Group Hopes to Make Charities More Accountable to Their Donors

It was a Torah portion from Exodus that helped convince Ira Kaminow to reform the Jewish philanthropic world.

Kaminow, who is religiously observant, was moved one Shabbat by the rabbinic analysis in Midrash Sh’mot Rabbah 51: “Even though Moses was a treasurer unto himself, he called in others to do the accounts, as it is said, ‘These are the accounts of the Tabernacle . . . ‘ it does not say that Moshe did the accounts, but that the accounts were done at Moshe’s command by the hand of Itamar.”

It struck Kaminow, a Washington-based public policy analyst and consultant, that Moses avoided any hint of impropriety by securing independent auditors to oversee funding of the Tabernacle.

Today Kaminow, a relative unknown in the organized Jewish world, is trying to get Jewish philanthropies to follow in the fiscal footsteps of Moses. He has drafted an ambitious blueprint for Jewish giving and spending that he hopes all Jewish nonprofits will follow.

Titled “Be Pure Before God and Israel: Principles of Ethics, Governance and Accountability for Jewish Philanthropies in the United States,” the rules aim to revamp the way Jewish philanthropies do business.

Kaminow hopes to convince Jewish philanthropies to adopt “transparent” accounting practices so that potential donors “have an idea what organizations do with the funds they collect,” he says.

“The aim is to encourage people to do more tzedakah and to do it in a more effective way,” he says.

Kaminow’s rules run some 26 pages, but the major points seem designed to ensure that Jewish charities spend the money they raise wisely and publicly.

For example, the rules call for nonprofits to spend 60 percent of the money they raise on programs; to hold fund- raising costs to 15 to 30 percent of assets; to see that their boards meet at least three times a year; and to keep minutes of the board meetings.

Some Jewish philanthropy professionals wonder whether it’s possible to convince the Jewish philanthropic world to follow one standard. Kaminow admits it could take years before he begins to make an impact.

Meanwhile, he will begin mailing “Be Pure” to Jewish groups in coming months, and will meet with leaders of Jewish federations to discuss the recommendations.

Few Jewish groups may have heard of him, but Kaminow has been trying to improve the ethics of Jewish giving for some time.

He also gathered financial details about groups from the American Israel Public Affairs Committee to the Zionist Organization of America.

But when Kaminow followed the paper trail to uncover financial data about these nonprofits, he found gaping holes. Kaminow learned that many of the groups fall short when it comes to volunteering much information to the IRS, such as how often boards of directors meet.

“There’s a mind set that no one takes these details seriously, so they don’t take the time to ensure that they’re totally accurate,” he says

Usually they don’t have to be. Only about one-third of these tax-exempt organizations, the majority of which by law are considered religious institutions, are required to file the Form 990 financial disclosure to the IRS.

When they do offer information, it’s often insufficient, he adds. Contributing to the problem is that nonprofits often hire accountants on a pro bono basis, even if they lack expertise in the nonprofit world. The number-crunchers then produce inaccurate spending reports, Kaminow says.

About 10 percent to 15 percent of the nonprofits whose books he has examined deviate from generally accepted accounting principles, Kaminow says.

Many groups also suffer from a lack of oversight, he says. Some charities fill their boards of directors with inexperienced laypeople, or list “trophy boards” filled with celebrities and public figures who lend the nonprofit some cachet.

Other boards hardly work at all. While nonprofits are required to detail in the 990 document how often each officer and director spends on an organization’s business, most charities either ignore this or simply state, “as needed,” Kaminow says.

Pressure to improve financial reporting has failed to build, he adds, in part because few donors pay attention, and in part because the IRS does not police the nonprofit world closely.

Part of Tzedakah’s mission is to get all Jewish nonprofits to at least take the 990s seriously, and file them as a matter of public record.

Better reporting will help Jews make more informed choices in other areas as well, says Harriet Bograd, who heads a Web forum on nonprofit cyber-accountability.

“Someone thinking of joining a synagogue should be able to see if this place is in the black or in the red,” she says.

Eventually Kaminow hopes to convince many Jewish philanthropies to endorse Tzedakah’s new standards of giving and spending. So far he’s won endorsements from one high-profile group, the Jewish National Fund, and the lesser-known Shefa Fund, but he admits he’s got a long way to go.

“I hope to get a large number of boards to read them and begin to focus on them,” he says. “It won’t happen willy nilly — it could take years.”

The JNF’s chief executive officer, Russell Robinson, not only backed the new standards but helped a Tzedakah committee draft them. Jewish charities must earn the community’s trust, Robinson says.

JNF, with assets of nearly $54 million, raises money for Israeli forestation and water-resource development. It was shaken in the early 1990s by revelations that it sent only 20 cents of every dollar raised to Israel.

Robinson, who stepped in after a management shakeup, says JNF’s participation with Tzedakah reflects JNF’s determination to be aboveboard.

The Shefa Fund, which promotes groups that work for social and economic justice and claims $14 million in assets, was already following open reporting practices but was forced to “double-check” its behavior after endorsing Tzedakah, says Sue Hoffman, associate director and grant director of the Shefa Fund.

Whether other Jewish organizations also will back the philanthropy standards remains unclear.

“If they’re seen as apple pie and the right thing to do, people will sign on,” Hoffman says.

But if other charities believe the rules are too rigid and require major organizational changes, their support will only extend to symbolic gestures, she predicts.

The ZOA’s president, Morton Klein, says the real question potential donors should ask about an organization is what it has accomplished.

“If an organization has major accomplishments but its board meets twice a year, and if an organization’s board meets 10 times a year but has accomplished nothing, who would you give to?” he says.

Klein says ZOA already likely adheres to much of what Tzedakah Inc. suggests, and details its financing and workings in letters to donors.

But the bottom line for Klein is ZOA’s impact on Israel and the Jewish world. No American Jewish organization “gets more bang for the buck” than the small ZOA, he says.

The other question a donor should ask about the ZOA or any Jewish organization, he says, is, “If we wouldn’t be here, would it change anything?”

For his part, Kaminow says the frequency of board meetings is important to understanding if an organization has “accountability.” If a board meets less than three times a year, he says, the organization it purports to oversee could be “a one-man show.”

Among the most active targets of Kaminow’s rules are Jewish federations, which raise and disperse hundreds of millions of dollars annually in the United States.

One of the larger federations is the Combined Jewish Philanthropies of Greater Boston, with a $21.5 million endowment in 2000-2001. CJP spent 68 percent of that money locally and 32 percent overseas and in Israel, according to its Web site.

Though CJP President Barry Shrage had not heard of Tzedakah Inc., he supports its goals generally, and believes CJP follows its top recommendations for open accounting practices.

“Anything that promotes transparency is a good thing,” Shrage says.

The real problem, Shrage adds, would be getting nonprofits of all types and sizes to follow the same rules.

Mark Charendoff, president of the Jewish Funders Network, which supports independent Jewish philanthropies such as family foundations, says several factors will determine whether the Tzedakah standards win wide appeal.

Tzedakah’s success will first be shaped by who signs on to the new rules, Charendoff says.

Jewish nonprofits also will look to see if the rules include compliance mechanisms, he adds.

“What happens if I sign up for this and I violate it?” he says. “There is no consequence.”

But Charendoff says there is a simple carrot-and-stick method to see that nonprofits follow the new rules. When he worked at the Samuel and Saidye Bronfman Family Foundation, he says, concern about the level of rhetoric between Jewish groups sparked vows to withhold funding from any group that did not pledge to avoid conflict.

Should Kaminow win broad support, Tzedakah could transform the Jewish philanthropic world, says Rabbi Yitzhak Breitowitz, a leading ethics scholar and law professor at the University of Maryland.

“We say in the High Holiday prayers that repentance, charity and prayer rip up evil decrees,” he says. “To be able to prioritize their giving, people need to have information. Hopefully, Tzedakah will be a vehicle to increase that giving.”

Meanwhile, Tzedakah is working on cleaning up its own philanthropic house. The nonprofit, with Kaminow as its sole nonsalaried employee, raised and awarded $35,000 in online contributions in 2000, but has yet to post its own financial reports on its site.

Kaminow says the problem is simply that he doesn’t have the time. “We need to meet our own standards,” he says.