Plenty of Money Made at 'Not-for-Profit' Cemetery

Paid $8.5M to Management Company That Controls Its Board

Digging for Gold: The board of not-for-profit Beth Israel Memorial Park in Woodbridge, N.J., is controlled by a management company, which earned a whopping $8.5 million in fees from the cemetery. The arrangement is legal, but raises eyebrows among watchdogs.
josh nathan-kazis
Digging for Gold: The board of not-for-profit Beth Israel Memorial Park in Woodbridge, N.J., is controlled by a management company, which earned a whopping $8.5 million in fees from the cemetery. The arrangement is legal, but raises eyebrows among watchdogs.

By Josh Nathan-Kazis

Published December 11, 2012, issue of December 14, 2012.

(page 3 of 5)

For more than half a century after its founding, Beth Israel was the keystone of what grew into a family-owned cemetery mini-empire. Isidore Shipper, a Jewish businessman, gained control of the cemetery shortly after it was created, according to David Shipper, his grandson. David himself started working there when he graduated from college, in 1978. The Shippers began to expand their operations to a handful of other East Coast cemeteries in the 1980s, using the same sort of corporate structure StoneMor uses now to control Beth Israel. The Shippers bought up the debt of not-for-profit cemeteries, allowing them to take control of those cemeteries’ boards. In at least one of the instances, the Shippers then hired a firm they owned to manage the properties, charging management fees to the boards they controlled.

In 1995 the Shippers sold their operation to the Canada-based Loewen Group, then a massive and fast-growing cemetery corporation that owned funeral homes and cemeteries across North America. David Shipper; his father, Irwin Shipper, and Aaron Shipper a cousin, all took positions as vice presidents at Loewen and went on to become major figures in the corporate cemetery industry. Irwin Shipper was elected president of a national death care trade association in 1996. He also served as president of the New Jersey Cemetery Board, the state cemetery regulator. David Shipper also served on the regulatory board and led the same death care trade association.

Even as large companies like Loewen were adopting the management model by which small operators like the Shippers had been controlling not-for-profits for years, New York regulators were moving against it. In 1997, the New York State Cemetery Board issued a policy opposing broad management agreements between not-for-profit cemeteries and for-profit corporations. The board argued that management agreements that put control of the cemetery in the hands of a for-profit corporation could threaten the future viability of the state’s not-for-profit cemeteries.

“The Cemetery Board opposes all management agreements designed to divert all or part of the control of the cemetery from the not-for-profit board into the hands of a for-profit organization,” the cemetery board wrote.

Loewen sued state regulators after an effort to enforce this policy against a cemetery that Loewen had bought from the Shippers. Courts found against Loewen, upholding the regulation.



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