Allocating Justice with Money from Jewish Assets, Claims Group Allocates Carefully

The Claims Conference says it sees itself as a guardian of “holy money” when it comes to funds designated for Jews who suffered in the Holocaust.

Not surprisingly, so does everybody else.

That’s why the debate is so passionate surrounding the Claims Conference’s distribution of hundreds of millions of dollars from the sale of Jewish assets looted by the Nazis in East Germany during World War II.

In contrast to the bulk of funds the conference administers — mostly German money that goes to individual survivors as some measure of compensation for their suffering under the Nazis — the allocations from the East German assets are Jewish money.

Proceeds from the sale of these assets — Jewish-owned homes, businesses, organizations and synagogues — go to their owners or heirs if they can be identified, while proceeds from unclaimed assets are earmarked for Jewish community projects.

At issue now is the latest batch of allocations from the unclaimed assets in this Successor Organization fund, $74 million in grants that is divided between social-welfare projects that benefit survivors — constituting 80 percent of the allocations — and “Shoah documentation, education and research” projects, which get 20 percent of the grants.

Every year, the Claims Conference makes about $90 million in grant allocations from the fund.

The fund was created in 1992 as the legal successor, or heir, to both claimed and unclaimed Jewish properties and assets seized by the Nazis in East Germany. Under the deal negotiated during German reunification, any property that went unclaimed after a German-mandated deadline reverted to the Claims Conference, rather than the successor state to the Third Reich or to postwar non-Jewish owners.

Grant money from the fund is allocated in two annual installments — usually about $75 million in the winter and about $15 million in June.

Through the end of 2002, the last year for which data was available, a total of $451 million was allocated from the Successor Organization to groups along the 80/20 split. An additional $90 million has been allocated in the past 13 months.

Aside from the grant money, by the end of 2002 about $260 million had been paid to survivors or heirs with proven claims to properties the Claims Conference had recovered from East Germany.

Another $157 million was being held at the end of 2002 in a special Goodwill Fund for assets for which people had not yet proven their claims.

The deadline for making claims against assets or properties in the Goodwill Fund is this March 31.

“We need the deadline so we can pay out money and know that nobody else will come to make claims, and the money can be released,” explained Gideon Taylor, executive vice president of the Claims Conference. “The Goodwill Fund has been open for about 10 years. The deadline will help us plan forward.”

The conference also has set aside about $260 million in the Successor Organization fund for survivors’ long-term needs, a move that has been criticized by some who argue that the conference should give away its assets as soon as possible because aging survivors need the money now.

In total, the Successor Organization, which includes the Goodwill Fund, has generated proceeds of more than $1 billion.

Every year, new proceeds are generated by the sale of newly recovered properties in the former East Germany. Though the conference tries to sell the assets soon after it recovers them, its auditors, Ernst & Young, estimated at the end of each of the last two audited years — 2001 and 2002 — that the Successor Organization had about $100 million worth of property that had not yet been liquidated.

An emerging problem, conference officials say, is that income to the Successor Organization generated by the sale of Holocaust-era Jewish assets is declining just as aging survivors grow more needy. Several recent studies on survivor populations around the world support those claims.

“The needs are not dropping off, but the income is,” said Greg Schneider, chief operating officer of the Claims Conference, noting that the conference has set aside $90 million per year from the sale of unclaimed Jewish assets for grant allocations to social-welfare organizations that benefit survivors and Holocaust-education projects. “When we don’t have income from the Successor Organization, you can reduce your allocations or begin to draw from” the $260 million set aside for long-term needs.

That’s why they have set aside money for long-term care for survivors, conference officials say.

“There’s people today who don’t need home care, but in 10 years they will,” Taylor said. “That’s why there was a long-term view taken.”

Taylor said the conference based its decision on an August 2003 study by the JDC-Brookdale Institute, which highlighted survivor needs in the former Soviet Union, and an October 2003 study by Ukeles Associates Inc. that estimated global demographic distribution of Holocaust survivors.

Others say the Claims Conference shouldn’t be setting aside money when survivors need it today.

“With regard to the amount of money being given to certain needs in the Jewish community, we believe some of the funds should be telescoped and front-loaded,” said Israel Singer, president of the Claims Conference and chairman of the World Jewish Congress. “When Holocaust survivors are dying at a rate of 10 to 15 percent per year, we’ve got to move rapidly.”

But the conference board has resisted Singer’s calls, with officials arguing that the group needs to plan for future needs.

Taylor also defends policies and decisions regarding the unclaimed assets divided each year along the 80/20 split.

The bulk of the money goes to groups that feed needy survivors, provide them with medical assistance and improve their living conditions. Allocations are made in 37 countries, with much of the money going to survivors in Israel, the United States, the former Soviet Union and Eastern Europe.

Every application that comes in to the Claims Conference undergoes several steps, Taylor says.

First, staff members review the applications and recommend whether or not to fund the project and how much to allocate.

Those recommendations then go to experts worldwide, who conduct their own analyses, sometimes visiting applicant projects, and assess needs based on the number of victims of Nazism to be served, the level of outside support and other factors.

The applications then are sent to advisory committees in Israel and the United States, which make recommendations for review by the Claims Conference’s 16-member allocations committee. That committee makes final recommendations to the board.

Twice a year, members of the board vote to approve or reject the allocations package. Critics — including members of the board — say this step is a formality in which members give their rubber-stamp approval to an entire package about which they have little say.

Taylor disagrees, noting the amount of consultation and analysis that goes into the decisions.

“It’s much easier to criticize than to actually run a program,” he said.

He also noted that the conference follows a strict set of ethical guidelines to ensure that no board or committee member votes on or advocates for allocations to an organization or project with which he or she is affiliated.

Taylor says any controversy over the allocations process is misdirected.

“The question is what is the substance of what we do,” he said. “Are we pushing for money from the Germans for home care or are we not pushing for home care? That’s what people care about.”