The rambling thoughts of a Modern Orthodox Chassid (whatever that means). Contact me at emansouth @

Wednesday, December 03, 2008

The Coming Crisis For Jewish Institutions. Part I

I have written previously about the coming crisis that will befall the Chareidi world because of the fallout from the financial meltdown. I observed that the current paradigm, where a large percentage of men learn full time, will be severely tested, and, in all likelihood, will have to change.

It is abundantly clear that these same pressures are going to be felt by virtually all Jewish mosdos, from Modern Orthodox to Chareidi and to all social-needs related institutions that are less well-defined hashgachicly.

Under halacha, Jews are required to give maiser (10%) on their income. So, based soley on simple math, there will likely be much less maiser money available as many people lose their jobs, others, particularly in the financial sector, will receive much smaller bonuses, and many businesses, especially but not exclusively those that are high-end businesses, will be doing less well.

But I think it will be even worse than that. I think many people, especially those who have previously given generous amounts of tzedakah, give not on a straight line basis but on the basis of how much discretionary income they have available after they take care of their sizable personal "nuts".

Let's take an example.

Let's assume a young investment banker made in 2007 a base salary of $150,000 and a bonus of $250,000, for an after-tax income of approximately $260,000. On a straight maiser basis he might be expected to give approximately $26,000 to tzedakah.

Let's assume this year the same banker makes the same $150,000 base salary but got his bonus slashed to $100,000 for a total after-tax income of approximately $150,000. On a straight maiser basis this banker would still be expected to give $15,000 to tzedakah; down $11,000 from the previous year but still a substantial amount.

The reality is probably very different.

If this banker has two or three kids in yeshiva, has a mortgage and real estate taxes, and has a couple of cars, his nut is pretty big. Yet, with $260,000 of after tax income, it's fairly likely that he can take care of his nut and still have a decent amount of discretionary income left to give to tzedakah. Perhaps he can even give 25% of his discretionary income which could get him close to his overall maiser target. This year, however, there probably will be very little money left over for tzedakah after he's done paying his nut. The likelihood that he will be able to scare up $15,000 for tzedakah is very low. He might struggle just to pay his shul membership(s) and school scholarship funds.

Next: The implications.



  • At 8:33 PM, Blogger nyfunnyman said…

    good analysis, but just remember Maaser kesafim is only a minhag, not really a halacha. this could further complicate the issue.

  • At 10:56 PM, Blogger ThePeoplesChamp said…

    Either way, MoC is right on target.
    There will be tremendous fallout from all this and we haven't seen anything yet, IMO.
    Yes, the stock market crashed but the overall economy, spending, unemployment, etc is a snowball that just started to gain steam.

  • At 1:12 AM, Anonymous arnie draiman said…

    very nice. very important.

    and with sacred tzedakah shekels being more scarce, nothing is as important as making your tzedakah shekels be used in as an efficient and effective manner.

    for an organization to be run inefficiently (by paying too much rent, high salaries, too much for fund raising, etc.) or to be run ineffectively (by not serving the population that they say they are serving or not accomplishing various goals, etc.) is basically stealing from the very poor people your tzedakah money is intended for. (see "al tigzol dal, kee dal hu" - mishlei 22:22 and the various comments on it, paticularly bamidbar rabba 5:2)

    arnie draiman

  • At 8:13 AM, Blogger Still Wonderin' said…

    Did someone say PONZI SCHEME?

  • At 9:55 AM, Anonymous Anonymous said…

    Still Wondering- anything beneficial to add to a serious discussion? I guess not

  • At 10:02 AM, Anonymous Anonymous said…

    I think the only way the Schools and Shuls can get thru this is if (A) We prioritize our tsedaka destination and emphasize "Any Ircha Kodmim". We HAVE to support the Yeshivas and Schools before we give to Chasidisha Rebbes that come from New Square and Williamsburg and out of town Yeshivas. I'm not sure where some other Mosdos should fall into this discussion.
    (B) The Yeshivas take the initiative and tell the older Kollel guys that the Yeshivas can't afford to give out the scholarships that it has in the past and therefore unless you can afford more tution, it's time to get a job.

    (A) can happen is the Rabbonim join together and voice that opinion, (B) is less likely.

  • At 3:34 PM, Anonymous Anonymous said…

    The irony is that once the Kollel guys accept that the economic crisis is forcing them to go to work, the unemployment situation will make it harder for them to find jobs.

  • At 3:46 PM, Anonymous Anonymous said…

    There's serious halachik groundwork for saying that someone making that amount of money should be paying 20%. Thats always lost in the discussion of ma'aser. Asseir a'asrenu lach--2 ma'asers-one fifth. If ur that type of wealthy, 1/5 is the way to go.Brad

  • At 6:54 PM, Blogger MoChassid said…

    This post is really not about kollelim. The problem goes way beyond that. While they will surely feel much pain, so will yeshivas, shuls and mainstream organizations.

  • At 4:22 PM, Anonymous Anonymous said…

    Its a sick world that $150K isn't enought for three kids and a car. That's the reality, though.

    Anyway, I don't feel sorry for anyone who was making $300; they should have squirelled something away.

  • At 9:22 PM, Blogger cool yiddishe mama said…

    MoC, you said that your post was not specifically about the kollel situation but they are a key component.

    Kollel is seen as some sort of ticket for a lot of young men who seem to lack strong job skills and basic general knowledge. They tend to marry women who likewise received a minimal education and are expected to find a decent job to support a frum family while the husband earns them z'chut from learning.

    Some the biggest scholarship cases in charedi schools are the children of these kollel families, and they are receiving the largest chunk of the pie. At one local school, I observed a family with the husband in a kollel stationed at the mesivta (but due to some back room dealings with a local yeshiva, it's not "technically" connected to the school), the wife teaching limudei kodesh in the girls' school, and the kids enrolled in the school. All told, the husband gets a kollel stipend, the wife gets a paycheck from the school (plus a tuition break), the children are also on scholarship (in ADDITION to the staff discount) and finally, they are the government doll (giving her daycare vouchers for the younger kids, WIC, food stamps, health coverage) since they only have to report HER income!

    The group who ends up getting shafted in all this are the "working" families (as a friend of mine in Lakewood was called when she was finding a school for her daughter). People who are pressured by various organizations to give them money since they are "so wealthy". Sadly, I also know families with children in that same school who had to cry in the menahel's office about the tuition bill since supporting their families and covering day school has been getting more problematic by the year.

  • At 9:54 AM, Blogger MoChassid said…


    I have covered all that in the past. I said then that I thought the current situation would force a paradigm shift in the kollel system. I still believe that but it will be vary painful because even as more men will be forced out of the kollel system, there are no jobs to be had.

    This post is NOT about the kollel system. Jy point is that the financial crisis will (and already is) impacting every type of Jewish organization, well beyond the kollelim.

  • At 8:30 PM, Blogger cool yiddishe mama said…

    "It's rough all over...", I'm hearing from all segments of society. Unfortunately, the kollelim/yeshivot/day schools have been sitting in the dark for years while others on the outside have seen the writing on the wall for several years already. Even shortly before Rosh Hashanah, around the time of the market crash, I was speaking to people in these organizations who have not been "storing their nuts", so to speak.

  • At 11:18 PM, Anonymous Anonymous said…

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