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Feb.12, 2010

The Jewish Funders Network is calling for greater transparency from Jewish religious institutions.

While most American nonprofits are required to file 990 tax forms that make public how the organizations pay their top employees and allocate money to outside organizations, religious institutions such as synagogues, day schools, yeshivas and Chabad outposts are under no such obligation.

Prompted by this summer's money laundering scandal in Deal, N.J., and Brooklyn involving a number of synagogues, the JFN has drafted a list of guidelines. JFN, , which represents hundreds of major funders of Jewish organizations,  is asking its members to hold the organizations they fund to the following standards:

The organizations should have governing boards that have financial oversight for the organization's expenses and transactions.

The organizations should be open to independent audits and should make financial data available upon donor request.

Compensation of the chief executive should be decided by a compensation committee.

The organization should draft a code of ethics that includes among other issues non-conflict of interest, whistleblower and gift acceptance policies.

"We engaged in discussions with our members and found that some just weren't aware of what the regulations were and some felt they were in an awkward position to request financial information," JFN President Mark Charendoff told me Wednesday. "If they don't have to provide these kinds of statements to the IRS, then they felt they had no right as funders to demand that kind of financial transparency. ... Now they can say, 'We are part of this group. This is what we are demanding.' We are not taking our case to the government, we are hoping our community can rise to a higher level of understanding and we can effectively police ourselves."

Synagogues make up the vast majority of Jewish religious institutions -- and as this summer's money-laundering scandal shows, they can run into sticky situations when they act as conduits for money to other charitable organizations. But these guidelines also could end up focusing attention on transparency issues that have surrounded a number of Jewish institutions here and abroad, and could put pressure on Jewish seminaries, Chabad outposts and overseas yeshivas to be more forthcoming.

"We are directing our energy toward any institution taking advantage of the religious exemption given by the IRS and not giving financials to investors and prospective investors," Charendoff said.