Belt Tightening

Federation and agencies cut budgets in advance of allocations.

Alan Hitsky
Associate Editor

W

e're trying to lead by exam-
ple," said Scott Kaufman last
week. The Jewish Federation
of Metropolitan Detroit chief execu-
tive officer was referring to pay cuts of
2-8 percent that have
begun rippling through
Federation and some
of its constituent agen-
cies.
There have been
some job losses as
well, but Kaufman was
Scott
reluctant to go into
Kaufman
detail in advance of the
Federation Board of
Governors discussion and approval of
allocations from the Annual Campaign.
The Campaign achieved lower results
this year.
While Kaufman is unhappy with the
cuts, he also saw a silver lining. "There
are 30,000 less Jews in this commu-
nity than there were a generation ago.
We have new priorities, but the same

infrastructure. How can we be more
efficient?"
He said the Federation internal
budget will be 14 percent lower in the
coming fiscal year.
There have been some
layoffs, but also new
hires for the Internet
and information
technology areas. "We
can't be everything to
everyone:' Kaufman
said. "We have to beef
up in some areas and
cut others?'
He added, "For 20
years, our donor base
has shrunk. We need
to reverse that. We
need more 'sharehold-
ers' who feel vested
— at any level.
"How great would it
be if instead of 9,500
donors we had 12,000 or 15,000?"
He said the Detroit Jewish community
is committed and unified more than
anywhere else is North America. "It's

like a shtetl in a good way. But we need
to connect with our donors. We need the
money and we need the people in order
to make a community. That's what we
are — a community-
building organization?'
Building Jewish life
in the future while
meeting the Jewish
needs of today is what
philanthropy is all
about, he said.
Detroit has been a
leading-edge Jewish
community for
decades, Kaufman
said, and we should
continue to be a
national leader in
community and phi-
lanthropy. "We should
Scott Kaufman be the place where
great ideas hatch
and affect the Jewish
world:'
An example he mentions with pride
is Detroit's partnership communities
in Israel's Central Galilee. They have

"For 20 years, our

donor base has

shrunk. We need

more shareholders

who feel vested

at any level."

–

become a mini-federation with joint
efforts "and the leading volunteer com-
munities in Israel?'
Turning back to Federation's budget
cuts, Kaufman said they were intended
as one mechanism to get more money
to the Federation agencies. "It's not just
because of revenue. We wanted to get
ahead of the curve he said, adding,
"Other nonprofits in Michigan have
made far bigger cuts."
Kaufman credited the leadership of
Federation President Nancy Grosfeld
and United Jewish Foundation President
Douglas Etkin in guiding the Detroit
community through difficult financial
times.
He also singled out his predecessor,
Robert Aronson, for "still being involved
and still on the team," despite his
involvement with Birthright Israel and
national philanthropy leaders.
Aronson, he said, "has given us the
time to rebuild the bench. He's helped
us avoid falling off the cliff these last
two years."

Bounce Back

Endowment total recovers from low ebb.

Alan Hitsky
Associate Editor

T

he Chronicle of Philanthropy
this spring reported that
the Jewish Federation of
Metropolitan Detroit and its United
Jewish Foundation lost 20.8 percent of
the value of their endowment funds
during the stock market downturn of
2008-09. It was one of the largest per-
centage losses of any nonprofit in the
United States.
A report by the Forward newspaper
in New York cautioned that "nonprofits
end their fiscal years at different times.
So some that ended their years early
may have seen significant bounce backs
since these numbers were filed."

Andrew Echt

Dorothy
Benyas

That was certainly true of Detroit,
Federation officials pointed out last
week. Detroit's endowment total quoted
by the Chronicle of Philanthropy —
$288 million — has increased in the
last year to $375 million.
Andrew Echt, Federation's chief
financial resource development officer,
said, "The Chronicle of Philanthropy
caught us on a bad day."

Federation Chief Financial Officer
Dorothy Benyas agreed. "It was a sna-
phot at a low point?'
Benyas said Detroit's endowment
funds earned 31.6 percent last year,
exceeding benchmark funds the
Federation uses as a gauge. The bench-
marks earned 29.6 percent.
But, warned Echt, "When people hear
that we have $375 million in endow-
ments, they think we are flush with
money. That's just not true."
Many of the funds are restricted,
with the earnings designated by the
donors for specific purposes. Most
often, the Federation is not allowed to
tap the principal.
And, Echt said, as assets are down
throughout the entire community,
donor money is down. The earnings

from endowments — rainy-day funds
— are stretched and "the here-and-
now money, the Annual Campaign, has
to stretch even more."
Both Federation officers stressed the
importance of safeguarding the com-
munity's funds. Benyas said a commit-
tee of 25 lay leaders monitors invest-
ment performance on a monthly basis.
"In the Bernie Madoff era," Echt said,
"it is important to be as transparent as
possible:'
Madoff's Ponzi scheme cost investors,
including many Jewish non-profits,
billions of dollars. Federation had no
funds invested with Madoff companies.
Said Benyas, "By design, we don't
invest more than 10 percent with any
investment manager?' ❑

June 10 • 2010

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