Last week the Milwaukee Jewish Federation board of directors made decisions in response to the recent global economic downturn that will change the size and scope of Milwaukee’s Jewish community infrastructure and services for the next fiscal year and, likely, beyond.
First, on Jan. 7, the federation’s executive committee voted to reduce allocation dollars to the local and overseas programs and agencies it supports by 15-20 percent across the board for fiscal year 2009-2010, which begins July 1.
Not only does the federation expect a decline of up to 10 percent in the 2009 Annual Campaign. It has also lost the capacity to tap into the Jewish Community Foundation’s unrestricted reserves because foundation investments suffered considerable losses in the last half of 2008.
When the campaign was launched in August, the goal was $8 million, which was 5 percent more than the final achievement for the 2008 campaign, said Tanya Mazor-Posner, the federation’s campaign director.
But the world financial crisis has slowed contributions. As of Jan. 30, the campaign had acquired $4,425,873 from 2,638 solicitations as compared to $5,157,763 from 3,150 solicitations at the same time last year.
According to an article in the Nov. 23, 2007, issue of The Chronicle, the foundation earned significant income in the previous four years. In an interview for that article, Bert L. Bilsky, executive director of the foundation and associate vice president of the federation, said the foundation’s assets then totaled about $144 million, which included growth of some $39 million since 2003.
This year, the foundation’s assets have fallen by about $39 million, to about $105 million, losing all of the gains realized in the last six years.
On Jan. 21, the executive committee voted to stabilize and protect the foundation’s assets by moving all of its 400 Donor Advised Philanthropic Funds, that operate with a guarantee of principal balance and investment return, into fixed income investments. Those funds are estimated to amount to approximately $27 million.
It was agreed that as of Jan. 1, 2009, those funds would not receive an investment return and that this decision will be reviewed at the end of the year. When returns resume they will be indexed to the 91-day Treasury Bill rate (a daily published rate), capped at a maximum of 3 percent.
This action, which was deemed necessary “to protect the principal balance of the Donor Advised Funds from market losses now and in the future,” will result in a loss of $13 million to the federation’s unrestricted reserves.
In an interview, JCF Chair David Lubar said, “The asset allocation of the funds in the foundation, which it developed in conjunction with its financial advisors, provided respectable returns for many, many years.”
“However,” he explained, “given the recent volatility in the markets, the foundation needed to change its allocation to a more conservative approach for at least the coming year. The asset allocation will be reviewed on a regular basis to determine when it may be appropriate to increase the exposure to public equities.”
Federation leaders have been holding regular meetings with “partners and key stakeholders” throughout the process of addressing the economic downturn, both to seek information and to share ideas about the approaches that might be put in place for the coming fiscal year, according to federation executive vice president Richard H. Meyer.
“Everything that we are currently working on and planning for is designed to maintain our ability to provide for the core needs of our community,” he said.
“The allocation process will be completed in May and June but we are addressing it early to help our partners plan for the coming year,” Meyer said.
Federation president Bruce A. Arbit is confident that the community will come together to meet the challenges of this difficult time. “The Jewish community is going to have to learn to live with less because that is what we have,” he said.
“But we also have unity in the Jewish community and all of us are going to pull together. We’re going to get through this together,” Arbit said.
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