Still In The Red: One Year After JPM Closure, JCC’s Finances Remain Precarious
One year after the Oak Park branch of the Jewish Community Center was shuttered to save money, the JCC is still operating at a loss and its balance sheet is still in trouble.
Brian Siegel took over the helm of the JCC in March from CEO Jim Issner, who was brought on board in 2013, when a financial mismanagement scandal propelled the JCC into the spotlight and the community united to try to “right the ship.”
Siegel, 52, was previously president of the JCC board and has been involved with the organization and the broader Jewish community for many years. An entrepreneur, he is the founder and managing partner of Joe Dumars’ Fieldhouse in Shelby Township and Detroit, owner of Star TRAX along with Geoff Kretchmer, as well as developer and business operations manager for Local Kitchen and Bar in Ferndale. Siegel also practiced real estate law for a national firm in Chicago prior to moving home to Detroit. A U-M alum, he has two children, Natalie, 18, and Griffin, 15.
Much has been done in the past three years to improve the finances of the JCC and ensure its sustainability for the future — but much still needs to be done, according to Siegel, who said he is working to regain community trust and inspire a fresh start.
“But talk is cheap,” he said. “I’m anxious to show real movement — real change.”
OPERATING LOSS REMAINS
The closure of the JPM building netted a savings of $885,000, but the preliminary operating loss for JCC’s fiscal year 2015-2016 is $275,000.
“If you ask me, the return on investment at JPM was on mission,” Siegel said. “So it was heartbreaking to stop serving people who were aligned with our mission.
“The quid pro quo of that was that it got us closer on our operating statement to break even. It didn’t get us all the way there, but we’re a lot closer than we were.
“We are healthier financially,” he added, “but we’re not necessarily healthier mission-based because we stopped serving an important population.”
More importantly, Siegel said, is the closure didn’t correct JCC’s balance sheet. “If year-to-year you’re losing money, you’re digging a deeper hole and your balance sheet gets worse. The JCC is still operating under a loss, although it’s digging a smaller hole each year. We think we’re within reach of being positive operationally on our $13 million to $14 million budget.
“But until the balance sheet is corrected, the JCC is in crisis.”
BALANCE SHEET UNCHANGED
The JCC has been running a deficit on its balance sheet for at least the last 10 years, and the number has been the same every year: about $4.5 million.
According to Siegel, the breakdown in debt consists of:
- a line of credit that is fully spent
- operating capital that the JCC doesn’t have
- borrowings against endowments
- critical capital improvements to upgrade
- legacy debt (shortfalls of prior fundraising campaigns)
- obligations to donors to fulfill programs where the money has not been set aside
The balance sheet needs to be corrected before the JCC can truly move forward in reinventing itself, Siegel said.
“When you’re operating a bankrupt company, you don’t make the investments to grow your business. You don’t have as much marketing as you need. You don’t invest in talent the same way.”
The Kahn Foundation, whose name is on the building, hired an outside consultant, O’Keefe and Associates, to do a viability study of the JCC before it would commit to a fundraising campaign to address the balance sheet issues at the JCC.
It recently completed its analysis and presented the results to the Federation Executive Committee. “The report was supportive of the viability of the JCC — if it gets support from the community. Our proposed initiatives are in line with its findings,” Siegel said.
Siegel said the Kahn Foundation will meet shortly to discuss the report and decide what they’re going to do. “We are awaiting a decision on whether it will provide a lead gift toward a campaign to fix the balance sheet,” he said.
“As long as the JCC is bankrupt, people should have limited expectations of what we can achieve because we can’t take the steps necessary to run a proactive business. When you’re trying to make payroll, you don’t make the investments in people, physical plant modifications or anything else you need to do to compete.”
REGAINING COMMUNITY TRUST
When the financial problems at the JCC first came to light, “the community lost confidence that we were telling a straight story, and the JCC bears responsibility for that,” Siegel said.
Financial One, an expert in providing accounting, financial and consulting services to nonprofit organizations, was brought in at the beginning of the crisis in 2013 to rebuild the books and create a rigorous financial accounting system that would prevent future problems.
“The original idea was that the group would stay for a certain period of time and then leave. Financial One remains here, and we don’t have plans to replace them,” Siegel said. “Our CFO works for Financial One and remains the gatekeeper for all financial information.”
Last year, the community was shocked and outraged when JCC Day Camp counselor Matthew Kuppe was accused of posting photos of nude boys on a Russian website — including three 5-year-old campers he oversaw. Kuppe pled guilty last month to distributing child pornography and is awaiting sentencing.
Siegel said they were heartsick when the matter occurred and looked at the day camp’s protocols after Kuppe was charged. “They were good, industry-standards,” he said.
Three day camp adminstrators were terminated for not acting on earlier concerns about Kuppe. However, over the past year, he added, the entire Federation system has gone through abuse prevention training. “It was intense, provocative and emotional,” he said. “It certainly got our entire organization focused on the risks associated with potential abuse. We’ll continue to improve on that education.”
Nevertheless, Siegel believes the incident did impact the JCC Day Camps’ bottom line. “Revenues for day camp are going to be down,” he said. “The marketplace in general is down, and our trend before last summer was down. But this horrific incident is going to hurt, no doubt.”
According to the JCC, no families of the victims of Kuppe have sued.
FUTURE OF THE JCC
An entrepreneur by nature, Siegel said he is anxious to get going on initiatives that “will change the nature of the JCC and break new ground. We’re taking a new look at what we deliver and taking it beyond the boundaries of the JCC,” he said.
“Of course, the JCC building still has relevancy — but we can’t be limited to our physical plant or we won’t be able to reach our constituents as we need to,” he added.
Attorney Rick Zussman, 61, of Huntington Woods is president of JCC’s 42-member board, taking over at the same time Siegel became CEO. Previously, he co-chaired the successful Maccabi Games at the JCC in 2014.
“Brian has terrific ideas,” he said. “My role is to reinvigorate the board, which has been relatively stagnant. I want our board members to be actively involved in both the governance and programming of the JCC so we can provide both oversight and assistance to Brian in achieving his goals. We will act as champions for the JCC’s new mission.”
When it comes to serving its customers, the core philosophy of the JCC is changing, according to Bret Hopman, marketing and communications director. “Our philosophy is to move away from telling people that they ‘should’ be JCC members. Instead, we want to show people why they should ‘want’ to pick our programs.
“We’re no longer operating under the notion of ‘you must be a member to be connected to the Center.’ If you’re in the Jewish community, or even in the larger community, we want our offerings to be available to you. You don’t have to be a member to participate. With that said, we’re also working to create an environment where our members are appreciated and acknowledged for their commitments. We will do that via discounts on JCC programs and exclusive events, among other concepts.”
If people want to join and work out at the health club, that’s great, adds Siegel. “But the JCC is not just a health club. We’re here to serve the community of today — not of 1953. We want to be the fabric-building engine of the community, not an island on to ourselves.”
One of its initial new offerings — “The Academies” — will launch this fall. It will consist of youth-oriented and adult programming across a variety of topics. Classes will be one hour a week over seven weeks and will take advantage of assets on the JCC’s West Bloomfield campus.
For example, Hopman said, “The Berman will no longer only feature programming of a high professional level, but will showcase students in the Academies who are taking introduction to acting or introduction to vocal music — perhaps with a talent competition.
“We’re also starting something called ‘PAIJ Players,’ a new community theater program for teens and adults. The inaugural performance is Hairspray, and there’s a place for everyone, whether you’re an actor, designer or technician.
“We’ll also do academies for fine arts such as ceramics and glass, leveraging the Janice Charach Gallery, for example,” he said.
Although initial Academies classes will launch at the JCC, future academies will be sprinkled across the community.
This is only one of the initiatives being planned, said Hopman, who hopes to announce more programs within the next few months. “We’re reimagining the word ‘Center,’” he said.
Added Siegel, “The JCC’s role in the community needs to change. We have the opportunity to do that, and we’re excited to make it happen.”
By Jackie Headapohl, Managing Editor