Community Bracing For Post-Election Perfect Storm

A Jewish federation system that was beginning to recover from the deepest recession in postwar history could be facing a new perfect storm in the wake of this week’s congressional elections and a tidal wave of voter unhappiness about big government and a runaway federal deficit.

And the reluctance of Jewish federation officials to take positions on debates that will determine how deep some of those cuts will be — starting with the expected push by newly empowered Republicans in Congress to extend and possibly expand Bush-era tax cuts — is making it even harder to defend threatened programs.

“If you believe, as we do, that there is a role for government in solving the pressing needs of the country, there need to be the resources,” said Simon Greer, president and CEO of the Jewish Funds for Justice, a social justice group outside the federation umbrella. “Without sufficient funding, and with all the negative rhetoric about government, you end up with the kind of easy answers that don’t work.”

Federation officials say they can’t speak out on taxes, because there is no consensus in the sprawling organization. Critics say the reason is more centered on objections from big givers who have gained the most from recent rounds of tax cuts.

The explosive confluence of the congressional elections, the nation’s ongoing economic woes and the rising demand for services will shadow this week’s Jewish Federations of North America General Assembly, which begins on Sunday in New Orleans.

The exact makeup of the next Congress was unclear at press time, but there was little doubt Republican clout would dramatically expand and that an early priority will be extending tax cuts and slashing spending.

“It will be very hard to fight significant cuts,” said Josh Protas, vice president and Washington director for the Jewish Council for Public Affairs (JCPA). “It would have been no matter what the election results are, given the very strong pressure from voters to reduce the deficit. With the new dynamic in Congress, that will be exacerbated.”

Groups like JCPA are focusing now on the lame-duck session after the election, but before the new Congress is sworn in, as the last good opportunity to get through some key human service legislation, including reauthorization of the Child Nutrition Act “because it will be much harder in the next Congress to get through even very important and popular programs like this,” he said.

Draconian spending cuts and huge new tax cuts are unlikely, since President Barack Obama still wields his veto pen and the GOP will be nowhere near a veto-proof majority.

But there’s little question Republican leaders have put the issues at the top of their legislative to-do list — and that a Democratic president and congressional leadership that will read this week’s political tea leaves with an eye on 2012 will be much more likely to compromise on some tax-and-spending issues, said Kean University political scientist Gilbert Kahn.

“The Republicans will get some of the tax-cut extensions they want, but not all,” he said. “There will be steadily mounting pressure on funding for human services; there will be tradeoffs, and nobody will get everything they want.”

For JFNA, the political shift couldn’t have come at a worse time.

The figures for 2009 show steep declines in giving for a number of federations, including groups in San Francisco, Chicago, Boston and, to a lesser extent, New York.

Recently the Jewish Federation of Greater Phoenix, facing financial hardships because of that city’s devastated economy, let go eight employees and announced a major belt tightening due to a “significant reduction in revenues.”

While federation officials insist the Jewish groups are faring better than philanthropies in general, a Chronicle of Philanthropy list of 400 top nonprofits revealed that overall fundraising for the largest Jewish charities was down by an average of 18.5 percent in 2009 — almost twice as high a rate as the list as a whole.

Looking at 2009 figures, “the federation donor drop-off is troubling since the demand for essential services have concomitantly increased,” said Mark Pearlman, a New York investment strategist and nonprofit activist who recently compiled and analyzed published statistics on Jewish philanthropies. (Pearlman writes the JInsider column in The Jewish Week.) “With the exception of Baltimore, all communities were down double digits. In the one year, more than $200 million disappeared from the federation system. Even if there is slightly positive growth in the future, it will be almost impossible to recover a material portion of these losses.”

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Many federations report a better outlook in 2010, but with the economic recovery still in doubt “the long-term outlook is such that this may very well not be a one-time-only event or that we will restore a material portion of these losses in the near future,” Pearlman said.

John Ruskay, executive vice president and CEO of the UJA-Federation of New York, said that while the 2008-2009 period saw significant declines, the premier federation group did better than most religious charities. Since then, donations have been increasing “and we’re confident the recovery will continue. It will take time to get back to the pre-crisis levels, but most of our agencies are funded at 99 percent of the pre-crisis level.”

Still, the group has reduced staff by 19 percent, he said, “and we have reduced some grants. We feel we are navigating these waters relatively well.”

He agreed that new government spending cuts are inevitable and that the group is undergoing “a very serious process” of preparing for them.

“Philanthropy cannot offset substantial government reductions,” he said. “So UJA and others will be forced to say: what programs are absolutely essential? What can we do to help government agencies reduce budgets in ways that are compassionate, and how can we use our philanthropic dollars in ways that are most essential to the Jewish community?”

He argued that “this has nothing to do with the outcome of the election. Government spending is coming down, and Jewish federations and others have to get crystal clear about the impact on our communities.”

Barry Shrage, president of the Combined Jewish Philanthropies of Boston, said his group is “prepared to fight as hard as we can to retain funding. That doesn’t mean we won’t be decimated, but right now we feel we’re in a pretty strong position to deal with whatever comes our way — not that there won’t be losses, not that people won’t be hurt.”

Part of that planning, he said, is “staying very close to donors and understanding their changing interests.” Jewish federations can also help insulate programs from looming federal cuts by working more closely with local foundations as well as the big national ones, Shrage said.

And Jewish federations will have to get smarter about advocating with government funding agencies at every level, he said.

“Irrespective of what the congressional majorities look like, there’s a huge wind blowing from voters concerned about the budget deficit and the size of government,” said William Daroff, JFNA’s vice president for public policy and Washington director. “That will certainly have an impact on the way the next Congress legislates.”

Daroff said his priorities are to “hold the line on important programs that the Jewish social service agencies appropriate for vulnerable populations — and come up with innovative solutions that can do more with less,” he said. “The answer isn’t to support putting more money into the same old vat, but to look for new, exciting and innovative programs that we can advocate on the Hill.”

He said that in the end, the partisan composition of the next Congress is less important than the great confluence of forces headed JFNA’s way

“We have to navigate this in a way that is consistent with there being a vital, vibrant social safety net that helps those in need,” he said.

Richard Wexler, a former national UJA chair and now an outspoken critic, says he isn’t so sure the Jewish philanthropic world is prepared for what’s to come.

“To some extent the federation world has been like the proverbial ostrich; the shock of pulling its head out of the sand is going to be even more extreme than when these things happened in the past,” he said.

He called the JFNA Washington office “a singular blessing … that can at least maximize the revenues that may be available” and said that some federations are doing a good job of preparing for a crisis that “is going to be even more extreme than it’s been in the past.”

Then he expressed doubts.

“Look at our national system, and mostly what you hear is silence,” he said. “You have to wonder how prepared we all are to deal with what’s ahead.”

There’s also the question of whether JFNA can effectively advocate on behalf of programs facing potentially big cuts while taking a pass on the hottest debate of the upcoming congressional session — extending and expanding tax cuts — since the outcome will have an immediate impact on available government revenues even if the long-term impact is salutary.

While conceding that every Jewish organization has a constituency to which it must respond, Sammie Moshenberg, Washington director for the National Council of Jewish Women, said “it is really difficult to talk about funding cuts and worry about human needs funding and not address the issue of revenue. People may disagree about tax strategy, but in the face of scarce resources for human needs we believe that when it comes to advocating for human needs, the other side of the coin is revenue.”