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 otA4v.gitst:61bw 5