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After a death watch lasting nearly two years, news that the end of the American Jewish Congress was imminent set off a flurry of e-mails in the Jewish organizational world wondering if the 91-year-old advocacy group indeed was shuttering its doors.

News of the demise was posted July 16 by eJewishPhilanthropy.com, a website focused on Jewish nonprofits.

“We have suspended most of our operations,” said the organization’s co-executive director, Marc Stern, confirming that the organization devastated by the Bernie Madoff scheme in December 2008 had laid off nearly all its remaining employees.

“Some things are continuing to go on because they are in process, and there are future activities a couple of months down the road,” Stern said, citing cash flow problems. “There are some other things floating around that can be done with minimal costs. I hope things will become very clear and we can discuss it in public.”

AJCongress president Richard Gordon issued a statement July 21 that implied the organization would continue in some form. He said the agancy’s governing council would continue meeting to discuss options.

Marc Stern, co-executive director of AJCongress

“During the course of this process, we will be operating with a skeletal staff over the next few months. However, we fully plan to continue the events that we have scheduled during this time,” the statement said. “This is a time for careful reflection and consideration as how to move forward and continue to be a major force in Jewish communal life.”

The AJCongress’ story is not just about cash-flow problems but also about the changing priorities of the American Jewish community, insiders said.

While the fulcrum certainly was the Madoff scandal losses — $21 million of the organization’s $24 million endowment disappeared — the money woes laid bare the longstanding weaknesses that for years had made the AJCongress a junior sibling to larger Jewish advocacy organizations such as the American Jewish Committee and the Anti-Defamation League.

“I think we had to find our voice in the community and in the arenas that were important; I don’t know that we did that very effectively,” said AJCongress Chairman Jack Rosen.

Others say privately that while the AJCongress was doing important work, focusing on issues of religious freedom in the United States, free speech and women’s rights, those simply did not resonate with donors who time and again have shown more interest in Israel and anti-Semitism.

Launched in 1922 by prominent Jews including Rabbi Stephen Wise and Supreme Court Justice Louis Brandeis, the AJCongress was established to be a democratic body that spoke for American Jews on a wide range of issues. At the time the AJCommittee, which had a similar mission, was seen as an elite bastion of German Jewish immigrants that was unresponsive to the broader Jewish community.

By the 1940s, the AJCongress was pioneering the model of using legal action to better Jews’ lives in America. In the 1960s, it took the lead role on behalf of the Jewish community in the legal fight for civil rights. In recent years it focused on securing the church-state divide, along with international issues such as helping refine Israel’s relationship with NATO and leading the legal fight against terrorists’ use of human shields.

Gordon attributed the fundraising woes to a changing of priorities in the Jewish community that many organizations are feeling.

“The number of people who give to organizations like ours is dwindling,” Gordon said. “There is not a group of younger people who see these organizations as vital to American Jews.”

As the deepening recession prompted increased calls for the organized Jewish world to eliminate duplication and unnecessary bureaucracy by merging and contracting, the AJCongress became a prime target for the chopping block. Many suggested it be taken in either by the ADL or the AJC.

Those calls became louder in recent months as news surfaced that the AJCongress was considering merging with the AJC. Gordon says those talks continue and take place nearly every day. The AJC would not comment.

Mission duplication aside, a shortage of cash was the precipitating event that led to the AJCongress closure. The Madoff losses erased the sum total of a bequest left to the organization in 2001 by Martin and Lillian Steinberg, philanthropists who were close with Madoff, according to the Forward. The losses also wiped out half of the remaining proceeds from the 2004 sale of the organization’s building on East 84th Street in Manhattan.

Until a few years ago, the AJCongress still was managing to raise between $3 million and $4 million per year from bequests and living donors. About a quarter of its budget came from endowments. But the pool simply dried up with the recession.

“There are some people who gave a lot of money, but over the last number of years that has not been very robust at all, even before Madoff,” Gordon said.

Immediately following the Madoff scandal, board member Jay Umansky issued a challenge to other board members to each contribute a low four-figure gift to help the AJCongress get back on its feet, according to several sources. But with a board composed more of intellectual than financial heavyweights, only a handful accepted the challenge.

It didn’t help that after the 2008 departure of the previous executive director, Neil Goldstein, the board did not hire a new CEO and instead had Stern and Matt Horn — the organization’s legal counsel and policy director, respectively — become co-executive directors while keeping their old roles. The two were meant to serve in their new executive positions on an interim basis, but the board never found a successor to Goldstein.

“This is about a vacuum of leadership,” one insider said. “That is what you are missing over here. It is about no cohesion that brought together contributors, programming and mission statement.”

While the AJCongress appears dormant for now, Stern and others are not closing the book completely. Several employees are still working, though it’s unclear if they are being paid.

“Maybe if money comes available, then we will pick up as resources pick up,” Stern said. “We have been wrestling with these problems for several months now and reached a point where we had to make a decision. At some point you just can’t continue with the resources available.”

Employees got only two days notice that they were losing their jobs. Whereas those laid off in previous rounds of cuts received severance pay and compensation for accrued vacation, the employees who lasted until the final round were told they would not receive the same benefits — at least until September.

Some employees who spoke on the condition that they would remain anonymous claimed that AJCongress still has money remaining from the 2004 sale of its building — an amount they believe adds up to about $2.5 million left in the bank — out of which the organization can pay the estimated $500,000 it owes employees.

Board members insist that employees will get all that is owed them and that there’s just a holdup while the money, which is restricted and cannot be touched unless the board approves the move in two separate votes, is made available.