In recent months, American Jewish philanthropies have taken about as many hits as the Israeli city of Sderot has seen Hamas missiles fired from nearby Gaza.
Nor has Colorado been immune to the damage that has been done to non-profits by a recession-wracked economy and a Wall Street reeling from mortgage disasters and investment scandals.
Last week, the Rose Community Foundation, a primary Colorado Jewish philanthropy, sent an open letter to its grantees –– which include both Jewish and general causes –– informing them that leaner times are ahead.
“The Foundation’s trustees have indicated that today’s extraordinary economic environment requires a different strategic approach focused on preserving the Foundation’s endowment for the long-term good of the community,” said the letter, signed by RCF president-CEO Sheila Bugdanowitz.
Bugdanowitz acknowledged “significant erosion” in the foundation’s assets during 2008, and noted “preliminary steps to reduce expenses both in the projected 2009 grant making budget and in administrative costs.”
Bugdanowitz told grantees to expect an estimated reduction in grants of 25-30% during 2009. That would amount to some $9.5 million in grants.
Speaking to the Intermountain Jewish News this week Bugdanowitz said a precise dollar amount on the foundation’s losses for 2008 won’t be known until March or April.
“We don’t know yet,” she said, “partly because the year is not over till it’s over.”
However, the anticipated reduction in grants is based on an estimate of those losses, she indicated.
In addition to cutting grants, the foundation has trimmed “discretionary assets” from its administrative budged and imposed a freeze on salary increases for staff and program officers.
The foundation plans to take another look at its budget next month, after “reviewing more complete information about the Foundation’s 2008 fiscal performance,” Bugdanowitz wrote.
That’s not necessarily a warning that future cuts loom for RCF grantees next year, Bugdanowitz told the IJN.
The last meeting of the trustees took place on Nov. 21, “the absolute worst date of the year” for the stock market, she said. Therefore, she doesn’t think the immediate future necessarily calls for pessimism.
“I don’t know what the trustees are going to decide, but I don’t think it’s going to be worse. We will have a better year in numbers by then.”
In the meantime, although the RCF has converted some of its assets into cash in a bid to avoid further market erosion, it is not entirely backing out of the investment market.
“We’ve taken steps to have greater liquidity by putting more assets into money markets,” Bugdanowitz said, “but that too can be risky.”
That risk, she elaborated, refers to the serious losses the foundation could lose through non-invested funds when the investment markets do begin to improve.
“We’re long term investors and we try to have a balanced portfolio. Hopefully, we’re balanced for the long-term, but that being said, we do have more liquidity right now.”
A glimmer of good news, or at least a tentative sigh of relief, was expressed this week by Bugdanowitz, who indicated to the IJN that it does not appear that any of the foundation’s corpus funds had been invested, directly or indirectly, with Bernard Madoff, arrested earlier this month after his investment securities firm collapsed in what appears to be a massive Ponzi scheme.
Although tracking each and every RCF investment is a fairly complex and time-consuming process, Bugdanowitz said, “to the best of my knowledge” the foundation seems to have escaped any damage from the Madoff scam.
The general economic downturn, however, remains significantly sobering in any case.
“There is no good time to deliver bad financial news, and it is especially difficult during the season when our thoughts turn toward those in greatest need,” Bugdanowitz’s letter concluded.
“On behalf of our trustees, committees, donors and staff, I want to convey my deepest appreciation to all of the kind and generous people in our nonprofit community who, in good times and in hard times, work to improve our community and the people who live here.”
Beyond that, Bugdanowitz said this week, the foundation will just have to ride out the economic storm like everybody else.
“The thing that’s been so hard about this time is the volatility, and we’re not seeing that change,” she said.
“It’s not predictable. Everybody is struggling with this.”
Search the IJN using the term Madoff, and find all of our stories related to this financial scandal.