Jewish Nonprofits and Giving

Reposted from eJewish Philanthropy – December 6, 2011

For more than two decades, we have had the privilege of working with hundreds of nonprofits across the globe. Throughout our close partnership with these organizations, we have learned that the public images of organizations may vary from the perceptions that donors and others may hold. Let’s acknowledge that perception and reality may often be different but that they do have relevance in today’s over-communicated world, especially as changes take place in the Jewish nonprofit marketplace. Consider six myths that may impact many nonprofits:

Myth 1
Nonprofits must generate revenue that exceeds income.

This myth is true. Like any viable enterprise, nonprofits – Jewish and otherwise – ultimately seek to bring in more money than they spend as a general good rule of practice. While the overarching goal of a nonprofit is to utilize funds that they collect to provide specific charitable services according to their mission, a realistic business plan needs to guide current and future decision making … based on realistic projections and the marketplace. Creating reserves as mandated by best practices and the actions of their Board will guarantee sustainability for the agency in years ahead.

Myth 2 
Nonprofits are established as charitable organizations, benefitting from tax relief, receiving special handling to qualify for philanthropic support, and serving important services to the community.

This is true. Surely there are many nonprofits that dedicate themselves to elevating noble causes but there are many classifications of nonprofits that utilize various governmental privileges to be tax exempt. This privilege is bestowed upon houses of worship, arts and cultural entities, fraternal beneficiary societies, educational institutions and social service providers. There is no doubt that these organizations seek donations as nonprofits, and contributors and funders can and will be entitled to tax benefits based on the nature of the organization and its classification under the IRS code and local jurisdictions.

Myth 3 
Nonprofit work is not challenging.

This is not true. In a way, nonprofit work contains more challenges than many other sectors of the economy. NPOs strain to achieve difficult missions, often with limited money and human resources. The business models of many nonprofits include the involvement of volunteers and other creative solutions to function, to promote their services and to serve their communities. It requires a certain temperament, passion and character to work for a nonprofit and to sustain its operations. Over 10% of all Americans work for a nonprofit and over 80% of US nonprofits operate with annual budgets under $1,000,000.

Myth 4 
Synagogues are considered nonprofits.

True. There are nearly 3,700 synagogues in the US and they classify as nonprofit. While most states and the federal government do not require houses of worship to file as 501C3 organizations, they do receive special treatment as tax exempt entities. Because we work with so many Jewish congregations, we recommend that congregations apply for and secure 501C3 status, thereby allowing synagogues to receive formal tax exemption benefits … both for the institutions as well as for their donors/congregants. Synagogues are not required to file an IRS form 990, a document that outlines an organization’s annual financial record and seeks to ensure transparent operations. According to the Union for Reform Judaism URJ), the central organization of the Reform Movement, membership dues count for roughly 68% of a congregation’s revenue, with the balance of the dollars coming from other means; in most cases that includes fundraising. Congregational members usually claim dues and other related expenses as legitimate tax dedications. Note that Giving USA reports that more than one-third of all charitable giving in the US is directed to religion, including dues and other support for churches and synagogues.

Myth 5 
Jews support Jewish organizations and Israel unconditionally.

False! Our firm recently prepared and released the second in a series of landmark reports outlining the scope of giving to Israel focused non-profits between 2006 and 2009. Among the observations we noted was that Israeli organizations are no longer seen in the same ways that they once were, reflecting that Israel is not an experiment but an important country on the international scene. Jewish federations and other traditional organizations associated with the Jewish nonprofit world are required to take new approaches to securing support and they are also changing their approaches, especially as Millenials (adults under 35 years of age) are coming onto the charitable scene.

Myth 6 
Jewish donors give more generously than those of other faiths.

Generally speaking this can be true, based on various reports. Jews number only about 2% of the overall US population. Therefore, the comparative giving number is not measurable to other religions. But per-capita, Jews seem to give as much if not more than those with other religious leanings. According to The Chronicle of Philanthropy, 19 of the top 53 donors in America are Jewish, including five of the top six donors in America (George Soros, Michael Bloomberg, Irwin and Joan Jacobs, Eli and Edythe Broad and Leonard Blavatnik). We should point out that this does not necessarily mean they support only Jewish causes. The Bible mandates tithing, whereby at least ten percent of one’s income goes for charity. Most American Jews seem to have abandoned that concept today. Mormons, on the other hand, generally give significantly to the Church of Latter Day Saints (LDS) as well as other causes they hold dear. As a result, Utah, with a large Mormon population, ranks as the most generous state today in terms of per capita giving.

Nonprofit organizations have very practical initiatives but benefit from important societal values and laws that allow them to operate with fewer tax restraints than for-profit organizations. But not all nonprofits are the same. While most are honest and law abiding, there are some which try to disguise themselves as legitimate to gain entry into the system. As a result of important oversight by various governmental agencies, many have lost their nonprofit status. (We wrote about this in June 2011 on eJewish Philanthropy: “IRS Targets 1534 Jewish Nonprofits.”) Most of the disallowed NPOs were very small and failed to report their finances properly … and a few did violate the trusts to donors about the work they provided or the services they performed.

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2 responses to “Jewish Nonprofits and Giving

  1. You said, “The Bible mandates tithing, whereby at least ten percent of one’s income goes for charity. Most American Jews seem to have abandoned that concept today.”

    If the Bible mandates tithing, then it’s not a concept; it’s a law. And you can’t take that law and change it to fit what you want.

    God defined His tithe in Leviticus 27:30-33 to be a tenth from HIS increase of food from crops and animals, NOT a tenth from man’s income. God commanded His tithe be taken to the Levites. There are no Levites to take the tithe to today.

    Jews haven’t abandoned the tithe, but rather know it is impossible for them to tithe today. First, the tithe must come from God’s Holy land, and must come from crops and animals. If the Jews don’t have crops and animals raised on the Holy land, they have nothing to tithe. Second, the Jews realize there are no Levites to take the tithe to, and there is no Temple for the Levites to keep up. Therefore, it is not possible to pay the Biblical tithe today.

    It is man that changed God’s tithing laws from crops and animals (assets) to man’s income.

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