Decline of Dollar Forces Agencies To Scale Down Overseas Efforts

Rising Costs of Food and Fuel Compound Fund Shortage

By Anthony Weiss

Published June 26, 2008, issue of July 04, 2008.
  • Print
  • Share Share

The steady decline of the American dollar is causing financial headaches for American Jewish organizations with overseas operations, forcing some of the most prominent agencies to cut staff and scale back services.

On June 24, the Jewish Agency for Israel wrapped up a meeting of its board of governors facing a shortfall of $20 million to $30 million in the current fiscal year, and a gap of $45 million for next year’s budget. The American Jewish Joint Distribution Committee, meanwhile, estimates that it has lost $60 million in overseas purchasing power and recently cut 60 staff members. Other not-for-profits say they are also feeling the squeeze.

All share a common problem: Though many of their expenses are in foreign currencies, they raise funds in dollars. As the dollar has weakened against most major currencies, and as costs for food and fuel continue to rise worldwide, organizations — both Jewish and not — are finding that their funds are no longer stretching as far as expected.

“It’s definitely a big problem. Not only are organizations having to pay more on the ground to deliver aid, but they’re also having trouble raising money here because of the economy,” said Stacy Palmer, editor of The Chronicle of Philanthropy, which tracks the philanthropic world. “It’s a double whammy.”

Though Jewish organizations do not necessarily have more pronounced difficulties than other charities, a couple of factors have made their fiscal pain particularly acute. One is that American Jews have traditionally been the leading source of funds for Jews in Israel and elsewhere. What’s more, two of the largest destinations of Jewish aid are Russia and Israel, both countries where the currencies have been particularly strong.

Not long ago, the JDC announced that the dollar’s recent sag had sapped its $325 million budget for 2008. As a result, the JDC has had to scale back on everything from Jewish cultural events to programs that feed the elderly. The moves have come even as fundraising efforts have remained strong.

The situation is potentially even more ominous at the Jewish Agency, which has seen core allocations from American federations stagnate and even fall in recent years. Over the past year, as the dollar has dropped nearly 20% against the shekel, the Jewish Agency’s financial planning has been thrown into turmoil. According to a recent article in The Jerusalem Post, the agency’s board chairman, Richard Pearlstone, told Israeli reporters that the 2008 budget was made with the expectation that a dollar would be worth 4.25 shekels. The dollar today is worth 3.38. Insiders worry that the resulting budget cuts could cripple an agency already scrambling to find new sources of funding (see related article, above).

Though the Jewish Agency and the JDC are two of the most prominent organizations to be hit by the weakening dollar, smaller groups are also feeling the pinch. American Jewish World Service, an organization that makes grants to not-for-profits in developing countries, has started drawing up contracts with foreign consultants in local currencies in order to shield programs against the possibility of further slides in the dollar’s value.

Other organizations have hedged their bets by shifting some of their funds to other currencies. Since December 2007, the Hebrew Immigrant Aid Society has converted $1.3 million to euros — a move that has proved to be wise, as the dollar has continued to decline against the euro. Other not-for-profits have been reluctant to take risks with the currency markets.

“Hedges are like going to Atlantic City and putting money on red or black; they’re not free,” said Steve Schwager, executive vice president of the JDC, which has not made any such moves. “If you guess right, you’re okay. If you guess wrong, you just lost that money.”

Schwager said his organization was focused on trying to raise money to compensate for the dollar’s shortfalls.

Ultimately, there may not be any solution to the overseas woes except to hope that the dollar will make a comeback.

“You can’t raise money from Americans in shekels,” said Gary Tobin, president of the Institute for Jewish & Community Research, a think tank that studies Jewish giving. “You take your lumps, you wait it out and you hope for the best.”






Find us on Facebook!
  • Lusia Horowitz left pre-state Israel to fight fascism in Spain — and wound up being captured by the Nazis and sent to die at Auschwitz. Share her remarkable story — told in her letters.
  • Vered Guttman doesn't usually get nervous about cooking for 20 people, even for Passover. But last night was a bit different. She was cooking for the Obamas at the White House Seder.
  • A grumpy Jewish grandfather is wary of his granddaughter's celebrating Easter with the in-laws. But the Seesaw says it might just make her appreciate Judaism more. What do you think?
  • “Twist and Shout.” “Under the Boardwalk.” “Brown-Eyed Girl.” What do these great songs have in common? A forgotten Jewish songwriter. We tracked him down.
  • What can we learn from tragedies like the rampage in suburban Kansas City? For one thing, we must keep our eyes on the real threats that we as Jews face.
  • When is a legume not necessarily a legume? Philologos has the answer.
  • "Sometime in my childhood, I realized that the Exodus wasn’t as remote or as faceless as I thought it was, because I knew a former slave. His name was Hersh Nemes, and he was my grandfather." Share this moving Passover essay!
  • Getting ready for Seder? Chag Sameach! http://jd.fo/q3LO2
  • "We are not so far removed from the tragedies of the past, and as Jews sit down to the Seder meal, this event is a teachable moment of how the hatred of Jews-as-Other is still alive and well. It is not realistic to be complacent."
  • Aperitif Cocktail, Tequila Shot, Tom Collins or Vodka Soda — Which son do you relate to?
  • Elvis craved bacon on tour. Michael Jackson craved matzo ball soup. We've got the recipe.
  • This is the face of hatred.
  • What could be wrong with a bunch of guys kicking back with a steak and a couple of beers and talking about the Seder? Try everything. #ManSeder
  • BREAKING: Smirking killer singled out Jews for death in suburban Kansas City rampage. 3 die in bloody rampage at JCC and retirement home.
  • Real exodus? For Mimi Minsky, it's screaming kids and demanding hubby on way down to Miami, not matzo in the desert.
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.