November 26, 2008 / 28 Cheshvan 5769

Every year, some 2 million people around the world depend on the services of the Jewish Agency. Youth and communities at risk in Israel—at risk from neglect, disadvantage or kassams—depend on our help. Vulnerable new immigrants look to us as they struggle to build new lives. So do young immigrant soldiers and students alone in Israel who count on us as family. Throughout the former Soviet Union, young people and communities at risk of being severed from their Jewish identity reach out trusting we’ll be there for them. That is why we are constantly looking for greater efficiencies, considering carefully and responsibly every single dollar spent on any activity not directly helping our beneficiaries.

Since the summer of 2007, the confluence of the decrease in the U.S. dollar against most world currencies and rampant inflation throughout Europe and the former Soviet Union has resulted in soaring costs to provide the same level of services and intervention for our beneficiaries. Initially, we were able to resist cutbacks on services through increased efficiencies and continued reduction of overhead expenses.

But with needs already far outstripping resources, the continuing devaluation of the dollar, and rising inflation in countries where we are operational, we are facing a financial challenge totaling over $20 million in 2008. This assumes that our core funding allocations do not decrease unexpectedly. With regards to the 2009 budget, we took the extreme measure of slashing $45 million, before even considering the impact of the current capital market collapse. More than the dollars that deficit represents, we see the people that have been impacted as we are being forced to make major reductions in essential programs in order to be able to responsibly manage these financial realities.

As this global economic crisis deepens, the severity of the repercussions and the needs will become even more acute. While spending during these most difficult times is now focused more than ever on helping our service recipients, the reality is that unless we can raise significantly more funds from every available resource, far too many of those who count on us will fall through the cracks.

PROGRAMS IN PERIL AROUND THE WORLD

The Jewish Agency is sensitive to the difficulties federations are facing in both reduced campaigns and increased local needs as the global economic downturn intensifies. We are your partners in facing this storm as we carefully weigh every dollar spent to ensure maximum benefit to the people supported by campaign dollars. Now, as always, our beneficiaries are our most important priority.

Already, in response to the continuing decline of core allocations to the Jewish Agency in recent years, overhead expenses have been cut by $21 million between 2004 and 2008 to ensure service delivery. In the 2009 budget, approximately $12.5 million in additional cuts will come from further organizational restructuring and management costs. But at this point, the remainder will have to come from program and services provided.

On-the-ground impact for those who depend on Jewish Agency services:

ISRAEL
In Israel, our major focus is twofold: strengthening Israel through aliyah and the integration of all new Israelis and closing growing socio-economic gaps for communities, families and youth. In the last decade, the socio-economic gap has grown in Israel to the point where there are two parallel Israeli realities. The goal of our services and partnerships in Israel are to close this divide. There is no time out-not only are lives at stake but the very future of Israel’s character. Every year that the gap grows wider, it becomes more difficult to bridge.

Over the past two years, the U.S. dollar exchange rate against the Israeli shekel was reduced by 23%.  Because 75% of all donations to the Jewish Agency are in U.S. dollars while 55% of total expenditures are in shekels, the net result was a shortfall of revenues against existing expenses. In other words, the total dollar budget of the programs has remained intact but the shekel budget to implement has decreased dramatically due to the lower exchange rate.

Additionally, the total rate of inflation during 2007 was 3.4% and the forecasted rate of inflation for 2008 is 4%. This translated into a cumulative affect on the shekel budget of about 30% forcing the Jewish Agency to cut projects and dramatically reduce activities for our beneficiaries.

Some impacted programs and services in 2008:

• Two absorption centers were closed in 2008; steps are underway to close additional centers.
  
• The 2008 annual shekel budget for our Youth Aliyah Villages for high-risk youth—like the Hadassah Neurim village—has decreased by 30%. The net result is more at-risk children per classroom and much less individual assistance and activities for these children.
  
• The 2008 activity budget for the YOUTH FUTURES program (children & youth at risk in Israel's periphery) has decreased by 25%. The net result is the number of enrichment classes available per child has been reduced—an element that is critical to the rate at which these kids can hope to turn the corner on disadvantage.
  
• During the summer of 2007, we were able to ensure safe, enriching environments for Youth Futures kids with summer camps.  During this past summer, we had no alternative but to cut funding of this program, reducing the number of beneficiaries by 30%.

The impact looking forward to 2009 without additional funds:

• Services to 17,000 olim will be reduced by another $6.2 million
  
• Services to 5,800 youth at risk will be reduced by another $2 million

FORMER SOVIET UNION (FSU)
Our major focus in the FSU is bringing the critical services and Jewish identity programs to the frontlines of the assimilation battle. This is not hyperbole—the Jewish people are in a race against time to connect far-flung remote communities and their young people in a meaningful way to their Jewish identity and our people. The Jewish Agency is providing on-the-ground services and programs in all regions of the FSU, especially in Russia and Ukraine in the areas of Education and Aliyah.  Ten percent of our overall budget is carried out in this region.

During the two-year period concluding December 31, 2007, the U.S. dollar exchange rate against Russia’s ruble was reduced by about 10% and there was an additional 3% reduction between January and June 2008. At the same time, as of December 2007 inflation increased by 16%, with an additional increase of about 13% from January to June 2008.  In Ukraine, inflation increased by 17% as of December 2007 with an additional increase of about 20% being forecast for the period January to June 2008. This has forced the Jewish Agency to cut projects and dramatically reduce the numbers of beneficiaries in each program.

Some impacted programs and services in 2008:

• Funding shortfalls required close to a 40%  reduction in the number of participants that could be accomodated in our Hebrew ulpan program.
  
• Our popular Jewish Identity program had to cut back the number of participants by 45%.
  
• The cost per day for a child in our FSU summer camp has increased by 62% (from $68 in 2007 to $110 in 2008). Note that this is more than the rate of inflation and decreased buying power of the ruble because the cost of living index has risen so significantly, affecting everything from rent (we rent campsites) to food to security.

The impact looking forward to 2009 without additional funds:

• Education services and programs in the FSU will be reduced by another $4.4 million
  
• Participants in Jewish Identity programs will be cut by another 10-15 percent

EASTERN EUROPE
Jewish Agency activities in Europe amount to some 5% of its total budget.  Over the past two years, the U.S. dollar exchange rate against the Euro was reduced by about 20%, while the inflation increased by 7%.  The net result is that all aspects of our activities in the Europe Region have been reduced in both the numbers of participants and the scope to activities.

NORTH AMERICA AND OTHER WESTERN COUNTRIES
The Jewish Agency and its worldwide team of Israel educators and emissaries are bringing Israel into lives and communities as a powerful force to engage and connect our Jewish world’s next generations. We are seriously concerned that overall cuts in our 2009 budget  will put at risk the scope of essential Jewish Agency's activities in North America.