My friend seemed agitated. We were discussing the topic of this article and he was concerned about the possibility it might lead to widespread suspicion of those entrusted with the management and safekeeping of the assets of our local mosdos. He reminded me of the pasuk “V’amech kulam tzaddikim” – “And your nation is all righteous.”
Aren’t lay people and professionals in shuls and day schools around the country fulfilling their tasks and responsibilities with honesty and integrity? Don’t those individuals who go about their (often thankless) jobs with the utmost dedication, all the while being overworked and underpaid, deserve a chezkas kashrus? If so, then on what basis are mosdos justified in implementing strong internal and financial control policies and enacting measures that can detect or prevent theft and fraud?
Anyone who follows current events is aware that fraud and abuse are continually on the rise. Nonprofits are no exception. Actually, in many respects, it is easier to commit theft and fraud in nonprofits than in commercial entities. This past August the CEO of the Metropolitan Council on Jewish Poverty was fired for major financial improprieties and two weeks ago was arrested and charged with stealing more than $5 million from the time he assumed that position in 1993. And then a senior executive at a prominent Jewish nonprofit organization resigned his position because of his alleged link to this scandal.
Experts in the field of fraud examination with whom I have spoken will tell you we typically are not dealing with evil people harboring bad intentions at the outset. The vast majority of those who perpetrate theft do not start with the intention to steal. Years can go by during which they actually fulfill their tasks and responsibilities with complete honesty and integrity. Then one day they are faced with an overwhelming expense, be it a wedding or a large unexpected medical bill. The pressure can be enormous and the rationalization to “borrow” from the institution’s account is beyond enticing. They figure they will pay it back soon and no one will ever know the difference. But they don’t pay it back. And they “borrow” again and again until they are swept up and trapped in a current of theft and deception from which they cannot find their way out.
Aside from the perpetrator, who must take ultimate responsibility, the board of directors is guilty of negligence. In many local mosdos, the professional staff or lay personnel in charge of finances are often people whom board members grew up with and have known for years. They share in each other’s simchas, their kids play together, or they may sit side by side in shiur. Putting absolute trust in such individuals is entirely understandable. But for those who sit on the board of a local institution and are charged with safeguarding the hard-earned mamon hekdesh, such blind trust is inexcusable. Everyone assumes bad things can never happen and will never happen – until they do.
Board members of our local mosdos have a sacred and fiduciary duty to take steps that would greatly reduce the risk of fraudulent activity. These steps are not difficult or expensive. Paying thousands annually to hire an outside auditor to conduct an internal control or fraud detection review is not necessary. Rather, a finance oversight committee of two or three responsible lay people investing one or two hours a month of their time is more than sufficient to reduce this risk to a minuscule level. The mere existence of such a committee alone would act as an effective deterrent.
Rudimentary steps could include reviewing the monthly bank reconciliation and bank statement, the cash disbursement register, the monthly cash receipts report, and a report of all recorded non-cash transactions. In addition, a system could be set up to inform the staff that donations in checks and cash, anonymously given and otherwise, will be sent in periodically and monitored to ensure complete and proper processing. For online accounts, automatic e-mail notifications for any transaction or change should be sent to at least two members of the finance oversight committee. Purchasing a fidelity bond insurance policy should also be considered as a practical step.
Much ink has been spilled in our community on the issue of living beyond our means. I don’t think anyone can argue that for many of us, the temptation to build a humongous house, make grandiose chassanahs and buy the fanciest cars and clothes is enormous. Particularly in America, the pressure to live a lifestyle of the rich and famous can be overwhelming. This just serves, of course, to increase the risk of fraud and deceit. The reality is, we all have flaws and weaknesses.
But how then do we understand the pasuk “V’amech kulam tzaddikim” that my friend mentioned? The explanation is that the navi Yeshayahu was prophesying; he was speaking of a future generation. At that time, Hashem will purify all the Jews gathered in Eretz Yisrael and the entire Jewish nation will in fact be righteous (may those days come soon).
But we are not there yet.
Thus we should learn from Moshe Rabbeinu, who in Parshas Pikudei made a full accounting of all the contributions for the Mishkan under his and Betzalel’s supervision. He understood that leaders, regardless of their high stature, must take all possible steps to prevent even an inkling of suspicion.
We should learn from the officers in charge of withdrawing the funds donated to the Beis HaMikdash. When they entered the lishkah, they did so barefoot and wearing clothing that contained no hemmed parts, no wide sleeves, and no pockets or cuffs, so that it would be impossible for them to hide any coins lest they be suspected of stealing.
We should learn from Chazal, who tell us it is not enough for one to know that one’s actions are proper in the “eyes of Hashem”; rather, one must act in a way that removes any suspicion in the eyes of people as well.
So just how should those charged with implementing strong financial oversight and controls do it? With extreme sensitivity, an ayin tov, and with a sense of gratitude and goodwill toward the professional staff. And this actually may be the most important point of all. Choosing the members of such a committee (or any lay committee for that matter) is the single most important decision an institution can make.
The net financial worth of a person, whether self-earned or by virtue of the family one is born or married into, should be secondary at best and perhaps not even considered at all. Rather, the primary focus should be on individuals who are professionally accomplished, successful, and respected – yet unassuming and humble. They should be people who are discreet and constructive; who seek to build up, not tear down; and who shun gossip. I am confident that most large donors, when they see an institution run with ehrlichkeit by a leadership of impeccable character, will give no less than if they themselves were in the position of leadership.
I believe mosdos that are wise in their ways and zocheh to this type of leadership will reap the tremendous benefits and siyatta diShmaya that will surely follow.Jake Goldstein
About the Author: Jake (Yaakov) Goldstein is a CPA and part-time consultant for day schools and non-profit organizations. He is also the executive vice president of Torah Institute of Baltimore. He can be reached at email@example.com.
If you don't see your comment after publishing it, refresh the page.
Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.
If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.