Friday, July 25, 2008

Economy puts pressure on Jewish community

From: The Jewish Journal

The food pantry would not open for another 40 minutes, but already about a dozen people were waiting in the parking lot, many holding umbrellas to shield themselves from the blistering San Fernando Valley sun. Before day's end, more than 100 people, Jews and non-Jews alike, many coming on foot or by bus, would visit SOVA's Van Nuys pantry to apply for food stamps, register with a dietician and, most certainly, receive the groceries they need -- literally -- to put dinner on the table.

So began a regular day at one of the three pantries SOVA Community Food & Resource Program operates throughout the city, evidence of an experience that has become familiar for a growing number of indigent families across Los Angeles.

These are tough times for all Americans. The drama working its way through the economy -- surging gas and food prices, crises in the housing and financial markets, climbing unemployment rates and a dismal overall outlook -- has been written into the American Jewish story, too. That much is abundantly clear from a trip to SOVA.

Monthly traffic at the food banks has more than doubled since 2002, to about 5,600 client visits in June, the busiest month since Thanksgiving. Only about 10 percent of those who come are homeless; the overwhelming majority are unemployed or, increasingly, underemployed.

This is, of course, exactly the need SOVA exists to fill. But these days there is no way its 15-person staff can fully compensate for the swelling demand on resources and the shriveling of public and private support.

"You are really talking about a perfect storm in the social service world of not being able to raise private dollars to make up for the sagging or lagging public dollars," said Paul Castro, executive director and CEO of SOVA's parent, Jewish Family Service (JFS).

The scariest reality for many organizations is how unclear the future remains. So far, many charities report that fundraising is on pace with last year, but at the same time, officials admit the situation could go south in a hurry if the economy doesn't improve. The demand for resources continues to climb each month for many, but social service organizations' financial health won't be fully known until donors write their final checks for 2008.

Already there are signs of belt-tightening: Last month, when SOVA's executive director left for another job, she was replaced by Joan Mithers, JFS' director of community programs and staff training. Mithers new role was blended with her old, and that position was frozen. More trimming is expected as soaring food costs continue to push SOVA's $1.5 million budget upward. And that is assuming end-of-year fundraising can live up to budgeted expectations.

That story could be told this summer over and over throughout the world of philanthropy in general and Jewish communal service specifically.

"It's really a catch-22," said Jay Soloway, director of career services for Jewish Vocational Service, which through June this year has seen a 50 percent spike in referrals from SOVA and an increasing number of clients holding master's degrees.

At the same time, in May, United Jewish Communities (UJC), the umbrella organization for North American federations, adopted a $37 million budget that was $3.2 million lighter than the previous years and included the reduction of 32 jobs.

Last month, the American Jewish Joint Distribution Committee (JDC) announced that it would cut 60 jobs, including 52 in Israel, to deal with a $60 million budget deficit, due, in large part, to the dollar's dropping value and the rising cost of work abroad.

And locally, Steven Windmueller, dean of the Los Angeles campus of Hebrew Union College-Jewish Institute of Religion, said the Reform college is evaluating the practicality of shaving a day off the workweek. Windmueller said other institutions and organizations are doing the same.

"The question [nonprofits] have to come up with," Windmueller said, "is whether this is viable for their operations, for meeting state law with hourly earners and whether the expectations of their donors and members and clients can be met in the context of a four-day workweek."

Some organizations will choose to borrow heavily to sustain programming, while many will cut back services and reduce staff, said Stacy Palmer, editor of The Chronicle of Philanthropy. Others will choose to collaborate or merge with another organization, and a few will likely call it quits.

Nevertheless, a broad survey of Jewish schools, synagogues and social service agencies big and small -- from the JDC to Project Chicken Soup -- depicts a mosaic of caution and pragmatic optimism, an awareness that the sky is not yet falling, but it very well could.

"We all have to proceed forward knowing that there is this ambiguity, there are a lot of pieces of a complex puzzle which are not filling in the gestalt of the communal reality," John Fishel, president of The Jewish Federation of Greater Los Angeles, said in an interview last week. "I start from a premise of 'let's be practical; let's assume the best, but be aware that the best may not be able to be achieved.'"

That perspective is a reflection of just how jarring the decline in the American economy has been during the past 12 months.

Inflation nationwide was up 5.5 percent in June from the previous year. California's jobless rate climbed to 6.9 percent. Stocks have fallen sharply, with the S&P 500 off about 22 percent last week from its October peak.

Home prices are dropping fast, too, the result of a combination of prices artificially inflated by speculators, fraudulent or high-risk mortgage lending and some resultant mass hysteria. New construction, a huge source of labor in California and nationally, has stalled; lenders are struggling to stay afloat, with IndyMac leaving the loan business and laying off 3,800; the government is considering how to secure Fannie Mae and Freddie Mac; and, according to, Los Angeles County foreclosures spiked to 14,505 in the second quarter, almost quadruple the number during the same period in 2007.

Bad news has been coming even from places that report the news -- the Los Angeles Times last week began its latest round of cuts, about 250 employees, including 17 percent of the newsroom. Questions about whether the United States is in a recession or on the cusp of one have been pretty much settled.

The query now -- tantamount to both individuals wrestling with life changes and the organizations seeking to help them -- is: for how long?

"The effects of the housing contraction and of the financial headwinds on spending and economic activity have been compounded by rapid increases in the prices of energy and other commodities, which have sapped household purchasing power even as they have boosted inflation," Federal Reserve Chairman Ben S. Bernanke told the House Committee on Financial Services last week.

"As events in recent weeks have demonstrated," he added, "many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus far credit quality, remains uncertain."

For Avi Edery, a 35-year-old Israeli native living in Woodland Hills, "sapped purchasing power" began a breakneck decline in the fortune of his home-improvement business.

"This winter was really bad," Edery, said. "Beforehand, we could just go into a house, and people would pull off money from their equity, whatever they wanted, and just roll with it. Now, nobody."

Edery and his wife fell behind on their rent. His credit was poor and their savings small. Traditional borrowing wasn't much of an option.

But Jewish Free Loan Association, with an interest-free emergency rental loan for up to $3,000, offered enough to stem the tide. Edery applied last month and was quickly approved.

"It's not a lot of money," he said. "But every penny helps when you are in need."

And who isn't in need when Jewish life can be so expensive? Synagogue dues, Hebrew school, summer camp, kosher food, the occasional trip to Israel -- the individual costs of Jewish involvement -- can significantly tap into "the discretionary income of practically every middle-class Jewish family in America," said Gary A. Tobin, president of the Institute for Jewish & Community Research in San Francisco.

When times are tight, some families look to congregational membership and Jewish education as significant expenses they can cut.

"A year ago, people still had savings, and they did not think it would take a year for them to find another place of employment," said David Brook, executive director of Temple Aliyah in Woodland Hills, a congregation heavy with real estate professionals. "Now we are seeing those same people come in, and they have not found employment, so they are either starting their own business or going into a new industry. We as a synagogue have to be there to help them. These are families that have children in our religious school and our preschool, and we will not deny a Jewish education to any of them."

Life was precarious enough last year for many congregants at Temple Aliyah, which budgeted about $50,000 for members needing dues reductions. These members, some paying as little as $180 for an annual membership that a family of four would ordinarily pay as much as $2,500 for, accounted for about 5 percent of the temple's 900 families.

"Seventy-five percent of the congregants who were asking for dues reductions were Realtors. And we also had two open administrative assistant positions, and we had Realtors applying for those," Brook said. "Then midway through the year, we had another open position, and we had Hollywood people applying because of the strike."

The temple budgeted 10 percent more for dues relief this year but won't know just what is needed until membership renewals roll in as the school year and High Holy Days approach. Unfortunately, Rabbi Stewart Vogel said, there are bound to be some who can no longer afford membership, but rather than ask for assistance, they will disappear from the synagogue community.

"I've had families who I tell, 'This is the job of the synagogue,'" Vogel said, "and they still don't take the help, because it makes them uncomfortable."

At Shalhevet School, where a Modern Orthodox high school education runs about $23,000 a year, one-third of students receive financial aid, Rabbi Elchanan J. Weinbach said. There has been an increase in scholarship applications from middle-class families.

"The wealthier families, thank God, can afford the cost, and the families at the bottom are the easiest to get assistance for," said Weinbach, who took over as head of school last month. "It's really the families who are somewhere in the middle that become the most painful cases."

In an effort to expand Shalhevet's scholarship fund, the school has been reaching out to affluent members of the community who have the means to increase their giving. Shalhevet, however, is not the only Jewish institution or organization turning to this community of higher-earning, committed Jews.

"In these kinds of troubles, there are some people who reach back and become more generous," Tobin said. "In every war Israel has fought, for example, people reach back. The capacity to do so is there. It's a matter of leadership and will."

When the real estate market was piping hot two years ago, friends courted him to build new homes on two parcels they had bought in Woodland Hills. They told Doustan the plans had been finalized and approved, and they offered $250,000. He bit.

But there were problems, and those only got worse as the market cooled. The plans hadn't been approved, and the partners' construction loan application had been denied. Doustan's payment was C.O.D., so the longer the project lagged, the more he had to tap into his savings, and the more he felt compelled to finance building expenses himself.

"After I got all the plans approved -- building, soil report, everything -- and I am already short $70,000," Doustan said, "they applied for a construction loan."

It was approved this time around in April 2007, but then the credit market soured, and the loan was cancelled before being administered.

Doustan finally cut his losses -- 60 years old and single, he became the suddenly unemployed owner of a $457,000 two-bedroom Woodland Hills townhouse, in which he sunk another $50,000 in upgrades and has since watched it fall in value roughly 20 percent.

"I had a very good business; I have been living on my savings," Doustan said. "It's almost reached the end, because everything has a limit. I haven't been paid in two years."

"The worst thing for me is I am not doing anything," Doustan said, eating baba ganoush during lunch last week at the Green Cottage Persian restaurant. "I feel restless. In New York, I used to work seven days a week. I feel worthless."

Doustan now finds himself in the place that many recent college grads do: He doesn't know what he wants to do for a living or how to search for a job, having never even drawn up a resume. But unlike the typical career virgin, Doustan has a healthy home mortgage.

So, four months ago, he turned to Jewish Vocational Service (JVS) after seeing an ad in The Jewish Journal. A career counselor helped him draft a resume and enrolled him in a four-week JVS course at the New JCC at Milken for seniors being pressured back into the workforce, as well as a logistics-training program at Santa Monica College. The counselor also is assisting Doustan with the job search.

"I am not financially desperate," Doustan said. "But I am desperate to do something."

The notion that a butterfly in Singapore could cause a tornado in Kansas seems an accurate parallel for the relationship between the health of industry and charity. When fortunes cool, donors, from the largest corporations and private foundations to the humblest of wage earners, have less money to give away. Soon, so, too, do governments. Eventually, reductions in prosperity trickle down to nonprofits.

"At our dinner last year, there were a number of financial service companies that had historically been big supporters, and when they are firing CEOs and laying off workers, one of the first things that gets cut is charitable donations," Mitch Kamin, executive director of Bet Tzedek Legal Services, said shortly after the organization's new fiscal year began July 1, on the eve of its big annual fundraiser, last Saturday's Justice Ball.

"Our overall fundraising numbers were not down, but I'm concerned about this coming year as companies and major donors and foundations are all looking at the impact of the economy on their giving," Kamin said. "It's not that people are walking away, but funders are cautious about what they support right now and how much they support."

At Project Chicken Soup, which delivers kosher meals two Sundays a month to 105 people in the county living with HIV/AIDS, slightly fewer volunteers have been participating lately. This partly is a symptom of summer, President Paul Chitlik said, but also could be tied to the cost for volunteers of commuting in and delivering the meals. What is clear is that donations, which usually increase this time of year, are flat. Food prices, on the other hand, are "spiraling."

"We have to do more fundraising to cover that," Chitlik said of the charity, which has a budget of about $100,000 and one 30-hour-a-week employee.

December represents the zero hour, the time for assessing just how close nonprofits came to their fundraising targets. This often is the case, but during a downturn in the economy it is especially so. A significant amount of supporters who commit in the first three quarters don't write their charitable checks until after Thanksgiving; many smaller-fund donors don't give at all until reviewing their year-end finances as New Year's Day approaches.

The Federation through mid-July, for example, was outstripping last year's fundraising, receiving donations and pledges of $35.1 million from donors who last year gave $30.3 million to a $49.8 million campaign. But Chairman Stanley Gold said in January he wants to increase fundraising this year by at least 10 percent, and the $14.7 million needed to equal last year's campaign isn't a gimme.

"We are going to be hopeful and just continue to push until Dec. 31, and then do the calculations on what we have," Fishel said.

Many organizations are now evaluating the easier decisions: prioritizing programming, paring travel expenses through reductions in staffing and frequency, looking for ways to work with other agencies. But there is no simple solution to the overall problem, and nobody knows how long the economic turmoil will last.

"Anybody who tells you they know the answer to that question is someone you should turn tail and run away from, because nobody knows," Tobin said. "This is one of those cases where you plan for the worst, and hope for the best."