EDITOR'S NOTEBOOK
Shorter Spending Reins
S
econd-guessing himself when the Jewish Federation of
Metropolitan Detroit tapped into the principal of
unrestricted reserves to support community needs,
CEO Robert Aronson turned to friend and confidant
Max Fisher, beloved patriarch of Detroit Jewry.
Fisher, a Franklin resident who winters in Florida, is a bril-
liant businessman and major charitable giver.
Federation, through its financial arm, the United Jewish
Foundation, faces a projected $6.2 million shortfall in the
General Fund for fiscal year 2003-2004. Staff layoffs, domestic
pullbacks, less .overseas support and other reductions are brew-
ing as a result. Also planned is a new, unre-
stricted endowment to take some pressure off
the General Fund.
Aronson, Foundation President Mark
Hauser and Federation's Executive Director
Mark Davidoff and President Lawrence Jackier
— Detroit Jewry's money managers — now
face the tide of public opinion. When times
are tough, the waves of scrutiny wash up at
ROBERT A. their doorstep. I recently visited Federation's
SKLAR
Bloomfield Township offices to talk budget
Editor
numbers with them.
First, Aronson recounted his March meeting
with Fisher. "When it comes to running a business and not los-
ing money in investments," Aronson said, "Max is the
ultimate tough guy. So I flew down to Florida and said
to him, 'Max, here's what happened and I feel respon-
sible because the spending reflected a vision I have
been very much apart of these past 14 years.'
"He said to me, 'You shouldn't feel bad. You did the
right thing. You spent the money on the community.
We'll get through this together. You were caught by the
economics, which is ultimately the bottom line. You
have nothing to apologize for."
Aronson
Fisher is unavailable because of illness but I have no
reason to doubt Aronson's account.
Still, I wondered if more cautious spending in the
form of fewer or delayed grants might have averted job cuts and
their emotional trauma. Layoffs are never easy, even justified
ones. To the workers and their families, they can be devastating.
When you work for a company, service agency or the govern-
ment, however, it's implicit your job isn't guaranteed. Notably,
Federation has tried to soften the financial blow for all who lost
jobs. Time will tell how well their workload is absorbed.
Some of the 15 layoffs this first year of three years of General
Fund tightening were inevitable with the merging of
Federation's Alliance for Jewish Education and Agency for
Jewish Education.
Federation's $84 million in restricted endowments are unaf-
fected by the General Fund crunch.
Community Support
Aronson is a fund-raising maestro who inspired the $60 million
Millennium Campaign for Detroit's Jewish Future a few years
ago. He's Federation's top professional but also counsels mega-
donors William Davidson, an Auburn Hills-based industrialist,
and Michael Steinhardt, the New York City-based chairman of
Jewish Renaissance Media, owner of the Detroit Jewish News.
Aronson said Fisher reinforced that the $50 million spent in
the community from the General Fund over the past nine years
was a good investment, not Federation board or officer mis-
management.
"It's not that we didn't know this was coming," Aronson said.
"The spending reflects a vision of the leadership that we should
be the total federated community and should be everywhere
and anywhere. Some could criticize us for that, I know.
"But the fact is, we didn't squander it. We spent it because the
attitude of this Federation was to reach out and help every
aspect of this community."
Still, he said, "We're A ll shaken by this. It is a sobering realiza-
tion for all of us. And it has led to certain actions that are diffi-
cult."
Simply, Federation saw almost $70 million in General Fund
unrestricted reserves fall to $20 million since 1998-1999. Each
year, Federation has drawn 10 percent of the Fund to support
partner agencies, initiate special programs and maintain operat-
ing budgets. A decline in investment returns kept reserves from
being replenished at the same rate they were tapped.
The General Fund started in 1984 with $15 million in con-
solidated unrestricted gifts to the Jewish community.
Larger recent allotments have brought highly visible results.
Yeshivat Akiva moved into the old Beth Achim synagogue in
Southfield. Need-based scholarships help students in synagogue-
based schools. The Commission on Jewish Eldercare Services'
Elderlink computer system links eldercare service providers. JVS
overcame government funding cuts to .continue job-placement
services as well as assistance to adults with disabilities. Advocacy
and support for Israel also benefited.
The most controversial outlay, one of the "difficult decisions
along the way" that Hauser talked about, was giving
$2.5 million over five years to the Jewish Community
Center of Metropolitan Detroit, Detroit Jewry's central
address. The outlay is earmarked to finish capital
upgrades deemed key to boosting membership and
serving the larger community. Federation raised most of
the $35 million in Millennium Campaign funding for
the JCC and wisely is overseeing how it is spent.
A Promising Fix
Echoing Aronson, Jackier insists there have been
no breaks in accountability. "We made conscious
decisions to spend the money very effectively on
needs in this community," he said.
But Jackier, whose family roots extend into the marrow
of Jewish Detroit, acknowledges that Federation's unsettled
budget would have gained from an unrestricted endow-
ment for urgent and planned community needs. "We're
going to fix that," he said.
Aronson and Mandel Berman, who is arguably the con-
science of Detroit Jewry, will work together to create the
Detroit Legacy Fund. The hope is to endow it with $50
million generated by planned giving.
Clearly, Federation faces the same economic noose con-
fronting agencies, businesses and levels of government
across the nation. It vows to curtail spending but not dis-
rupt critical community services, a lofty goal that time
may force to be revisited.
Meanwhile, the Detroit Legacy Fund has the potential
to insulate the community from recurrent rainy days. So
Federation must strive to endow it fully despite a back
draft from other demands. Work continues on various cap-
ital projects as well as the 2004 Miracle Mission to Israel.
Ultimately, Federation no longer can be the "go to"
place for any and all financial relief. It needs more self-dis-
cipline. The community will have to accept that and
adjust. The General Fund is not bottomless.
As Federation's Mark Davidoff so succinctly put it, "We
must get back to the culture of living primarily off the
Annual Campaign."
JARC extends
our heartfelt
gratitude to
each sponsor,
volunteer,
and guest.
Thanks to you
2001
was a
RECORD-
BREAKING
SUCCESS!
Your support
truly makes a
difference in
the lives of
children with
special
needs.
4IN
❑
4/18
2003
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