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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.
1. SUPPORT OF NEWBERGER HILLEL
JFMC: “Over the last decade, Federation support has increased dramatically from $213,000 in FY2002 to $483,000 in FY2011.” OUR RESPONSE: This claim relies on a misleading calculation of “support.” JFMC’s actual cash support rose from $170,000 in FY02 to $183,000 in FY11 and fell to $172,000 in FY12. JFMC includes three components in their calculation of support: 1) allocations from The Hillels of Illinois; 2) Newberger Hillel endowment payouts; and 3) payments for deficit reductions. 1) Allocations. We are grateful for the JFMC Hillels of Illinois allocations to Newberger Hillel, which, as mentioned above, went from $170,000 in 2002 to $172,000 in the current fiscal year. 2) Newberger Hillel Endowment Fund Payouts. JMFC includes as its support the payouts Newberger Hillel receives from its own endowment, which JMFC holds in trust for Hillel. These endowment funds rightfully belong to Newberger Hillel and should not be represented as additional JMFC support. The gifts to create these endowments were intended for Hillel in accord with donors’ wishes. • Payouts on these endowments more than quadrupled between 2002 and 2012, from $40,000 to $170,000, for two reasons. First, during this period the Newberger Hillel endowments themselves increased by over $1 million as a result of fundraising and donor generosity to Newberger Hillel -not because of management decisions made by JFMC. Second, these payouts increased because some of these endowments are being drawn down at the potentially unsustainable rate of 9.4% per year in an attempt to compensate for the JFMC-organized capital campaign that did not reach its goal (see below).
• 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 year’s 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: JFMC’s 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 People’s 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.
JFMC: “We repeatedly offered to work with you on fundraising—something that JFMC excels at—but at no time did you accept our offer.” OUR RESPONSE: • Newberger Hillel board and staff members, without assistance from JFMC, more than tripled Hillel’s 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.
Newberger Hillel Center
• 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.
4. IMPACT AND COST
JFMC: “We have pointed out that the cost to JFMC per student at the U. of C. is twice that of any other campus.” OUR RESPONSE: • There are few economies of scale in running a Hillel building or a Hillel program. The University of Chicago undergraduate body is substantially smaller than at Northwestern and University of Illinois, Urbana-Champaign. Distributing the fixed costs of running any Hillel, including a building as well as unalterable events, such as Shabbat and High Holy Day services, over an undergraduate body of approximately 800 Jewish students (rather than the 3,000 at Urbana-Champaign and 1,600 at Northwestern) yields a higher cost per undergraduate. • Unlike other Hillels in Illinois, we have also embarked on serving graduate and professional students this year which adds to our costs. JFMC’s calculation must also include these approximately 1,000 additional students, which would make the cost per student comparable to other Hillels. • The proper denominator is the number of students touched by the program, not the number of students on campus. Given that the Newberger Hillel has, for two years running, registered more than 80 students each year in the Birthright Program (the highest proportion of students nationwide), it would appear that the program is exceedingly cost effective. Birthright Israel is a program in which both Newberger Hillel and JFMC take great pride.
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.”
Newberger Hillel Center
• 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 Hillel’s 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 week—before 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 O’Brien, 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
Newberger Hillel Center
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