Donors Beware: Jewish Organizations Can Spend Your Money Pretty Much However They Please.
Image by Forward Montage
By Lila Corwin Berman December 8, 2016
For charitable organizations to demur from their political responsibilities in today’s world is to mask the political leadership these organizations already exercise through their financial practices.
Take, for example, a recent story reported in the Jewish press about a wealthy Los Angeles couple that holds a donor-advised fund (DAF) at the Jewish Community Foundation of Los Angeles. DAFs are charitable accounts, created by individual donors and managed by sponsoring public charities. Earlier this fall, following standard practice, the couple sought to make a contribution from its DAF to IfNotNow, an organization that “seek[s] to shift the American Jewish public away from the status quo that upholds the occupation.” It came as a surprise to the couple when the community foundation, a public charity with historical ties and leadership connections to the Jewish Federation of Los Angeles, refused to fulfill the request, explaining that the mission of IfNotNow was antithetical to its values.
Whatever one’s thoughts about IfNotNow, a progressive and outspoken Jewish organization with a record of being critical of mainstream American-Jewish institutions, the fact of the matter is that the Jewish Community Foundation of LA was entirely within its legal rights in denying the couple’s request. A donor who places assets in a DAF is simply an advisor, as the name of the fund makes clear, to the fund. The tax lawyers who crafted DAFs in the late 1960s were careful to designate donors’ requests as advisory and rest final allocation authority with the sponsoring organization.
But in practice, DAF holders generally assume that their allocation recommendations will be followed, as long as the recipient organization meets the basic test of being able to prove its 501(c)3 status. For decades now, community foundations have sold DAFs to their donors on this very premise of individual autonomy. As community foundations proliferated throughout the 1970s and 1980s and as commercial investment firms gained IRS approval to open charitable divisions in the 1990s, the balance of power tilted even more definitively toward the donor.
Jewish communal institutions often claim that the diverse list of organizations that their funds support prove that they are “big-tent,” non-political actors— but the proof is in actions, not words. In this case, by denying its donors’ request to allocate funds to IfNotNow, the Jewish Community Foundation of Los Angeles has unequivocally asserted its political power. One is hard-pressed to think of a more clear-cut case of political activism than that of economic boycott. The community foundation is preventing its assets — regardless of the individual names or account numbers assigned to them — from moving into economic streams that represent ideologies with which it disagrees.
Donors with money in DAFs should pay close attention to our changing political landscape. While commercial DAF institutions, with no mission beyond taking management fees from investments, appear unlikely at the moment to enforce ideological thresholds for allocations, other community foundations may increasingly believe it their responsibility to monitor how their legal assets do and do not circulate in a world more and more reliant on private funds.
All donors, whether or not they have DAFs, and the public more generally can and should demand is full transparency about the political goals embraced by public charities, such as Jewish Community Foundations and Federations.
Today, when many Jewish institutions and their leaders refrain from speaking against the racism, nativism, sexism, homophobia, and anti-Semitism reflected in Trump’s political appointments and policy promises — and then, simultaneously, exercise their legal right to draw political lines around the financial resources they have amassed in DAFs and endowments, then we can only assume that their silence is a political and economic calculation. We may empathize with the leaders who bear the heavy burden of exercising moral leadership, but we should not excuse institutions that conceal the moral choices they have already made.
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