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Jewish Organizations Challenge Sba Decision to Bar Aid to Hasidic Businessmen’s Group

February 18, 1981
See Original Daily Bulletin From This Date

Six national Orthodox Jewish organizations have challenged a decision of the federal Small Business Administration (SBA) barring aid to a Hasidic businessmen’s group.

In rejecting the Hasidic group’s application the SBA declared that approval would have meant designating “a religious group for special treatment” in probable violation of the First Amendment, according to Howard Zuckerman, president of the National Jewish Commission on Law and Public Affairs (COLPA).

Zuckerman said that last April 9, the SBA rejected the application from the Hasidic group, organized as an Opportunity Development Association(ODA), even though the SBA agreed that the ODA met fully SBA requirements for recognition as a “socially disadvantaged” group eligible for such aid.


In challenging the SBA ruling, the Orthodox groups protested that the SBA’s position “presents a clear threat to religious freedom and relegates religion to an unprecedented and wholly unwarranted pariah-like status in this country.”

Zuckerman said Section 8 (a) of the Small Business Act authorizes the SBA to give special help in getting financing for small business concerns “owned and controlled by socially and economically disadvantaged individuals.”

The occasion for the Orthodox challenge was the publication in the Federal Register last Dec. 1 of proposed changes designed by the SBA to more clearly define social disadvantage in Section 8 (a).

As required by federal law, the SBA solicited comments on the proposed changes from the general public. The comments of the Orthodox organizations were prepared by Dennis Rapps, COLPA executive director, with the assistance of Ivan Tillem, a staff associate.

The protesting national Jewish organizations are Agudath Israel of America; National Council of Young Israel; Rabbinical Council of America; Torah Umesorah, the National Society for Hebrew Day Schools; the Union of Orthodox Jewish Congregations of America; and COLPA. A local agency in Brooklyn, the Council of Jewish Organizations of Boro Park, joined in the protest to the SBA.


Zuckerman said that SBA rules establish two categories of such aid applicants. The first consists of individuals who can demonstrate that they personally have suffered social disadvantages. The second category consists of members of “designated groups, ” who, “in the absence of evidence to the contrary, are presumed” by the SBA “to be socially disadvantaged.”

The SBA defines as socially disadvantaged “those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”

In rejecting the ODA bid, the SBA found that, while the Hasidim as a group met all the objective criteria for designation as being socially disadvantaged, the SBA nevertheless denied the ODA that designation because “their cultural distinctiveness derives from religious beliefs.” “The bias they suffer in the marketplace as a result of that cultural distinctiveness, ” the SBA held, “stems from adherence to religious doctrine. The Hasidim are not just another group arguably comprised of members who are social disadvantaged; they are a religious group. Their application in effect asks the SBA to designate a religious group for special treatment.”

Under SBA rules, persons falling into the first category must establish the fact of their social disadvantage on the basis of “clear and convincing evidence” submitted to and accepted by the SBA. Zuckerman asserted that; as a practical matter, the “clear and convincing” yardstick would work to exclude practically all persons in the first category from getting SBA benefits.


The Orthodox comments held that, by refusing to designate Hasidim as a socially disadvantaged group on grounds of religion and the First Amendment, the SBA in effect had irrelevantly defined the Hasidim as primarily a religious group and that, therefore, individual Hasidim were not entitled to the benefits of SBA group designation.

Zuckerman said it was this application of constitutional law and the arbitrariness of the exclusion of Hasidim from the benefits of SBA disadvantaged group designation that were being challenged by the seven organizations. The Orthodox comments said that the organizations declared they shared with many Americans “a sense of uneasiness over group designations, as a matter of general principle.”

But, they added, “if such designations are to be employed, then they should be applied to all who are similarly situated.” The Orthodox groups disputed the SBA position that the First Amendment restrictions compelled the SBA to deny such designation of the Hasidim as a socially disadvantaged group, assuming they would otherwise qualify, “simply because their disadvantagement arises out of religious belief.”

Quoting from a U.S. Supreme Court decision, the Jewish organizations declared that the purpose of the First Amendment establishment clause was to prevent the occurrence of “the three main evils” of entanglement with religion–“sponsorship, financial support, and active involvement of the sovereign in religious activity.”

The organizations declared that designating the Hasidim as socially disadvantaged was “such a far cry from these three main evils” that it showed that the SBA “has lost the forest for the trees.”

The Jewish groups contended that the minority group designation was not established by Congress in the Small Business Act to give benefits to individuals to which they would not otherwise be entitled. The Congress established the disadvantaged group categories “in recognition that providing individual entitlement would be extremely difficult on a case-by-case basis” to such a degree “that an appropriate shorthand approach would be consistent with the Congressional purpose,” Zuckerman declared.

Thus, the groups asserted, a Black American, as a member of a designated group, is not given access to the SBA program “simply because he is a Black American, but rather because of the historical discrimination practiced in this country against Black Americans, he is presumed to have personally suffered from discrimination.”

The Jewish organizations asked that the SBA correct “the injustice” to Hasidim and to end its “mistaken application of important First Amendment principles.”

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