Thursday, December 25, 2008

The Richest Man in the Cemetery

Re: A matter of trust

לכך נקרא שמם נכסים שנכסים מזה ונגלין לזה ולמה נקרא שמם זוזין שזזים מזה ונותנין לזה ממון מה אתה מונה אינו כלום מעות מה לעת

Hence they are called נכסים (assets), they become concealed נכסים from the first owner and revealed to the second. And why are they called zuzim? Because they move (זזים) from one person to another. Mammon (ממון) means: what you are counting (מונה) is actually nothing. Maot (מעות) is מה לעת it's just for this moment. - (Breishis Rabba BaMidbar 22:8)

A scary realization has emerged from the Bernard Madoff debacle. Many foundations have lost a tremendous amount of money. And we find out that many foundations had a lot of money to lose. Perhaps, too much. This is the crux of the op-ed piece written by Carmi Wisemon in the Dec. 23 Jerusalem Post.

This is the main part of her article:

For the average person, regaled by the media over the past week with the monumental losses of banks, universities, hospitals and foundations, many of them serving the Jewish community, there has dawned a true realization of the tremendous amount of wealth earmarked for charitable purposes. Yet we have become used to hearing that there is simply not enough money to fill the growing needs of the community.

Our shock has been heightened by the knowledge that a sizable portion of the vast wealth accumulated by prominent Jewish institutions and foundations was passed on to a select few who neither used these funds to help people or run programs but instead perpetually reinvested the money to create ever larger endowments of their own.

Small but worthy grassroots initiatives with high impact and minimal overheads rarely receive funding from closed philanthropies, some of which appear to have spent significant funds to expand the size of endowments of large Jewish institutions. Just imagine how the gigantic sums of money sucked into the Madoff black hole could have enriched the Jewish world if they had been used for the benefit of those for whom the money was supposedly earmarked. Instead, these foundations sat on the money like nesting hens, ineffectively passing large shares of it to large institutions which themselves reserved the right not to use the funds, but rather reinvest them (and ultimately lose them).

FOUNDATIONS AND institutions have the right to distribute their funds and services as they see fit. Yet it is no secret that in the years leading up to today's economic crisis, many people, both donors and recipients, have lost faith in the mechanisms of Jewish philanthropy and institutional life.

As budgets are reduced, small grassroots initiatives will be hit the hardest and hear more than ever before, "Sorry, there is no money available to support your cause, noteworthy as it may be." The message will be clear, "Please don't bother us during such a time; can't you see that we can barely keep ourselves afloat?" The public should take a hard look at the institutions it supports. Not only because of past misplaced trust, but because the bottom line is that many of the large Jewish institutions which have lost parts of their endowments state that they still have a hefty nest egg to rely on.

And so, it is with mixed emotions that we learn that even though Yeshiva university lost 110 million dollars, they are still very financially sound because their total endowment is $1.2 billion.

1.2 billion is $1,200,000,000.00. I wish any numeral in my bank account had that many zeros! (I don't really because I am in overdraft!)

It's nice to have money. There is so much we can do with it. But if we don't do anything with it - why do we need it? G-d doesn't give us money to horde away for future generations. And it is no blessing to do so. Reish Lakish told us this. The gemara in Gittin 47a tells over that as Reish Lakish was dying, he had to his name nothing but a kilo of paprika that he had not managed to consume. With this, Reish Lakish admonished himself: "And they leave over to others [the fruits of] their strength." (Tehillim 49:11).

This is the lesson that we are meant to learn from the mahn that fell in the desert. The Torah commanded us not to leave any over for the next day. Those who tried it had to discard it while holding their noses. The lesson was clear: If you have what you need for today, you are as rich as anybody.

This is because money, like every other resource is a test and an opportunity. It is an opportunity to do important things. To do mitzvos and chessed. Using money properly is what upholds the world. For G'milas chassadim is one of the three pillars of the world (Pirkei Avos 1:2) and Dovid HaMelech wrote (Tehillim 89:3): עולם חסד יבנה . The world is built through chessed.

It is also a test. Many commentaries have noted that the gematria for ממון - the word that is printed in every Machzor above "U'Tzedaka" is identical to the gematria of the word סולם , a ladder - both are 136. This is a message that money is a ladder with which we can raise ourselves to great heights or lower ourselves to the gutter.

Of course, it is wise to have some money stored away in a reserve for unanticipated expenses and it is essential to store away money for known projected expenses - e.g., educating and marrying off our children - or for a concrete goal - e.g., to be able to afford a bigger house. But, somehow, squirreling away piles of money in order to be the richest man in the cemetery rings a bit hollow. Reish Lakish (like Kenny Rogers's gambler) was happy to break even.

So, let's look again at YU's $1.2B. What were they doing with it? Well, I can tell you what they weren't doing with it.

Let's be very conservative. If the money was invested and returning an average of, say 5%/year (Madoff was giving 10% while he was kicking), we get $60M. Now, I don't know the rules, but I suspect that money won't be taxed too much being a non-profit organization and all. In America, schools don't need to pay a 16% off-the-top tax on donations like every single Yeshiva in Eretz Yisroel does.

Now, the news says that YU has a total 0f 7000 students. This means that the modest interest that I calculated works out to a bit more than $8,500 / student for each and every student. (Bear in mind that the average full salary in Israel for somebody who works 8.5 hrs /day plus travelling is NIS 8000 - USD $2,075 - per month BEFORE TAXES and there is no such thing deductions for dependents for any male worker. A man with 10 kids is taxed as much as a bachelor). So, how about reducing every student's tuition by around $5-6000 to take the burden off of lower or middle class parents. Oh, I know there are scholarship funds and programs, but what does one need to do to qualify and, does this come from the endowment or a standalone fund?

It looks like I am not the only one who sees things this way. Here are the remarks of Talkbacker #10:

10. Endowments should pose a halachic question: the profits they generate should be used to offset running costs, tuition, etc.

An acquaintance in education fervently believes every day school, yeshiva should strive in its early years, when costs are lower, to raise a nest egg which could generate profits/interest which over the years can serve as a source of revenue. If doable, its a great idea. Hording an endowment and not using the profits, and trying to raise further donations, sounds clearly wrong, and it shows a lack of trust in Hashem. This article is correct-a portion of charity goes to the wrong places, where its not needed. Orgs. and schools, too, are greedy, not just individuals. G-d is teaching us a lesson.

Roz - USA (12/24/2008 05:05)

I couldn't have said it better.

And here is something else that they aren't doing with it. This is a comment that appeared in the Emes Ve-Emunah blog which I have commented on in earlier posts (here and here):

A group of Roshei Yeshivah from Bnei Brak went to meet Rav Herschel Schechter last week in order to beg him to help them raise $12 million for the kollels. Rav Schachter said, let the guys go out and get jobs! They said, we've had siyata d'Shmaya for 25 years, we're not going to give up now. Rav Schachter said, But this was a time-bomb that was bound to self-destruct eventually!

Rick 12.07.08 - 5:00 am #

Firstly, let me repeat that I sincerely hope that this comment is not true. So far, nobody has confirmed or refuted it. Secondly, The people who approached Rabbi Schachter, based on this comment, were Roshei Yeshiva and Kollel Heads and they trying to collect money for peole who currently are, and in the future will be, Roshei Yeshiva and Kollel heads. These peole work very hard.

Now, as far as I know, Rabbi Hershecl Schachter is a Rosh Yeshiva and Kollel Head (says so right here in Wikipedia). So, now, can somebody please explain to me exactly what Rabbi Herschel Schachter does that is called a job more than the people who are appealling to him for help that he should advise them (or their students) to "get jobs"????? And if their students get jobs, then they won't have a job and if Rabbi Herschel Schachter's students go and get jobs, then he won't have one either.

Oh, I know the difference. His Yeshiva has a $1.2B endowment and theirs doesn't.

But, back to our discussion. At first, I thought that perhaps asking him to help for $12M was a bit much. That is quite a bit of money (as one US Senator said in the 1960's: a few million for this and a few million for that - next thing you know you're starting to talk about a serious amount of money!)

But, hey, come on. Be a sport. You are sitting on top of a Yeshiva with a $1.2 billion dollar endowment which, as I said, should bring in annual returns upward of $60M and all these fellows are asking for is help in raising a paltry $12M for hachzakas haTorah in Eeretz Yisroel.

What an opportunity!!!

Now, I don't suspect that he is the master of the $1.2B endowment. after all, he is only a Rosh yeshiva. He just works there. But, come on! I am sure his leverage with the board of Trustees should be able to loosen a million or 2. From the interest!!

But the story goes that this Rosh Yeshiva sent the other Roshei Yeshiva packing with a message that future Roshei Yeshiva (and mechanchim and mashgichim and dayanim and poskim) should get jobs. It's a time-bomb that is bound to self-destruct eventually.

This is because MY yeshiva has a $1.2B endowment and yours doesn't.

Boy, I hope this story isn't true. A Kiddush Hashem it's not.

In my reprint of Carmi Wisemon's article, I left out the closing paragraph. it speaks for me as my post's closing paragraph:

Now, despite their losses, is the time for foundations and institutions to stop hoarding their funds and use them to provide services needed by the Jewish community. Let them use some of their remaining investments to rekindle the community's dampened trust in many of our most venerable organizations.

And I will repeat the closing remarks of Talkbacker #10:

This article is correct-a portion of charity goes to the wrong places, where its not needed. Orgs. and schools, too, are greedy, not just individuals. G-d is teaching us a lesson.

G-d is teaching us a lesson. He doesn't want anybody to be the richest man in the cemetery.


Anonymous said...

How about, "my Yeshiva has tried to reach a balancing point where not every talmid is encouraged to stay in learning for life so that we can afford to support those that do?"
Joel Rich

Ari said...

Something doesn't smell right here. Bnei Brak rabbonim requested financial help from someone who they think is a rusha or ignoramus? Oh wait; maybe this is a true story, after all.

Anonymous said...

This is rediculous. Imagine going to Chasdei Naomi and asking them to take money from their accounts to give to Kollels. After all, it's Tzedaka! The answer would be that Chasdei Naomi raised money with a specific intent, which is also a tzorech mitzva (even more so, in fact) and to sideline money to somewhere else, even to another tzorech mitzva, would be improper.

Likewise, claiming that YU should take their foundation interest, which obviously is not sitting around unneeded, should give money to another tzorech mitzva instead of using it for its intended purpose is laughable.

Batya said...

I'm rather in shock. There was money, and it was put "away," (invested) while not only were Jewish kids sent to public schools in the states, because their parents couldn't afford tuition, but fewer kids were born, so parents could send them to Jewish schools, and...
...the money was "lost."
?? wow

G said...

G-d is teaching us a lesson. He doesn't want anybody to be the richest man in the cemetery.

Careful what you wish for - my guess is there are quite a few poeple 'in learning' who are banking on that dead money coming their way one day.