Administering a Tzedakah Fund

In the previous issue, we discussed the communal and individual responsibilities of giving charity (tzedakah).  One of the communal responsibilities is to establish a fund that collects charity from the community and distributes it to the poor.  In this issue, we will discuss some of the issues that arise when administering a tzedakah fund.

The Accountability of the Fund Administrators

Fund administrators represent the entire community and their decisions must reflect those interests.  R. Yosef Karo (1488-1575), Beit Yosef, Yoreh De'ah no. 257, writes that if an administrator distributes funds to relatives who don't deserve that amount, it is considered a form of theft from the other recipients.

The Gemara, Baba Batra 8b, states that the distribution of funds should be done through three people, similar to a trial on monetary matters, which requires three judges.  Rashi (1040-1105), Shabbat 118b, s.v. M'Machalkei, implies that we require three people because we are concerned that a single distributor might have too much compassion for certain poor people and distribute the funds inequitably.  Mordechai (1250-1298), Baba Batra no. 488, notes that it has become common practice to appoint a single person to distribute the funds and he implies that the justification is that the community has the right to accept upon themselves a single individual as opposed to a three member panel.  R. Karo, Beit Yosef, Yoreh De'ah no. 256, writes that perhaps the requirement to have a three member panel only applies when the tzedakah is collected as a form of taxation.  If the tzedakah is collected on a voluntary basis, one may distribute the funds through a single individual.

The Gemara, Baba Batra 9a, cites a Beraita that states that the administrator is not required to provide an accounting of funds collected and distributed.  Nevertheless, Rama (1520-1572), Yoreh De'ah 257:2, writes that it is proper for the administrator to voluntarily give an accounting of the funds.  Rama further states that if the administrator used clout to attain his position or there is a reasonable suspicion about the fund's finances, then there is a requirement to provide an accounting of the fund's finances.  R. Yechezkel Landa (1713-1793), Noda B'Yehuda, Tinyana, Yoreh De'ah no. 157, writes that even in situations where there is a requirement to provide accounting information, the administrator is not required to provide the details of every transaction because there are certain matters in tzedakah distribution that must remain private.  Rather, he is required to provide a general accounting of all of the funds to show that they were apportioned properly.  This is also true of the administrator who voluntarily provides this information.

Appropriation of Funds

The Gemara, Baba Batra 8b, cites a Beraita that the people of the city can transfer money collected for the tamchui (fund for daily distribution of food) to the kupah (weekly distribution) and vice versa or to something else.  Rabbeinu Asher (c. 1250-1327), Baba Batra 1:29, cites R. Yosef Ibn Migash (1077-1141) that one may only transfer the money to another cause that supports the poor.  Rabbeinu Asher also cites the opinion of Rabbeinu Tam (c.1100-1171) who disagrees and permits transferring the money to other causes, even communal needs such as security for the city.

Rabbeinu Asher notes that there is a Mishna, Shekalim 2:5, that one must understand in light of Rabbeinu Tam's position.  The Mishna states that if money was collected for a group of poor people and there are no longer poor people to give to, it must go to other poor people (elsewhere).  This implies that money collected for the poor is designated for the poor and may not be spent on anything else.  Rabbeinu Asher defends Rabbeinu Tam's position by claiming that the Mishna is dealing with a special collection for the poor.  According to R. Ya'akov ben Asher (1269-1343), Yoreh De'ah no. 256, Rabbeinu Asher adopts a compromise approach and allows money from the tamchui and kupah to be transferred because the distribution to the poor is fixed and the poor will not be affected if the funds are transferred.  However, if there is a collection for a specific cause, one cannot transfer the money to other causes.  R. Shabtai Kohen (1621-1662), Shach, Yoreh De'ah 256:7, adopts Tur's compromise.

The Mishna op. cit., also states that if funds were collected for a specific person and that person no longer needs the money, the money nevertheless belongs to that person.  R. Ya'akov Weil (15th century), in his responsa, no. 26, notes that one can conclude from the Mishna that if tzedakah was collected for an individual or a specific group of people, the funds may not be transferred elsewhere, even according to Rabbeinu Tam.  R. Weil's position is recorded by Rama, Yoreh De'ah 256:4.

Administering Private Funds and Estates

An administrator of a private foundation or an estate operates with a different set of principles because, to a certain extent, he acts in the interest of the donor and not the community.  Mordechai, Baba Batra no. 493, discusses the case of someone who pledged a portion of his wealth to charity upon his death and shortly after his death, some of his relatives became poor.  Some rabbis were of the opinion that the money should go to those relatives because if the deceased would have known that his relatives would become impoverished, he would have certainly wanted to give them the money.  Other rabbis contended that the deceased wanted his money to have immediate impact and since those relatives did not require tzedakah at the time of death, they are not entitled to any special rights to the funds.  Rama, Yoreh De'ah 251:4, rules in accordance with the second opinion.

Rabbeinu Nissim (1320-1380), Chiddushei HaRan, Baba Batra 8b, writes that an administrator of private funds is entitled to use the funds for something other than the original intent.  He explains that when the administrator is given the funds, the assumption is that if there is a cause that is more worthy than the original, the money should go to the more important cause.  Rashba (1235-1310), Baba Batra 8b, does note that the difference between public funds and private funds is that the people of the community do not have the right to transfer those funds to another cause.  It is solely the right of the administrator.  The rulings of Rabbeinu Nissim and Rashba are codified by Rama, Yoreh De'ah 256:4.

R. Shlomo Drimer (d. 1872), Beit Shlomo, Yoreh De'ah 2:55, discusses a case of someone who established a foundation that, upon his death, would distribute its dividends to the poor of the city.  Over time, one of the children of the deceased, who was living in a different city, became impoverished and claimed that he should be the beneficiary of future dividends.  R. Drimer permits the administrator to give some of the funds to the deceased's child for two reasons.  First, in the case of an ordinary pledge (such as the case discussed by Mordechai), the poor can claim that they "acquired" the tzedakah on their behalf and therefore, if a relative were to come after the acquisition, he does not receive special treatment.  However, in this case, the administrator was not entitled to use the principle investment and he was only entitled to distribute its dividends.  As such, every time a new dividend is earned, the poor must reacquire their share. Second, according to Maharik (c. 1420-1480) no. 5, a private administrator has more flexibility to transfer funds than an administrator of a public charity.  Therefore, the administrator may reevaluate the distribution criteria to conform to what the deceased would have wanted.