How Government Threatens Religious Charity
One of the more sensational recent scandals involving an ostensibly religiously-inspired social services non-profit—the Metropolitan Council on Jewish Poverty, in New York—reached its sad climax last week. It is a story with far more than local importance, however. It is one not just of personal failing but of the problems–and wrongdoing– that can arise when non-profits rely on government contracts.
The details are these. The Council's long-time executive director, William Rapfogel, was sentenced to up to 10 years in prison for his role in what the New York Times described as a “scheme with the organization's insurance broker to pad insurance payments and split the surplus.” As the state indictment puts it, “The defendant received in excess of $1 million in proceeds from the scheme from in or around 1993 to in or around August, 2013, and these proceeds included, but were not limited to envelopes of cash given to the defendant on a regular basis and periodic checks that the defendant used to pay his personal expenses.” Investigators, in fact, found hundreds of thousands of dollars in cash literally stuffed away in a home Rapfogel owned. All this during a period in which his own salary reached $400,000 a year.
But, notably, the proceeds of the kickbacks from inflated insurance policy payments did not only go to support Rapfogel's own lifestyle. Just as important—or even more—is the fact that much was converted by the insurance company itself into checks which took the form of campaign contributions to New York state politicians. Here lies the broader significance of this scandal. As the indictment puts it: the insurance firm “was directed to make donations to various politicians to benefit Met Council”. The underlying story here: like so many religious charities once independent of government, the Met Council has received millions of dollars in state contracts (as I noted in the New York Daily News, $96.9 million in 2009 alone) –but it is prohibited by law, as a non-profit, from making campaign contributions.
In other words, the Council—and non-profits all across the country—have great incentive to curry favor with elected officials but no legal means to do so. Thus, we should not be surprised that when an illegal means of doing so comes to light. (Nor should anyone be surprised when politicians received awards at non-profit fundraising banquets, for that matter). The so-called “independent sector” has, in other words, become anything but. The ranks of social services non-profits include many which have no religious affiliation—but a great many who do. As James Piereson of the William E. Simon Foundation has noted in the Wall Street Journal:
“Religious organizations also receive large infusions of federal funds. Catholic Charities USA receives more than half of its funding each year ($554 million in 2010) from federal grants. In 2012, the U.S. Conference of Catholic Bishops received $63 million, and World Vision, an evangelical relief organization, received $57 million in federal grants.” In fact, the revenue which religious organizations receive from government often exceed their philanthropic donations—raising questions about the extent to which their purposes are truly their independent of the state.
There is no reason to think that many of those in need are helped, at least somewhat, by these arrangements, nor that crimes such as those committed by Rapfogel are common among the leaders of non-profits with ties to religion. But there is no doubt that the incentives which underlay the Met Council kickback/campaign contribution scheme are far from unique to one organization.
That an organization operating in the name of the Jewish poor would both rely on government and use nefarious means to influence public spending is particularly ironic and disappointing. Jews, historically and around the world, have established independent communal institutions to provide for the poor—inspired by the charge from the Babylonian Talmud: “ Kol Yisrael Arevim Zeh Bazeh”, widely interpreted as “All Israel is responsible for one another” (Shavuot 39a). That a Jewish organization would turn to the state for support, and both become dependent on it a corrupted by that dependence, is a tragedy that transcends the fate of one wrongdoer.
This piece originally appeared in Forbes
This piece originally appeared in Forbes