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superb work at Newberger Hillel under the leadership of Dan Libenson. We have worked with you and enjoyed Hillel events together. Most important, we have worked together to support innovative and exciting programming that engaged the students at The University of Chicago. In the last two weeks, much has been said by the Jewish Federation of Metropolitan Chicago (JFMC) about its dismissal of the board and executive director of the Newberger Hillel. We are greatly troubled by the accusations made, particularly those of ingratitude, fiscal irresponsibility, indifference to budget deficits, ineffective fundraising, and disregard for costs. To assure you that we have stewarded your contributions of money and time on behalf of the students at the University of Chicago, we offer a fuller explanation of some of the partial truths stated by JFMC in this regard.
JFMC elected to finance building renovations in 2000 through a bond issue rather than paying for the renovation directly with capital campaign gifts. Newberger Hillel is charged approximately $55,000 per year to pay off this bond. JFMC includes the interest payout on the capital gifts in its calculation of its support, despite the fact that this element of the JFMC contribution is offset almost dollar for dollar by the bond payback expense. 3) Deficit Reductions. JFMC's calculation of its support in FY2011 included funds to cover that years deficit, which we believe (and can document) includes substantial over-charges (see below). A Note on the Building. The Newberger Hillel Center building was assigned to JFMC in 2000 for $1.00. As consideration for this asset, JFMC agreed to raise $1.6 million for Hillel in a capital campaign. They raised only $869,000. Had JFMC met their commitment, Hillel would have had substantially greater cash flows from this endowment -- at JFMC's standard 7% draw, for example, Hillel would have had an additional $50,000, an amount that would have covered the bond issued to finance the rehabilitation of the building. Instead, Hillel not only covers the bond out of other funds but also pays JFMC rent for the building.
2. FISCAL RESPONSIBILITY
JFMC: Annual budget deficits averaged $100,000 per year. OUR RESPONSE: JFMCs calculation of the deficit is in error for two reasons. First, they charge Newberger Hillel above-market costs for facilities management, infrastructure services, and fringe benefits. Second, as noted above, they are charging Hillel for their failure to complete the capital campaign as agreed in consideration for obtaining the building. Overcharges. JFMC charges Hillel for facilities and other infrastructure expenses and also manages Hillel's payroll, charging Hillel for fringe benefits provided to staff. As part of our negotiations with JFMC, we obtained firm verifiable quotes from outside vendors for these services that were $100,000 less per year than the comparable JFMC charges. Capital campaign. As noted, JFMC did not complete its end of the bargain when it obtained the building for a dollar. Had it provided the agreed upon consideration, our endowment, and thus our cash flow from the endowment, would have increased. JFMC: Your utter refusal to engage in any constructive discussion of fiscal responsibility. OUR RESPONSE: We offered to eliminate $120,000 in expenses, multiple times. When we developed the FY2012 budget in March 2011, we were prepared to eliminate $120,000 in expenses related to building maintenance, equipment, and personnel benefit charges (JFMC charges Hillel for benefits even for personnel that do not receive benefits), which would have achieved a balanced budget. All of these expenses were charged by JFMC, and we identified less expensive sources for these services and equipment. We found, for example, that we could purchase utilities
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from Commonwealth Edison and Peoples Gas at lower rates than we were being charged by JFMC. Our plan to outsource these items, at substantial savings, as a means of reducing the deficit was rejected by JFMC. We believe that all line items in a budget contribute to fiscal responsibility, not just those selected by one party or another. JFMC, however, insisted that all the cuts be made to program or to staff rather than overhead, and did so when we were already seven months into the fiscal year. During the course of our discussions with JFMC over the past year, we cut costs whenever we had the opportunity to do so without affecting the student program. For example, we chose not to fill the position of the Director of Operations (who was on leave) as well as the Director of Development (who took another position in February). The savings from these two positions came to $45,000 over and above the $120,000 we had already recommended as savings in rental, maintenance, equipment, and other administrative costs. Despite requests over the last several years, JFMC has been unable to provide a complete accounting of the Newberger Hillel endowment funds, including the $200,000 Rabbi Daniel Leifer Speaker and Scholarship Fund that was entrusted to JFMC in 2006.
3. FUNDRAISING
JFMC: We repeatedly offered to work with you on fundraisingsomething that JFMC excels atbut at no time did you accept our offer. OUR RESPONSE: Newberger Hillel board and staff members, without assistance from JFMC, more than tripled Hillels fundraising success between 2006, when we raised just over $100,000, and 2011, when we raised $343,000. These amounts do not include the tens of thousands of dollars in competitive grants we received from Hillel International. Nancy Newberger said in an email to JFMC: I was deeply offended by the hypocrisy of JFMC in your discussion of fundraising efforts given the past 10 years of requests by NHC for such fundraising support from Hillels of Illinois and JFMC and assistance with reducing management costs which were all met with resistance. One of the root causes of current financial difficulties is that JFMC has not been able to reach its own goals for the capital campaign at Newberger Hillel. It has also not reached its capital campaign goals at Northwestern Hillel or the University of Illinois, Urbana-Champaign. Work with potential major donors requires considerable time and conversation so that assistance with fundraising would not alleviate the immediate budget cuts that JFMC demanded.
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The claim that we did not accept offers to work together on fundraising is simply false. For example, we came prepared to discuss fundraising at the January 17, 2012, meeting that JFMC called and for which we prepared an agenda (copies are available) that included working together on fundraising.
5. GOVERNANCE
JFMC: After months of negotiations to resolve budgetary and governance issues, the advisory committee and executive director of the Newberger Hillel Center at the University of Chicago issued an ultimatum: either they would negotiate a separation from the Jewish Federation of Metropolitan Chicago under which they would retain ownership of the building and management of the Hillel program, or they and their executive director (a Federation employee) would establish a new entity at a different location and with a different name. OUR RESPONSE: As Jim Cherney wrote to JFMC on behalf of the Board, We believe very sincerely that we will advance our program more rapidly and successfully as an independent entity and that Federation would be better served relating to us in a different relationship. We have never wished to be a financial burden to Federation.
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We continue to believe that it is in the best interests of our students and the Hillel program to separate from JFMC. Decisions such as how best to balance the budget and what type of programming to pursue are best made by those directly connected to the Hillel. Had we become independent, we would have had to run a balanced budget. Hillel was an independent entity for most of its existence. The building and the endowments were transferred to JFMC to be held in trust for Hillel. We want to restore our traditional independence. We offered to resign in June because we intended to fulfill our responsibilities to University of Chicago students through the end of the academic year. We did not issue an ultimatum, but rather offered to resign at the end of the academic year if JFMC remained unwilling to engage in a mediated conversation with the goal of Hillels independence. Our intent was to fulfill our responsibilities without disrupting the student experience and to allow a smooth transition in June. Instead, JFMC chose to fire all of us at a very inopportune time Passover and college admissions announcement weekbefore we were able to discharge our responsibilities to the students whose programs and interests we are bound to protect. Finally, we believe that we were entitled to be treated respectfully, as volunteers and as donors who support a vision for the next generation, committed to the programs for students at the University of Chicago. We were treated instead with disdain, which has saddened us immeasurably as volunteers and donors within the Jewish community. We continue our work on behalf of the students at the University of Chicago and will soon provide you with a case statement outlining our plans to continue our work over the coming years. Sincerely,
Ruth OBrien, President Jim Cherney, Immediate Past President Sara Segal Loevy, Vice-President for Development Adam Levine-Weinberg, Vice-President for Finance Halina Brukner, MD, Secretary Executive Committee Former Board of Directors Newberger Hillel Center at the University of Chicago
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