A not-for-profit Jewish cemetery in New Jersey has paid $8.5 million in management fees over the past six years to a for-profit cemetery company that controls its board of directors, public records show.
The cemetery company, StoneMor Partners L.P., has said in filings with the Securities and Exchange Commission that the fees it makes from not-for-profits like Beth Israel Memorial Park in Woodbridge, N.J., are roughly equivalent to the profits it would earn if it owned the cemeteries outright.
It’s an arrangement that New York cemetery regulators do not allow. In New Jersey, where critics have decried industry influence over cemetery regulation, the practice is legal. The cemetery executive who first set up the arrangement at Beth Israel is a former chair of the state board that regulates cemeteries.
One charity law expert said that though the arrangement does not breach cemetery regulations, the management fees paid by Beth Israel to StoneMor could breach Internal Revenue Service guidelines barring board members of not-for-profits from earning profits from their organizations.
The disparity between New York and New Jersey regulations on management fees mirrors other instances in which New Jersey cemetery regulators have taken a softer approach than those in New York. New York Jewish cemeteries charge far less than New Jersey Jewish cemeteries for Sunday burials. And the Forward reported in June that an official at a New Jersey cemetery earning an exceptionally high salary had been forced out of business in New York ten years earlier, after state officials charged that he had received unfair compensation at cemeteries there.
In recent years, a loose coalition of rabbis and legislators has worked to strengthen New Jersey cemetery enforcement by, among other efforts, reducing the number of cemetery industry executives mandated by state law to sit on the state regulatory board. A bill introduced by New Jersey State Senate Majority leader Loretta Weinberg that would cut down industry representation to a minority on the cemetery board is set to take the first steps toward legislative approval in mid-December.