A Victim of Madoff and Changing Priorities, the American Jewish Congress Calls It Quits

When the board of the American Jewish Congress decided to suspend its operations, it didn’t give its staff much notice.

Employees were notified on July 13, that Thursday, two days later, would be their last day and that they then would receive their final paychecks. Whereas those laid off in previous rounds of cuts received severance pay and compensation for accrued vacation, the employees who lasted till the last round were told they would not receive the same benefits —at least until September.

Some employees who spoke to JTA on condition of anonymity are crying foul, saying the AJCongress still has money remaining from the 2004 sale of its building — an amount they believe adds up to about $2.5 million left in the bank — out of which the organization can pay the estimated $500,000 it owes employees.

Board members insist that employees will get all that is owed them and that there’s just a holdup while the money, which is restricted and cannot be touched unless the board approves the move in two separate votes, is made available by board votes.

According to the AJCongress constitution, the first of those votes cannot happen until 20 days after a proposal is made to unrestrict the funds, and the second vote cannot take place until 30 days after the first vote. Each vote requires at least 75 percent board approval.

“The employees have been kept up to date on every aspect of the finances of the organization. Nothing came as a surprise to them,” AJCongress President Richard Gordon told JTA.

“This has been discussed for months. They knew exactly the financial situation of the organization,” he said. “Shortly after the Madoff situation happened [in December 2008], we let a lot of people go. They were made whole with severance, vacation, etc. I have always believed that those who stayed on should be treated no worse than those let go initially.”

But employees are miffed that the board did not take the votes to unrestrict the money before making the layoffs.

“We never doubted leadership’s assertions and desire to pay the staff,” one employee said. “What was really surprising to us was to learn that the money was restricted and requires a lengthy constitutional process that could take weeks or months before we see the money owed to us.”

Marc Stern, the organization’s co-executive director and its legal counsel, said the board was made aware that it had to unrestrict the money to pay employees, but it chose not to.

Board members including Gordon and AJCongress chairman Jack Rosen say they are confident the board will unrestrict the money and take care of its employees as the process allows.

The AJCongress’s demise is a story not just about cash-flow problems but about the changing of priorities of the American Jewish community, organizational insiders said.

While the fulcrum was certainly the organization’s losses in the Madoff scandal — $21 million of its $24 million endowment disappeared in the scheme — the money woes laid bare the long-standing weaknesses that for years had made the AJCongress a junior sibling to larger Jewish advocacy organizations such as the American Jewish Committee and Anti-Defamation League.

“I think we had to find our voice in the community and in the arenas that were important; I don’t know that we did that very effectively,” Rosen said.

Others say privately that while the AJCongress was doing important work, focusing on issues of religious freedom in the United States, free speech and women’s rights, those simply did not resonate with donors who show more interest in Israel and anti-Semitism.

Launched in 1922 by prominent Jews, including Rabbi Stephen Wise and Supreme Court Justice Louis Brandeis, the AJCongress was established to be a democratic body that spoke for American Jews on a wide range of issues. At the time the AJC, with a similar mission, was seen as an elite bastion of German Jewish immigrants that was unresponsive to the broader Jewish community.

By the 1940s, the AJCongress was pioneering the model of using legal action to better Jews’ lives in America. In the 1960s, it took the lead role on behalf of the Jewish community in the legal fight for civil rights. In recent years it focused on securing a church-state divide in the United States, along with international issues such as helping refine Israel’s relationship with NATO.

Gordon attributed the AJCongress’ fund-raising woes to a changing of priorities in the Jewish community. “The number of people who give to organizations like ours is dwindling,” he said. “There is not a group of younger people who see these organizations as vital to American Jews.”

As the deepening recession prompted increased calls for organizations to merge or contract, the AJCongress became a prime example for the chopping block. Many suggested it be taken in either by the ADL or the AJC.

Those calls became louder in recent months as news surfaced that the AJCongress was considering merging with the AJC. Gordon says those talks continue and take place nearly every day. The AJC declined to comment.

Mission duplication aside, a shortage of cash was the precipitating event that led to the AJCongress closure. The Madoff losses erased the total of a bequest left to the organization by philanthropists Martin and Lillian Steinberg in 2001. The losses also wiped out half of the remaining proceeds from the sale of the organization’s building on East 84th Street in Manhattan.

Until the middle of the 2000s, the AJCongress still was managing to raise between $3 million and $4 million per year from bequests and living donors. About a quarter of its budget came from endowments. But the pool simply dried up with the recession.

While the AJCongress appears dormant for now, Stern and others are not closing the book completely. Several employees are still working, though it’s unclear if they are being paid.

“Maybe if money comes available, then we will pick up as resources pick up,” Stern said. “We have been wrestling with these problems for several months now and reached a point where we had to make a decision. At some point you just can’t continue with the resources available.”

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A Victim of Madoff and Changing Priorities, the American Jewish Congress Calls It Quits

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