How to avoid the next Gmach Shefa Chaim scandal

I’ve blogged quite a bit about the issue of irresponsibility and transparency in Jewish philanthropy and tzedakah organizations – see here and here, for example – but the newest scandal, the New Jersey/New York money laundering (and organ sales?!) scandal, demands a response.

So far, it sounds like a basic money-laundering scheme, for all of the complexity of the different pieces involved. Criminals run illicit businesses, and send checks to so-called tzedakah funds, which then spend the money for “program services” that funnel the money back to the criminals. The tzedakah funds benefit by receiving a commission or a fee.

We can’t prevent these altogether – criminals will always find ways to commit crimes – but I believe we could do a lot to stem the tide with the following four rules:


First: Give only to tzedakah organizations that file a 990 or similar financial disclosure of their funding sources, their program services, and their oversight.

I don’t care if they are exempt. Yes, preparing a 990 will cost them money. But it’s a responsible way to function. I hate to say this, but I will no longer give significant money to Ner Yisrael, to the OU, to National Council of Young Israel, to Chaim Berlin, etc. They are all legally exempt from transparency, but as the Rama wrote in Yoreh Deah 257:2, tzedakah distributors must transcend their legal obligations in order to demonstrate innocence in the eyes of ה' and the Jewish people.

I would accept an annual public meeting with an explanation of the organization's finances, though. (Many synagogues, including my own, do this.)


Second: Give only to organizations that can explain their mission and program services in a clear, coherent way.
Open-ended gemachs, as well as Rabbi’s Benevolent Funds that don’t offer a clearly defined mission, are too open to abuse.


Third: Give only to organizations that mail you an annual report.
The report should summarize and explain the information outlined in Item 1 above – funding sources, program services, and oversight, and any significant changes therein. I do this for my Benevolent Fund (this year's report is here), and it has made me much more careful about how I handle the Fund.


Fourth: Eliminate the culture of winking and nodding.
As I discussed here, communities often assume that tzedakah funds, including the Rabbi’s Benevolent Fund, can somehow operate outside the law.

I have had people try to give me honoraria by writing checks to the Benevolent Fund;
I have had people try to write checks to support individuals and claim a tax deduction by doing it through the benevolent fund (you can’t claim a tax deduction for checks written to a specific person) [Yes, a fund can collect for individuals if the collection is in-line with the mission, but this is easily bent and broken.];
A few years ago a local bank went public and offer shares to local people, and I had out-of-town people try to get me to open an account with benevolent fund money, as their partners.

This is wrong, and it creates a culture of approving illegal operations. It must stop.


Ultimately, nothing will deter a determined criminal - but that doesn't mean we shouldn't bother with security systems for our homes, and for our communities.

Transparency in American Orthodox Jewish Institutions, Part II

Here is Part II of our look at Institutional Transparency in Tzedakah Organizations. We will list major tzedakah organizations which publicly file their financial information, using the IRS Form 990 for non-profits. Links are to the most recent Form 990 stored on the Guidestar website.

(Part I was here.)

Umbrella Organizations – Torah Education and Program Services
Agudath Israel of America

Agudath Israel of America Foundation

EDAH

National Council of Young Israel - DOES NOT FILE

OU – Union of Orthodox Jewish Congregations of America - DOES NOT FILE

Torah uMesorah - National Society for Hebrew Day Schools


Primarily Fundraisers
AMIT Women

Emunah Women of America

National Council of Young Israel's Yisrael haTzair supporting National Council efforts in Israel

RZA (Religious Zionists of America)


Program-Specific Organizations
Bnei Akiva of the US and Canada

Chabad Lubavitch National Campus Foundation

JOFA (Jewish Orthodox Feminists of America)

Rabbinical Council of America

Star K Supervision

ZOA (Zionist Organization of America)


Outreach and Educational Programming
AJOP

AOJS (Association of Orthodox Jewish Scientists)

Chabad Lubavitch Torah Educational Services

Chofetz Chaim Heritage Foundation

Merkos l’Inyonei Chinuch (But why nothing since 1998?)

National Jewish Outreach Program

Torah MiTzion Kollelim - St. Louis, Chicago, Detroit


Educational Institutions (Yeshivot and Colleges)
Beis Medrash Govoha (Lakewood Yeshiva)

Drisha

Hebrew Theological College (Skokie) - DOES NOT FILE

Ner Israel Rabbinical College - DOES NOT FILE

Rabbinical College of America (Lubavitch - Morristown, NJ)

RIETS (Rabbi Isaac Elchanan Theological Seminary)

Sh’or Yoshuv - DOES NOT FILE

Touro College

Touro University

Yeshiva Chaim Berlin - DOES NOT FILE

Yeshiva Chovevei Torah

Rabbi Israel Meyer haCohen Rabbinical Seminary of America (Chofetz Chaim) - DOES NOT FILE

Yeshiva Torah voDaath - DOES NOT FILE

Yeshiva University


Note, as we said in Part I, that the following religious organizations are technically exempt:
1. A church, an interchurch organization of local units of a church, a convention or association of churches, or an integrated auxiliary of a church as described in Regulations section 1.6033-2(h) (such as a men’s or women’s organization, religious school, mission society, or youth group).
2. A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs and is described in Rev. Proc. 96-10, 1996-1 C.B. 577.
3. A school below college level affiliated with a church or operated by a religious order described in Regulations section 1.6033-2(g)(1)(vii).
4. A mission society sponsored by, or affiliated with, one or more churches or church denominations, if more than half of the society’s activities are conducted in, or directed at, persons in foreign countries.
5. An exclusively religious activity of any religious order described in Rev. Proc. 91-20, 1991-1 C.B. 524.

Also, organizations are exempt if their annual gross receipts are normally less than $25,000.

(For more information, see the IRS pdf here.)

Transparency in American Orthodox Jewish Institutions

As I've noted elsewhere, one of this year's RCA resolutions promoted Insitutional Transparency for the Jewish community.

I spoke about the issue in shul two weeks ago, connecting it with the Institutional Transparency of sending the meraglim to scout out Israel (derashah here).

In the wake of that speech, a congregant of mine inquired about a major Orthodox Jewish organization that does not publish its financial records. I passed along the question to one of the organization's leaders, and he replied that they are very fiscally responsible, reviewing and auditing their records, but they do not plan to publish anything.

Note that some organizations are legally exempt from transparency - here are the IRS exemptions for religious organizations:
1. A church, an interchurch organization of local units of a church, a convention or association of churches, or an integrated auxiliary of a church as described in Regulations
section 1.6033-2(h) (such as a men’s or women’s organization, religious school, mission society, or youth group).
2. A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs and is described in Rev. Proc. 96-10, 1996-1 C.B. 577.
3. A school below college level affiliated with a church or operated by a religious order described in Regulations section 1.6033-2(g)(1)(vii).
4. A mission society sponsored by, or affiliated with, one or more churches or church denominations, if more than half of the society’s activities are conducted in, or directed at, persons in foreign countries.
5. An exclusively religious activity of any religious order described in Rev. Proc. 91-20, 1991-1 C.B. 524.
(For more information, see the IRS pdf here.)

Nonetheless, I believe that financial transparency of tzedakah-receiving organizations is important in halachah, separate from financial responsibility:
Responsibility means we are careful with how we spend tzedakah money.
Transparency means we let our donors know how we spend their tzedakah money.

There are many sources in our masorah recommending transparency; see Midrash Tanchuma Pekudei 4 and Rama Yoreh Deah 257:2 for a couple of examples.

So I began to look at Orthodox Jewish institutions, to see how many file Form 990 with the IRS, publicizing their records. The results are encouraging; most of them do publish their records.

Here are some early findings, courtesy of Guidestar; more to follow, Gd-willing. The organization titles below link to their most recent publicly available filings, which are generally 2007.

THOSE WHO DO PUBLISH FORM 990
Agudath Israel of America

Agudath Israel of America Foundation

AMIT Women

AOJS (Association of Orthodox Jewish Scientists)

Bnei Akiva of the US and Canada

Chabad Lubavitch National Campus Foundation

Chabad Lubavitch Torah Educational Services

Drisha

EDAH

Emunah Women of America

JOFA (Jewish Orthodox Feminists of America)

Merkos l’Inyonei Chinuch (But why nothing since 1998?)

National Council of Young Israel's Yisrael haTzair supporting National Council efforts in Israel

RCA

RIETS (Rabbi Isaac Elchanan Theological Seminary)

RZA (Religious Zionists of America)

Star K Supervision

Touro College

Touro University

Yeshiva Chovevei Torah

Yeshiva University

ZOA (Zionist Organization of America)


THOSE WHO DO NOT PUBLISH FORM 990
National Council of Young Israel

OU - UNION OF ORTHODOX JEWISH CONGREGATIONS OF AMERICA

(Note that they are both legally exempt under Item 1 above.)


More to follow, when I have a few minutes to follow up on more organizations.

Iran's Trust Revolution and the Meraglim (Derashah Shelach 5769)

According to the analysts, Iran’s upheaval is not a 21st century version of Eastern Europe’s liberation. Mir-Hossein Moussavi and Mahmoud Ahmadinejad are both conservatives, ideological brothers.

This is also not a “power to the people” rebellion; Iran’s poorer classes support Ahmadinejad, not Moussavi.

Millions of Iranians are endangering their own lives not out of political philosophy or abject poverty, but in outrage over a government that has betrayed their trust.

Government has always been empowered by social contract, but in this age of free and speedy access to information government is also held accountable to social contract. Violating that contract, betraying that trust, in Iran’s case ignoring votes in a democracy, leads to revolt.


The need for maintaining popular trust is not a new idea. In fact, a midrash suggests that Gd's decision to send the meraglim/spies was motivated by that need, to maintain popular trust regarding Canaan, to head off doubt by letting the Jews themselves see what the land offered.

Elaborating on this point, the midrash compares the desert Jews to a man who wishes to purchase a donkey. He asks, 'Would you give it to me for a test run?' The owner agrees. 'Can I take it on mountains and through hills?' 'Sure.' Once the buyer sees that the owner is hiding nothing, he hands over the money without even doing the test.

Of course, our relationship with HaShem is supposed to be about Emunah/faith, but Gd understood that not every Jew would reach such a high level, that some might need to know everything upfront – and so HaShem allowed them to send spies, in order to build trust.


Moshe also practiced this trust-building transparency, regarding the money he raised for the mishkan. After the collection was complete, Moshe gave the nation a full accounting of all of the items presented; it’s listed in the beginning of the parshah of Pekudei.

One midrash suggests that this was a response to people's explicit allegations about what Moshe was doing with the money; Moshe swore he would provide a full accounting in order to earn their trust, and he did.

Moshe's practice with the Mishkan collection became the recommended ‘best practice’ for tzedakah in general; the Shulchan Aruch says that elected tzedakah distributors need not provide a full explanation of their spending, but the Rama adds that they should do so anyway, כדי שיהיו נקיים מה' ומישראל, to maintain innocence before Gd and Israel.

And this transcends the realm of tzedakah; the Torah’s instruction of maintaining innocence in the eyes of Gd and Israel, of earning popular trust, is all-encompassing.


This is certainly true for our communal institutions.

One of the RCA's resolutions at this year's convention was on exactly this topic – the need for Jewish institutions to function with the greatest transparency, in order to build trust.

The wording of the resolution includes the message, “Let it be resolved that all Jewish communal institutions strive to attain levels of transparency regarding financial affairs, regarding the mechanism of leadership succession, and regarding the planning and execution of general business. Vehicles for attaining transparency include annual open meetings, featuring complete reports of their activities and financial condition, as well as periodic newsletters detailing current news and goals.”

Iran or Meraglim or Tzedakah funds or communal instituions, it’s all about earning and maintaining trust.


And there’s one more area where transparency and trust-building are critically important: On talking to our children and grandchildren about our religious beliefs.

As parents and grandparents, we wrestle with the question of what to tell our children about illness, about family issues, about finances; we wonder when it's appropriate to include them in the knowledge that a parent lost a job, or that a relative has received a terminal diagnosis.

This question is all the more applicable for our personal spiritual struggles, our issues of faith and doubt, and I believe that pre-teen and teen children need to know their parents’ beliefs, as well as their parents’ skepticism, in an age-appropriate way.

As children near their teenage years, some younger, some older, they experience normal skepticism about all of the things they learn in school, and particularly the Jewish lessons which are contradicted by so much of society's input. How do I know the Torah is true? Where is Gd now, and where was Gd during the Holocaust? Is there really a Mashiach? What happens when people die?

When parents discuss these issues, and their own views, with their children, that open conversation can establish a trusting relationship that will last far into the future:
• It can prove to children that their parents are people of depth, and not rote observers of ritual;
• It can send the message that wondering and doubting are normal and healthy;
• It can provide answers for children’s questions, and it can provide lessons in how to deal with doubt;
• And it can establish a line of communication that children will, hopefully, exploit as they grow older.

The trust this establishes can be the difference between a child who rejects his parents’ path, and a child who chooses to follow it.


In his essay, “My Father’s Bourgeois Judaism,” Franz Kafka described being dragged to shul for Rosh haShanah and Yom Kippur. He wrote to his father, “Four days a year you went to the synagogue, where you were, to say the least, closer to the indifferent than to those who took it seriously, patiently went through the prayers as a formality, sometimes amazed me by being able to show me in the prayer book the passage that was being said at the moment, and for the rest, so long as I was present in the synagogue (and this was the main thing) I was allowed to hang around wherever I liked. And so I yawned and dozed through the many hours (I don't think I was ever again so bored, except later at dancing lessons) and did my best to enjoy the few little bits of variety there were…”

Kafka felt that his father never discussed the spiritual with him, and the result was a son who did not trust, and who rebelled and walked away.

Let’s model our parenting on HaShem’s act of sending the Meraglim, rather than the silence of Kafka’s father. When our children know that their vote counts, when they see that we permit them to take the donkey for a spin before buying it, then we will have earned their trust.

-
Notes:

1. The midrash comparing sending the meraglim with selling a donkey is Sifri Devarim 21; the midrash on Moshe earning trust by making a full accounting is Tanchuma Pekudei 4. The Rama's comment is in Shulchan Aruch Yoreh Deah 257:2.

2. Note that the meraglim trumped Gd in the drive for the nation's trust, by claiming that Gd really had been hiding information all along - the land is filled with giants, it's a harsh land, we've been duped, etc. It isn't until the beginning of Devarim that Gd, through Moshe, acknowledges to the people the residents of the land are mighty, etc.

3. Perhaps this desire for national trust is one reason why a nasi (leader of the Jewish people) is required to bring a unique korban if he sins. Bringing a normal sin-offering, hiding his transgression among the regular citizens, will not suffice; leaders must be honest with their citizenry.