The following article appears in the August 21, 2009 issue of The Jewish Week.
Sephardic Charities Move Toward Self-Audits
by Adam Dickter
Assistant Managing Editor
A Sephardic organization working to avoid collateral damage from last month’s arrest of three Syrian rabbis in an alleged money-laundering scheme has named a lawyer and accounting firm to oversee many of the community’s charities.
Eli D. Greenberg will head an independent committee of legal and policy experts that will police nonprofits that raise tens of millions of dollars within a cohesive, largely affluent local community of up to 100,000 people of Syrian, Egyptian, Moroccan Israeli and other backgrounds.
The funds serve needy families as well as support public action and causes in Israel. The accounting firm of Loeb and Troper, which also specializes in the health care and nonprofit community, was named by the Sephardic Community Federation to certify that charitable groups are meeting the guidelines established by Greenberg’s committee.
Last month, The Jewish Week first reported that the Sephardic Community Federation called on large and small nonprofit organizations linked to Sephardic institutions to work toward greater transparency and assure good governance, in light of recent events.
Suggested measures included an independent certification process, the creation of an audit committee, the adoption of a conflict-of -interest policy to protect against any benefit to officers and employees of a charity and procedures on accepting contributions and distributing grants.
The move came after the chief rabbi of the Syrian community, Saul Kassin, and two rabbis of shuls in Deal, N.J., were among 44 people arrested by the FBI on various corruption charges. The rabbis each had established funds that allowed them to write checks at their sole discretion. Prosecutors allege that they accepted and disbursed money they were told came from illegal sources, in exchange for a percentage, in a sting operation that involved an informant.
The majority of those charged in the operation were not Sephardic.
What we’re doing is putting together a model compliance program for community organizations to adopt, and we will be working with Loeb and Troper to develop guidelines for an audit process, said Greenberg.
Greenberg told The Jewish Week the Sephardic Community Federation’s effort to ensure high standards was in accordance with recent trends. The entire nonprofit community, country-wide, is moving toward good governance over the past 10 years, he said, adding that since Congress passed the 2002 Sarbanes-Oxley Act requiring accounting reform and investor protection because of the scandals related to Enron, Tyco, WorldCom and other corporations that cost investors billions, a similar, voluntary initiative was moving to the nonprofit world.
While nonprofits linked to religious groups remain exempt from filing full disclosures, Greenberg said they will find themselves under increasing pressure to do so on their own.
Good governance benefits an organization and helps both trustees and beneficiaries, he said. That’s the way to go for all organizations, whether they have a religious or charity exemption.
I think the pressure on them will be twofold to adopt this compliance: One will be from the donors, a lot of whom will not want to give to an organization that doesn’t have their full confidence. And to the extent that an organization has a board of trustees who will not just want to put their names there, they will want to know the organization is in full compliance. Most trustees get involved for altruistic reasons and they don’t want to take on personal liability.
In another development that could increase pressure on Jewish charities to more fully open their books, another umbrella organization, this one focusing on donors, is quickly working toward establishing good governance guidelines.
Our board has been actively engaged in this subject and there is a draft document that is being refined, said Mark Charendoff of the Jewish Funders Network. If our board approves it, it will go out to our membership, I hope, either at the end of summer or the beginning of September.
If approved, the measure would ask some 800 philanthropists and foundations not to support nonprofits that do not meet minimal standards of transparency and good government, said Charendoff.