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.