As a global recession looked increasingly likely this week, officials at UJA-Federation of New York said they were prepared to dip into their reserves to help sustain vital services here for those in need.
“The reserves will be available during acute crises, whether to rescue Jews globally or to assure that those in our community can live in dignity,” said John Ruskay, the organization’s executive vice president and CEO.
Irv Rosenthal, the group’s chief financial officer, said simply: “If we need to dip into our endowments, we are prepared to do it. No Jews will go hungry and nobody will be without a roof over his head. How we are going to approach it remains to be seen; it will depend of how things develop.”
UJA-Federation’s endowment fund has doubled in the last eight years to a record $850 million as a result of gifts and a largely booming economy.
It would not be the first time the endowment was tapped for an emergency. When the war in Lebanon erupted in the summer of 2006, $10 million was withdrawn to help move families in northern Israel out of range of Hezbollah rockets and to send their children to summer camp.
“When there is a need, that is part of the reason we have it,” Rosenthal said.
Of the $850 million endowment, about 55 percent is unrestricted. The rest is restricted by the donors to specific projects.
The depth of the economic downturn is yet to be determined, according to Paul Levine, executive vice president and CEO of the Jewish Board of Family and Children’s Services.
“The anxiety levels of everybody are sky high about the impact of this on their lives,” he said in a conference call with The Jewish Week and a group of UJA-Federation agency executives. “We are trying to determine what the impact is regarding the loss of jobs, the loss of homes, threats of losing a home and things like buying or leasing cars and the ability to manage or get new credit cards.
“That requires hundreds of people [on staff] to speak to people about what is happening so we can form a picture of what the greatest risks are.”
The executives noted that they normally are in touch with each other but that the level of agency cooperation now is particularly high.
Among those already experiencing the economic crisis are 10 FEGS employees who in the last month have asked for salary advances “because of pending foreclosures” on their homes, said Gail Magaliff, FEGS’s CEO.
“They will pay it back through their paychecks,” she said of the cash advances. “People who work in the health and social service field don’t live on a lot of money.”
Magaliff, who noted that her organization has 4,000 employees, said it is too early to know the full impact of the economic crisis here but that it would be “naïve to say we’re not going to have to make changes over time.”
Levine concurred that the depth of the crisis is still to be determined.
“I agree we are going to be struggling with how we keep services in place and the consequences for our staff,” he said. “Everyone thinks it is likely we will have to cut back, but we don’t know the impact of state and city” funding cuts yet.
“Most of us rely heavily on government funding,” Levine observed. “And until the State Legislature and the City Council make their cuts, we can plan but we are not making any reductions.”
Asked if he was considering program or personnel cuts, he replied: “Most of our services are provided by people. We’re a people organization; you can’t provide it by creating a machine. If we lose services, we lose staff.”
As to whether UJA-Federation might cut back on overseas funding projects to allocate more money locally, Ruskay responded by noting that the charity assumes “global Jewish responsibility” in responding to need.
In recent years that has meant helping people in Argentina and the Former Soviet Union, for example. Now, some officials say, it could well mean giving priority to New Yorkers in need.
The good news, Ruskay said, is that some of UJA-Federation’s biggest donors recognize the increased need and have responded in kind. But he cautioned that no philanthropy can “make up for every dollar lost” in government allocations. “We will need to be very clear about which services are most essential.”
Susan Fox, executive director of the Shorefront YM-YWHA of Brighton-Manhattan Beach in Brooklyn, said she anticipates hearing from families with children in the Y’s after-school and pre-school programs that they are no longer able to pay for the programs.
And, she said, “we are hearing from seniors that it is more difficult to make their SSI [Supplementary Security Income] money cover food and rent and medical costs.” In addition, staff members are discussing how difficult it is for them to make ends meet.
“The challenge we are facing is that this is happening as we speak,” said Fox. “It is so dynamic it is a crisis that is emerging on a day-to-day basis.”
William Rapfogel, executive director of the Metropolitan Council on Jewish Poverty, noted that last month UJA-Federation made an emergency $400,000 grant to keep his food pantries stocked.
“We are seeing more need than ever,” he said. “Our greatest need is in central Queens, central Brooklyn and Williamsburg.”
He added that the housing situation “has been a problem and will dramatically get worse. There are people who have significant mortgages and will have to make significant changes in their lifestyles. There is no way some people can deal with it.”
The budget crunch, Magaliff noted, has an effect on everything from housing to the cost of gasoline and heating oil, and from the cost of food and vendors’ services.
“These are really tough times and all of us will be faced with the potential of having a greater need to deliver the services we had provided before,” she added.
Rosenthal, UJA-Federation’s chief financial officer, said the organization’s 12-member investment committee is very conservative in its management of the endowment fund and that no money has been lost in the current downturn. The committee meets regularly and is primarily composed of investment managers.
“The committee is full of experts,” Rosenthal said. “We rely on them heavily.”
“Most of the endowment is invested in a range of diversified investments — equities, real estate, hedge funds, private equity,” he said, adding that about 10 percent of the endowment is kept in cash.
“We’re always looking at appropriate investment strategies and I don’t think the fundamentals will change,” he said. “Usually out of turmoil and chaos come opportunities. You just have to know where they are.”
In developing UJA-Federation’s $200 million budget for the fiscal year that began July 1, Rosenthal said “we were very conservative” and reduced by $1 million a proposed $10 million budget increase. Although no allocations to agencies were cut, about $2 million in proposed grants to agencies was withheld.
“This was because of concern about the economic situation and how it affects needs and donations, and we wanted to maintain flexibility,” he said.
About $51 million of the $200 million budget comes from the endowment; the rest is from annual donations.
Asked if the economic downturn might prevent people from fulfilling their pledges, Rosenthal replied:
“There are a lot of people who had jobs a few weeks ago who don’t have them now or who are not going to have them, and I can’t imagine that won’t affect payments. … In the economic downturn after Sept. 11, there were some people in that situation, but at the end of the day I don’t think it was as bad as what we are going to see now. It wouldn’t surprise me if we have more people who aren’t able to pay.”