Citing new reality, JDC presses for change in funding formula

The American Jewish Joint Distribution Committee and its executive director, Steve Schwager, seen here at the General Assembly on Nov. 8, 2009, are pushing the Jewish federation system for more money. (Robert A. Cumins)

The American Jewish Joint Distribution Committee and its executive director, Steve Schwager, seen here at the General Assembly on Nov. 8, 2009, are pushing the Jewish federation system for more money. (Robert A. Cumins)

NEW YORK (JTA) — The main international relief agency of the Jewish federation system wants to pull the plug on a long-standing funding arrangement, saying it requires more money to meet the humanitarian needs of poor Jews abroad.

Each year the Jewish Agency for Israel and American Jewish Joint Distribution Committee split $160 million to $200 million raised by local Jewish federations for overseas causes. Under a formula used for much of the past half century, 75 percent of the funds go to the Jewish Agency, which historically focused on helping immigrants to Israel, and 25 percent to JDC, which focused on helping needy Jews and building Jewish community in countries around the world.

But JDC President Irv Smokler sent a letter Nov. 12 to Kathy Manning, the chairwoman of the federations’ umbrella body, the Jewish Federations of North America, saying that the JDC would no longer accept the traditional split.

“The current split of 75 percent for JAFI and 25 percent for JDC came into being in 1952 when Israel was ready to accept large numbers of immigrants and JDC had declining welfare roles in Europe as a result of the closing of the DP camps,” Smokler wrote. “The world has changed significantly and the funding formula must reflect this new reality."

Steven Schwager, JDC’s executive vice president and CEO, pushed further this week in an opinion piece for The Jerusalem Post. He argued that the needs of Jews living outside of Israel and the United States were largely ignored last week in Washington at the federation system’s annual General Assembly.

“Will we abdicate this moral commitment under the pressure of domestic issues and needs?” wrote Schwager, who was granted a prime speaking role at the GA’s opening plenary.

“Can we — the more comfortable, more secure 80 percent of the Jewish people — cut off the neediest 20 percent of our brethren? Since when has a hungry Jew anywhere become an ‘overseas issue’ marked as less urgent compared to local needs?”

The JDC’s renewed, stepped-up push for more overseas funding puts an intense focus on the tough funding choices facing the American Jewish community’s largest charitable network. It comes just days after what many local and national federation leaders hailed as a successful GA, punctuated by high praise from many participants for the Jewish Federations’ new CEO, Jerry Silverman, and the Jewish Agency’s new chairman, former Soviet dissident Natan Sharansky. 

JDC officials rejected suggestions that its recent moves were aimed at quelling some of the excitement over Sharansky’s leadership of the Jewish Agency. Schwager said the timing of his organization’s decision to speak out was based simply on when JDC could gather its leadership to discuss the latest proposal for a funding agreement.

The main issue, JDC officials say, is that sagging local fund-raising campaigns have led to a cut in the federation system’s support for JDC and the Jewish Agency. This year the federations’ allocation to the overseas organizations dropped to $160 million — and both organizations were told recently to expect further cuts of 10 percent to 20 percent next year.

In his letter, Smokler wrote that the JDC would be “derelict in our responsibilities” if it failed to seek more money, stating that the organization has “been forced to curtail or eliminate food, medicine, and other material needs to 60,000 poor elderly Jews. In addition, we have no resources to serve 20,000 poor Jewish children and their families.”

After receiving Smokler’s letter, Manning sent a note to members of the Jewish Federations board saying that the organization was working to quickly address the matter.

Through a spokesman, Manning and Silverman declined comment to JTA.

The organization’s Israel office did issue a statement to the Israeli daily Ma’ariv.

“As was indicated in the JDC letter, the Jewish Federations have a very positive, longstanding and strong relationship with both of our major partners, JAFI and the JDC," the statement said. "We are of course very aware of increased needs in many sectors, and are confident that our continued dialogue will result in an agreement that is acceptable to all sides."

JDC officials say the shrinking pie must be redistributed if the federations and overseas agencies cannot find a way to raise more money together.

One option, they say, is to revise the set formula to ensure that the JDC receives a larger annual slice. Another is to resurrect a tension-filled system under which the JDC and Jewish Agency essentially were pitted against each other and forced to prove the merits of each of their budget needs over those of the other. The system was abandoned after a few years.

Officials at both overseas organizations say they have worked to improve relations and forge a new funding framework for federations to consider. Still, in his opinion piece, Schwager took what could be interpreted as a swipe at the Jewish Agency and some of its donors.

He criticized Russian oligarchs who “prefer to put their money and their names on mausoleums and universities,” and then said that “in the excitement to trump new ‘Jewish peoplehood,’ there is the risk that we are abandoning the Jewish people.”

Sharansky has been toiling to raise money from Russian philanthropists and repeatedly has declared that the organization’s focus in the coming years would be on promoting the concept of Jewish peoplehood.

JDC officials are arguing essentially that the federation system needs to prioritize the cause of helping needy Jews over the sorts of programs being advocated by the Jewish Agency. By its own admission, however, the JDC has had trouble convincing its private supporters to switch their gifts from identity- and community-building projects to humanitarian efforts.

Asked about the struggle to shift the priorities of JDC’s own donors, Schwarger noted that the organization’s major supporters have kept their donations steady or increased their gifts.

In contrast, money from the federation system to JDC continues to fall. About 80 percent of JDC’s budget comes from private donors giving to specific projects. Most of the rest comes from federations and goes to cover core operating costs.

As a result, Schwager said, the federation money is the one place where JDC’s board has real flexibility in diverting dollars from non-essential projects to humanitarian relief.   

In recent months there have been rumblings that the JDC eventually could decide to break free from the national system, opting instead to raise money directly from individual local federations. Schwager, however, dismissed the notion.

“We are part of the national system," he said. "We wouldn’t leave the national system.”

Stephen Hoffman, who served a stint as the head of the federation national body before returning to his post as CEO of the Jewish Federation of Cleveland, said that infighting would help no one.

“This isn’t about competition between them. That is a struggle that will only lead to the unwinding of both of them,” Hoffman said. “When there is sniping, the end result is a decrease in overseas allocations not to one or the other, but to both.”

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