The question that initially prompted my examination of four New York City JCCs’ accounting documents was: why did JCCs start taking government money to pay for programs and services? If, as I hypothesized, it was because JCCs needed the money, my analysis of the accounting documents had to show that these JCCs ran bigger and bigger deficits from year to year throughout the 1960s. I also hypothesized that these deficits occurred because, at the same time, the FJP was running bigger and bigger deficits and so was giving the JCCs less and less money.
Testing this guess required compiling and analyzing the FJP’s working account balance from between 1946 and 1973 (the year after which I had more difficulty finding this information). As I discussed in my post yesterday, I used Excel to compile FJP financial data into four columns. The first was the total amount that the FJP collected during its annual campaigns, and the second was the total amount of income FJP earned (the campaign contributions plus the income from FJP's endowment and investments). A third column listed the total amount FJP disbursed in allocations to its beneficiary agencies plus the amount of money it spent on administrative overhead, and the final column listed the FJP’s end-of-year account balance.
I was surprised by what I found when I reviewed this fourth column. Without even needing a graph, I could see from the data that there was no clear pattern in the balance of working capital that FJP had at the end of every fiscal year. I had expected that they would begin to run big deficits in the late 1960s, explaining why JCCs began to need another source of money in the early 1970s. Surprisingly, however, deficits became neither more frequent nor more severe in the 1960s--in fact, FJP ended only three fiscal years with a surplus during the 1950s, but yielded a surplus in at least six years during the 1960s! More interestingly, the deficits occurred despite the fact that, with a few exceptions, the annual campaign brought in more and more money every year.
I realized that the existence of a deficit was not the best indicator of the Federation's health. Using Excel, I was able to create a formula that calculated what percentage of FJP's total income came from their annual campaign contributions. In 1947, it was 88%, meaning that Federation was very reliant on its annual campaign that year, but twenty years later, in 1967, the campaign only accounted for 61% of FJP's total income. That revealed that not only was campaign income increasing overall, but revenue generated from the endowment and other investments was as well. If the Federation working account balance ran a deficit, it was not because they were taking in less money. Deficits were a function of FJP spending--if they chose to allocate more money to their agencies than they predicted they would make from their campaign and investments. That showed me that deficits may not have been the biggest concern of the FJP when it made its allocations to its beneficiary agencies, because they never reduced the total amount of their spending to close a deficit (for example, reducing their expenditures by $100,000 the year after running a $100,000 deficit). Usually they continued to increase their allocations, or perhaps made a marginal cut in order to prevent future losses.
So if FJP was not concerned with running a negative balance in their operating budget, I wondered if there was another way to understand their fiscal health. It was clear from the language used by the Federation Distribution Committee that they felt concerned about financial losses--and even more clear, from the pleas made by the JCCs, that agencies needed more money and were having to cut programming and staff. So what was causing the consternation, if the numbers all appeared copacetic? I decided to turn from the FJP’s finances and look at the JCC’s.
In an attempt to figure it out how much bigger the JCC’s deficits were growing from year to year, I asked my sister, who works with accounts and budgets every day, to help me create an Excel formula that would show the percent change in the account balance that the individual agencies reported at the end of each year. She pointed out that this measure was not particularly helpful, because the value of money is not static.
I confess that this comment blew my mind. I had not even considered how inflation was warping the comparisons I was making from year to year. Now, after examining hyperinflation in the 1970s, I recognize how fortunate I am to live at a time when the dollar has experienced reasonable levels of inflation. I do not acutely feel the purchasing power of my income decreasing on a daily basis, and so I completely neglected the role of inflation in my historical analysis of JCC budgets.
As it turns out, inflation played a very significant role in why JCCs felt constrained by the tiny incremental increases (or, yes, sometimes decreases) in their FJP allocations. My colleague and friend Kevin C. Brown taught me how to use the U.S. government’s Bureau of Labor Statistics CPI Inflation Calculator to adjust the nominal value of each allocation for inflation (I used 2016 as my comparative year to make it easier for readers to understand). I found that although FJP allocations were increasing, the purchasing power of these dollars decreased. And, at the same time, JCC’s personnel costs were increasing due to union contract renegotiations winning better pay for Jewish Center workers. FJP’s money did not go as far as it used to!
As a result of this finding, my current answer to my initial question is that New York City JCCs did begin taking government money because their FJP allocations were decreasing—but not in nominal value. The allocations were no longer keeping up with JCC’s costs. Although I had assumed the issue was that FJP was not raising as much money during their annual campaigns, contributing to a deficit, the truth is that they raised about the same amount of money from year to year. Unfortunately, it just was not enough to keep up with inflation.