| From Steve Schwager, Chief Executive Officer |
June 30, 2009 |
Dear Board Member,
As I outlined for you in my column several weeks ago, we are now in the midst of the Board-approved budget process. The 2010 Global and Regional Goals have been accepted by JDC’s Executive Committee at their March 2009 session and by the Area Committees at their May 2009 meetings. JDC’s staff and senior lay leadership currently are involved in preparing the initial draft of the 2010 budget. The critical first step in this process is to estimate the actual dollar amount of the 20 percent of the budget which is undesignated, meaning that its use is subject to the discretion of the Board. The remaining 80 percent of the budget represents donor-designated gifts. After making the budget reductions in May, the 2009 budget now has $73.8 million of undesignated funds, of which $37 million is provided by the federation system. Our 2010 best estimates at this point are that only $66.1 million of undesignated funds will be available. This represents a shortfall of $7.8 million for 2010. The majority of the shortfall is expected to be the result of reduced overseas support from the UJC/Federation system.
Given the Board’s balanced budget policy, if we do not find new sources of funds, an $8 million reduction in undesignated funds will mean a significant reduction in our programs and activities across the globe. As you know, we leverage our undesignated funds on a ratio of four to one. This reduction in undesignated funds of $8 million could translate into an overall budget reduction of about $40 million in 2010.
In order to prevent this from occurring, the Board and the staff must make every effort to secure additional undesignated funding from the Federations, from the Board itself, from new donors, or from an extra draw on the endowment fund. My guess is that the ultimate solution will be some combination of the above, in addition to further budget cuts. The 2010 draft budget will be presented to the Area Committees, Budget & Finance Committee, Executive Committee, and the Board in October for discussion and eventual adoption. The year 2010 is going to be a very tough one unless we win the lottery.
While I am on the topic of budgets and finances, I thought I would share with you a few JDC facts. First, much has been written lately about how our sister organizations around the world have found it necessary to make staff reductions and salary cuts in order to save positions. As many of you tell me so often, JDC has many of the finest professionals in the Jewish world. Our staff members believe that JDC itself must be operated as an efficient entity. We are always looking for ways to be more effective and to stretch every dollar. In the last seven years during my tenure as CEO and EVP, thanks to changes in our methods of operation, we have reduced our staff complement from 948 in 2003 to 766 in 2009. This is a reduction of 20 percent and our 2010 numbers will be even lower.
While these reductions were taking place, our total budget grew from $249 million in 2003 million to $332 million in 2009—an increase of 33 percent. There is no correlation at JDC between budget size and staff complement. We simply are committed to doing the best job possible in the most efficient and effective manner.
While 2010 will be a challenging and difficult year, Irv and I recognize that JDC is blessed with partners who work with us in over 70 plus countries across the globe. Together we will ensure that the "3 Rs" of JDC are met wherever there is a Jew in need. I never tire of repeating that for 95 years we have been the 911 of the Jewish community. In a world that is constantly changing, it is reassuring to know that JDC’s commitment never changes.
Until next time,
