Relief Agency Approves Deficit, Vows Not to Cut Key Programs

The Jewish community’s largest international relief organization has adopted a budget for next year that includes a $9 million deficit, saying that despite a drop in support from American donors it would not cut programs to aid elderly Jews in the former Soviet Union.

The American Jewish Joint Distribution Committee approved a $316 million budget last week.

It blamed the deficit on the shortfall of Operation Promise, a proposed $160 million fund-raising campaign started in 2005 by the national arm of Jewish federations, the United Jewish Communities.

UJC officials dismissed the claim, saying the JDC knew two years ago that it would not have funding in 2008 from the campaign.

Operation Promise was intended initially to pay for the remainder of Ethiopian immigration to Israel, as well as infuse the JDC with $30 million over three years to help needy elderly Jews in the former Soviet Union. But the campaign fell far short of its goal because it was interrupted by Israel’s war in Lebanon in the summer of 2006.

Subsequently the UJC agreed to provide a total of $18 million over 2006 and 2007 to the JDC for assistance in Russia and other nearby countries. In the end, UJC officials said, it sent $21.5 million for those two years to help the elderly in the former Soviet Union.

No agreement was reached for 2008, according to UJC.

With the start of ’08 approaching, JDC officials said the relief programs that were supposed to be funded by Operation Promise are too important to cut, so the JDC board instead adopted a budget that includes the projects even though the organization has no money to pay for them.

JDC officials said that they did not want to be in a position of denying food to starving elderly Jews in the former Soviet Union.

“Unfortunately, when Operation Promise — a UJC fund-raising initiative — ended, the JDC was left at a deficit of nearly $9 million,” the JDC’s chief executive officer, Steve Schwager, said in a statement. “We remain appreciative of the UJC’s continued contribution to our programs worldwide, but we are also hopeful that the UJC and federations will partner to help raise additional funds that will enable us to keep these critical programs running.”

The JDC has a longstanding policy of maintaining a balanced budget, Schwager told JTA in an interview, but broke the policy in this case because of its inability to move around allocations. Eighty percent of JDC revenue is designated for specific purposes by donors.

Schwager said the organization has no reserve funds for operating costs, so it will borrow monthly from a bank to pay for the deficit until it can find alternate funding.

Observers on both sides say the JDC is clearly positioning for more money and that the $9 million deficit was approved to put pressure on funders — especially the UJC.

“They created a $9 million deficit,” said one person close to the situation.

UJC leaders are apparently irked by the move and insist they have cooperated with the JDC in good faith. They say that some money from the immensely successful Israel Emergency Campaign, which raised $360 million after the Lebanon war, was redirected into Operation Promise when it fell short.

“We have a long and productive relationship with JDC,” said a UJC spokesman, who asked not to be identified. “UJC and the federations are aware of the fact that needs are ever growing. We are confident that through appropriate interaction, we will arrive at the right result for those that require our support. That is what partnerships are about.”

The JDC has been in discussions with UJC about a possible funding solution. One may include a change in how the funds that the federation system funnels through UJC to the JDC and the Jewish Agency for Israel are split.

Each federation gives UJC an allocation for the two overseas agencies to use for their core budgets. This year the total was approximately $160 million. JDC receives 25 percent of that money and the Jewish Agency 75 percent, as per a 2005 agreement. But the three organizations are renegotiating that split, which could yield JDC a larger portion.

Those negotiations are in their infancy, however, and would not have any effect until July 1, Schwager said.

In the meantime, JDC President Ellen Heller says the organization will reach out to individual federations, foundations and members of the new wealthy elite in the former Soviet Union.