Ethical Issues In Doing Charity

by Rabbi Pinchas Rosenstein, Rabbi Shmuel Strauss and Dr. Meir Tamari

Charitable foundations, welfare organizations, not-for-profit institutions and philanthropic trusts collect, distribute and invest vast sums in all economies. This is probably even more the case in the Jewish world, where such organizations fund welfare, education, and religious facilities in every community. The idealistic nature of such funding and its moral manifestations, does not however mean that there are no ethical dilemmas both in raising the funds and distributing them. Sometimes these dilemmas are rooted in the vast sums involved that tempt people to the same fraud, coercion or immorality that faces them in ordinary business dealings. Sometimes the dilemmas are rooted in the lack of transparency and public supervision, that is even greater than that of business organizations. In the latter, shareholder and statuary regulatory bodies provide more moral control than is possible in the voluntary often closely knit bodies that govern and manage charity. Sometimes the importance of the cause blurs the ethical perspectives of the officers or contributors.

Obviously fraud, theft, and dishonesty are disallowed however, as in business the issues are often less clear. One such issue was recently posed to us by Dr. Sol Kimerling of KIMCCORP Inc.

“I would appreciate your views on the ethics of paying commissions or fees to board members, trustees, governors, investment advisors, committee members of Jewish communal organizations, foundations, synagogues et al for buying and selling stocks or other financial instruments, real estate transactions, investments and counselling on the use of funds by organizations upon whose boards the individual serves.”

Rabbi Pinchas Rosenstein: “It would be quite unacceptable for a board member, trustee or governor responsible for communal property or funds to benefit directly or indirectly from his position of trust within the community. Such individuals need to make all decisions solely on the basis of the communal interest; any personal involvement creates conflicts of interest and clouds judgement.”

Rabbi Shmuel Strauss: “Until some 300 years ago, communal needs and charity were funded primarily through taxation and distributed through a communal prescribed procedure. In this respect, while it is not feasible to create the kehillah (Jewish community) mini-state in its entirety, perhaps it is at least possible to follow this pattern so that all Jewish charitable, educational and communal dealings would be supervised by independent communal personalities parallel to the Adam Chashuv, arbitrator in constraints of competition.”

Dr. Meir Tamari: “It should be noted that the question raised by Dr. Kimerling applies also to the possibility of nepotism in hiring and the blurring of any distinction between the assets registered in the name of the non-profit organization and the personal property of the officers. This happens constantly in the case of family-held corporations with all its potential for fraud and immorality. Charity funds and assets possess the same potential.

Perhaps some of our sources will show the sages’ awareness of the ethical issues involved and the necessity to avoid even the appearance of irregularity.

The Medrash tell us of the ever-present need for accountability of public officials that is codified in the Shulkhan Arukh and sourced in the full accounting given by Moses of all the wealth raised for building the Mishkan and his division of responsibility with Betzalel and Elazar.

The text in Samuel I “The sons of Eli, desecrated the sacrifices and caused the women to sin [adultery]” is understood by our sages in the light of public sector corruption. They illegally took the best meat or changed the sacrificial ritual to benefit themselves more than they were entitled to. They neglected the dove offerings of the women since here their personal share was less than from the regular sacrifices. Thereby they delayed the return of the women to their husbands, a form of sexual immorality.”

A person should not make a public display of the giving of charity [earning for himself social status at the expense of the poor]. If one does show off [with acts of charity] not only do they not get merit for it but are even punished for it”.

(Shulchan Arukh, Yoreh Deah section 249; subsection 13, the gloss of the Ramah)

 

Rabbi Pinchas Rosenstein is the Director of the Center for Business Ethics and Social Responsibility. Rabbi Shmuel Strauss is the former assistant director of the Center for Business Ethics. Dr. Meir Tamari is the former chief economist of the Office of the Governor at the Bank of Israel, and the founder of the Center for Business Ethics and Social Responsibility.