers, in an effort to help cut $400,000 from its budget, according to the organization’s CEO.

Rieger is warning that the federations are dangerously close to putting their operations in jeopardy if they have to cut more.

“It is a two-edged sword,” he said. “You cut all you can and see how you can work better. But as organizations look to cut, they have and should be cognizant of the future. Federations are not going out of business. The needs that they meet are not lessening; they are growing. In free fall, needs are going to grow.

“Yes, we need to rationalize cuts in operations, but we need to be able to grow for the future. You can’t cut back so much that you can’t grow in the future.”

It’s a message that hits close to home for the UJC.

In May, the UJC cut 37 jobs in an effort to reduce its budget from $40.2 million to $37 million, and it is facing more cuts in the near future.

The organization is under intense pressure from the federations it serves to cut its budget even further. Prior to a February powwow of more than 200 federation leaders in Florida to discuss the future of the UJC, a letter signed by several major federations circulated asking the organization to cut its budget.

Rieger responded at the meetings by offering to slice the budget another 10 percent and is waiting to see if that will be sufficient for the federations. The decision could be made over the next several weeks, as the UJC is set to hold budget meetings soon in Chicago.

This has UJC employees on edge, according to sources within the organization who feel that the UJC already has cut as much fat as it can and now is in danger of cutting into meat and bones.

“If that 10 percent proposal were to be sustained, that would mean that in the course of a handful of years, we have cut our staff by 45 percent,” Rieger said.

“The question for us is no different than the question for all the federations: What do we need to do to sustain operations? What elements of this work that we do would we just stop doing because we have reached the limit on proportionality? The last thing we want to be is equally non-productive in all areas.” (JTA)

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Shrinking Coffers, Mass Layoffs Push Federations Into Crisis Mode

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