OUR SACRED OBLIGATION הקדצ TZEDAKAH -
BY RABBI AARON LERNER President & CEO
PHILANTHROPY SITS AT THE VERY HEART OF OUR JEWISH IDENTITY.” “
FOREWORD
Philanthropy sits at the very heart of our Jewish identity. Across text and tradition, we encounter again and again the ideas of giving back, of aiding the stranger, and of strengthening the larger community.
At the Jewish Community Foundation, we help clients put those ideas into practice and navigate the philanthropic landscape with precision and stratigic foresight. Our expertise—customized strategies that combine our proficiency in the mechanisms for charitable giving and our deep familiarity with the our community’s needs—is rooted in an embrace of Judaism’s ethical and legal mandates.
To assist our community in navigating some of the Jewish traditions that drive our commitment to tzedakah, we have compiled this guidebook of related texts and teachings. We hope it inspires you to set out on your own philanthropic journey, and we invite you to lean on The Foundation as a supportive partner in reaching your long-term goals.
– Rabbi Aaron Lerner President & CEO, Jewish Community Foundation of Los Angeles
Your Partner in Philanthropy
Why Work With Us?
You have many choices when selecting where to open a charitable fund, but we believe we stand out in our field by collaborating with clients on solutions that meet their needs and improve our community. We strive to provide a customized, rewarding, and personal experience. Here are the top five reasons clients value their relationship with us:
Partner with The Foundation to Enjoy Giving
More than anything, we want you to be able to focus on what really matters most: giving to causes you believe in and having an impact. Whatever path you choose, we are here to help you become the most effective and most fulfilled philanthropist you can be. Contact us today and partner with The Foundation to get started on your philanthropic journey.
Dan Rothblatt
Executive Vice President drothblatt@jewishfoundationla.org
Steve Gamer Vice President, Advancement sgamer@jewishfoundationla.org
Lew Groner Vice President, Marketing & Communications lgroner@jewishfoundationla.org
Naomi Strongin Vice President, Center for Designed Philanthropy nstrongin@jewishfoundationla.org
TABLE OF CONTENTS
Introduction. 1 & 2
I Want to Give–But How Much? 3
Who Counts as a Worthy Recipient? 4
How Do I Set Priorities? 5
What Counts as Tzedakah? 6
When Should I Give? 7
Should I Give Beyond The Jewish Community? 8
How Do I Calculate My Income? 9
What About Tax Efficiency and Estate Planning? 10
I. INTRODUCTION
Jews have been debating our core beliefs and religious expressions for millenia. Yet, when it comes to the importance of charitable giving, we find common ground—a shared interest in uplifting the poor and embracing the stranger. Scholars throughout the ages have weighed in on the finer points of philanthropy, often starting by emphasizing its centrality in Jewish expression.
PRINCIPLE #1:
Tzedakah is possibly the most important commandment (mitzvah), a mark of one’s Jewishness and a fulfilment of the Torah’s focus on justice (tzedek) and redemption.
Source:
We are obligated to be more careful in fulfilling the mitzvah of tzedakah than any other mitzvah, because tzedakah is the sign of a righteous person (tzaddik). And Israel will be redeemed solely through tzedakah.
- Rambam, Laws of Gifts to the Poor 10:1 & 2
Maimonides even goes so far as to question whether the Jewish lineage of someone who refuses to give tzedakah!
“A person who is cruel and does not show mercy to the poor, their Jewish lineage is suspect.”
“Charity” comes the Latin caritas or benevolence, generosity, love.
“Tzedakah” derives from the Hebrew root tzedek = justice/righteousness.
PRINCIPLE #2:
While we have become accustomed to thinking of “our money” or “our possessions,” Judaism claims that we are more like vessels through which funds can flow to the poor. We do not own the funds that are supposed to go to the poor. Further, we are promised blessings if we fulfill our obligation to pass on these funds properly and consequences if we do not. Judaism generally views money as an ends to a means: fulfilling our duties, caring for our families, and assisting the poor. It is decidedly anti-materialistic.
Regardless of personal theology, the fact remains that there is a limit to how much money one can reasonably spend on meeting personal needs in a single lifetime—and that bequeathing large sums to one’s children may not always be the most advisable course of action.
Source:
A person shouldn’t ask, “How can I spare my money to give to poor people?” because he should know that the money is not his but rather a deposit with which to do the will of the depositor (God), which is to distribute some of it to the poor.
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Rabbi Yohanan makes a play on words… “Give tithes (aser) that you may be enriched (ashir).”
- Babylonian Talmud, Tractate Ta'anit 8b-9a
Tur, Yoreh Deah, Laws of Tzedakah, 247
II. I WANT TO GIVE — BUT HOW MUCH?
Charitable giving is perscibed in Jewish teaching. Different Jewish communities often have their own parameters, but here is some broadly applicable guidance.
In our time of unprecedented material wealth, Maimonides reminds us that “to those to whom much has been given, much is also expected.” The following texts encourages giving a percentage of one’s total net worth, not just a percent based on annual income:
If a poor person comes and asks for help, we should ideally give according to our capacity, even up to 20% of our property.
– Rambam, Mishneh Torah, Laws of Gifts to the Poor, 7:5
Many people use eser (10%) as the framework for their giving, whereas others advise giving more. Poskim (legal scholars) differ as to whether this mitzvah, known as ma’aser kesafim or ma ’ aser for short, is a Torah obligation, one that derives from rabbinic decree or a minhag (tradition).
The amount one should give is as follows:
1. If one can afford to, let them give as much as is needed.
We should give according to our capacity.”
- Maimonides
2. Under ordinary circumstances, a fifth (chomesh = 20%) of one’s possessions is most laudable.
3. To give one-tenth (10%) is average.
4. Giving less than 10% is considered stingy.
- Shulchan Aruch, Yoreh Deah, 251:3 and other sources
But a person should not give more than 20%, so that they might not become someone who needs tzedakah. This refers only to one’s lifetime. At the time of death, one may leave as much tzedakah as they please.
- Rama
Or perhaps consider an approach relative to spending. Oftentimes, our bank and credit card statements are more indicative of our values than what we profess.
Homes, vehicles, and vacations are major expenses and often reflect our lifestyle choices. Could you give the same amount of tzedakah that you spend on your rent or mortgage? Or the equivalent of what you spent on vacations this year?
Another approach is to consider giving the same amount annually that your most expensive car would sell for currently (regardless of whether you lease or own it).
A driver of an older Honda Civic will likely only owe a few thousand dollars of tzedakah. A driver of a brand new Range Rover? You do the math. Regardless, Judaism's measure will always be according to your overall wealth.
Should this vehicle represent the value of your annual tzedakah obligation?
Donors are advised to ask their local rabbi or to consult another competent authority.
III. WHO COUNTS AS A WORTHY RECIPIENT?
Allocating funds for tzedakah is the first step; next is determining who qualifies to receive them. The purpose of tzedakah is to support people in need, starting with those in close proximity. In practical terms, that means we first support the local community and destitute family members. Doing so through direct cash assistance or providing work or job training is especially important. There is certainly no shortage of need.
Before giving tzedakah to others, one should first ensure that they are taking care of their own basic needs.
The definition of "basic needs" varies based on a number of factors including the society they find themselves in, and what they are accustomed to.
Obviously, it is very difficult to set an exact list of which needs are basic and which should be viewed as luxury. Indeed, in our society there are few people who could make this distinction for themselves—how much more so when judging another person’s needs.
When describing a person who is in a situation that “parnassa (livelihood) is tight” - it would seem that we are NOT talking about an ahni (a poor person).
- Rav Shlomo Levi, Yeshivat Har Etzion
While we are not supposed to endanger ouselves, using money that should have gone to tzedakah on non-essential expenses is considered improper. Doing so is even compared to stealing from G–d!
Ought people defraud God?! Yet you are defrauding Me. And you ask, “How have we been defrauding You?” In tithes (ma’aser) and offerings…[Rather] Bring the full tithe…and thus put Me to the test—said the Lord of Hosts. I will surely open the floodgates of the sky for you and pour down blessings on you.
- Malachi 3:8 & 10
Practically speaking, we can all ask ourselves: Are there areas where I could pull back on costs, thus enabling me to fulfill my obligation, teach my kids by example, and/or feel better about my spending?
- Rabbi Sharon Brous Senior & Founding Rabbi, IKAR “
At the heart of
the conversation on tzedakah is the
value of human dignity – the dignity of both the giver and the recipient.”
IV. HOW DO I SET PRIORITIES?
In the nonprofit world, countless worthy causes clamor for attention. While there is no one rule about where to direct philanthropic dollars, Jewish tradition does offer insight into potential methods for choosing a charitable path. Among the central considerations are:
• According to the Shulchan Aruch, we prioritize tzedakah first toward saving lives, then for Jewish learning, medical needs of the poor, ensuring that the community has a synagogue, and finally all other needs of the poor. Giving to several organizations can help accomplish all five goals. Our Foundation clients are welcome to contact our philanthropic advisors any time to find organizations that meet their specific needs.
• When it comes to supporting the poor, we first give to family members, then people we know, neighbors, poor people in one’s city and then different cities. Some say the poor of Israel take precedence, and Jerusalem’s even more so.
• The IRS does not determine what qualifies as tzedakah. Just because an organization is a 501(c)3 does not mean it counts toward one’s Jewish obligations. Conversely, giving to one’s needy family is generally not deductible but is certainly ma’aser.
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
- Henrietta Szold Founder, Hadassah Hospital
V. WHAT COUNTS AS TZEDAKAH?
In addition to the funds we allocate for supporting the poor, Jewish practice allows for some flexibility regarding what counts as tzedakah, especially when it comes to Jewish education and communal institutions. We encourage you to consult your rabbi. Here are a few general principles:
1) A parent who cannot afford a Jewish education for their child might be considered “poor” in Jewish law and therefore able to use tzedakah funds for tuition. A rabbi should be consulted, alongside an honest appraisal of the household budget.
a. Interestingly, grandparents can use tzedakah funds to defray the cost of day school!
2) Synagogue operating expenses are considered tzedakah. Synagogue dues become more complicated because of the personal benefit one receives from seats, aliyot (the honor of being called to the Torah for a blessing), food, and community programs. Some suggest that about two-thirds of synagogue dues count as operating expenses. Note: A Donor Advised Fund at The Foundation can be used to pay synagogue dues.
3) Debt relief and loans: In some cases, tzedakah funds can be used to pay off debts or loans for someone in financial distress.
The Rambam reminds us that helping others achieve self-reliance is the best and most dignified form of tzedakah:
“The highest level beyond which there is none is a person who supports a Jew who has fallen into poverty [by] giving that person a present or a loan, entering into partnership, or finding them work so that they will be fortified and not have to ask further.”
VI. WHEN SHOULD I GIVE?
The need for philanthropy is constant and ongoing, and giving has no particular season. There is a general halachic (legal) consensus that ma’aser should be set aside immediately, as soon as it is earned. Best practice suggests depositing a percentage of one’s paycheck into a separate account dedicated to tzedakah
DISTRIBUTION CAN TAKE TIME
Although funds for ma’aser should be separated as soon as possible, one need not give them away immediately. Using a Donor Advised Fund (see p.11) is a great way to set aside a distinct pot of money for ma’aser and receive an immediate tax deduction, while still having the flexibility to decide when and where to distribute the funds. Learn more at jcfla.org.
The Chofetz Chaim and the Rambam encourage giving smaller sums frequently. That way, tzedakah, and staying connected with the poor, are continually front of mind. This regular practice strengthens donors’ character and spreads out the giving to a wider pool of recipients.
However, the frequency of giving should not distract people from the total amount they are obligated to give. Tzedakah is about more than pushing a few coins into a metal box before Shabbat. That may be appropriate training for a young child to become accustomed to regular giving, but older children should be included in the family’s annual charitable calculations. Perhaps they can even help choose the organizations and causes to support!
Of course, Judaism provides other auspicious times for pledging tzedakah, including the High Holidays when our liturgy claims that repentance, prayers, and tzedakah can save us from all manner of harm.
VII. SHOULD I GIVE BEYOND THE JEWISH COMMUNITY?
Supporting Jewish causes can be a meaningful way to give back. Yet building sustainable communities requires responding to need wherever it occurs, regardless of religion, race, origin, or any other defining characteristic. Philanthropy takes many forms, but a fundamental truth underlies all charitable giving: Societies thrive when all communities are healthy.
INTERPRETING TEXT
Following the Mishnah, Rav Shlomo Zalman Auerbach and Rav Moshe Feinstein allow using ma’aser for donations beyond the Jewish community mipnei darchei shalom, to promote peace both locally and nationally. To that end, several jcfla.org charitable account holders use their Donor Advised Funds specifically to give to non-Jewish organizations. Since the check a beneficiary receives reads “Jewish Community Foundation of Los Angeles,” they are making clear that local Jews are invested in causes and people beyond just the Jewish community.
“ ”
The value of tzedakah runs deep within our faith and within my home. It’s incumbent upon all of us to do what we can, and I’m fortunate I have a lot of opportunity to help. That gives me a very big responsibility to help.
- Sheryl Sandberg Former Chief Operating Officer, Facebook
VIII. HOW DO I CALCULATE MY INCOME?
There are numerous ways to calculate income for the purposes of determining a percentage for charitable giving. The widely accepted practice is to take a percentage of one’s net—not gross—income to be used for ma’aser.
THE SIMPLEST FORMULA
Subtract payroll taxes from gross income and add any gifts, inheritances, and other gains. Then multiply by 10 percent.
For example, $130,000 gross income, minus $30,000 of taxes = $100,000
Add in other income, say $5,000 = $105,000
Multiply by 10% = $10,500 to be allocatd to tzedakah
One should apply the percentage they have chosen based on the Shulchan Aruch (see p. 3, I Want to Give—But How Much?). One may go as high as 20% — or, if it will not endanger them to give more, even higher!
A MORE COMPLICATED APPROACH
Add to gross income any nontaxable benefits paid by an employer such as health insurance, moving expenses, 401k matches, and capital gains adjusted for inflation.
Then subtract commuting costs and most business expenses and depreciation upon the sale of assets. Unless a person is eligible to receive tzedakah themselves, they should not deduct cost of living, housing, dry cleaning, food or similar expenses.
Then multiply this amount by 10—20 percent.
Ma’aser is an annual calculation, so losses can offset profits only in a single year and do not carry over.
Good News: From a halachic (Jewish law) perspective, you do not owe any additional ma'aser on the tax benefits derived from giving charity.
IX. WHAT ABOUT TAX EFFICIENCY AND ESTATE PLANNING?
For many people, philanthropy is an essential component of a broader tax and estate planning strategy. Knowing how to give—by what means or vehicle and when to give—can significantly lower a client’s tax burden and estate taxes.
SOME CRUCIAL THINGS TO DISCUSS WITH A QUALIFIED TAX ADVISOR:
• Donations of appreciated stock to charity are one of the most efficient ways to avoid taxes since the fully appreciated value is deductible.
o Donating appreciated stock is one of the most common uses for jcfla.org accounts since a client can deposit appreciated stock in their account, take the full tax deduction, and then distribute those funds to their favorite charities over time.
• Similarly, it is highly efficient to give required minimum distributions (RMDs) directly to nonprofits.
o Clients should also seriously consider leaving their IRA /retirement accounts to charity instead of to family. They are taxed outrageously, so giving them to a 501(c)3 can help maximize the benefit to the estate. A person can leave their IRA to a Donor Advised Fund so that their successors can continue to give from the fund in their memory.
• Charitable remainder trusts can provide clients or other beneficiaries with income during their lifetimes, with the remainder going to their favorite charities. They are one of several excellent planning vehicles to discuss with your CPA or estate attorney.
WHAT ABOUT CASH?
It is reported that the IRS will permit a person to estimate charitable contributions under certain circumstances. For instance, if someone puts spare change or even dollar bills into the tzedakah box at synagogue, the IRS will allow that person to deduct the annual total. Regular pushke contributors should ask their CPAs.
SCAN HERE TO LEARN MORE ABOUT TAX-EFFICIENT STRATEGIES:
For 70+ years, The Foundation has helped individuals and families, institutions, and professional advisors make the greatest possible charitable impact on both the Jewish community and the community at large.
We are the largest manager of charitable assets and the leader in planned giving solutions for Greater Los Angeles Jewish philanthropists. The Foundation currently manages $1.4 billion of assets entrusted to it by 1,400 families and ranks among the 10 largest Los Angeles foundations. Over the past 10 years, it has distributed $1 billion to thousands of nonprofits across a diverse spectrum.
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Individuals and families establish charitable funds—such as Donor Advised Funds and Endowment Funds—at The Foundation, receive an immediate tax deduction, and can then make grants to thousands of nonprofits locally, nationally, and in Israel.
The Foundation recognizes that every person is unique when it comes to their charitable giving. That’s why we offer multiple fund options and customized services for wherever you stand in your philanthropic pursuits. Whether you’re starting on a modest scale or you oversee more substantial personal or institutional assets, we’ll help you (or your clients):
• Define your philanthropic goals
• Optimize your savings on capital gains, estate, and income taxes
• Plan your giving thoughtfully and strategically to maximize results
• Learn about charitable giving opportunities
• Build a charitable family legacy
• Create income for your retirement or for loved ones after you’re gone
• Manage the day-to-day administration of your funds properly
We leverage decades of experience to provide L.A. Jewish philanthropists with the counsel, resources, and networks to elevate their giving.
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We can contribute appreciated stock to our Donor Advised Fund at The Foundation, save on capital gains taxes, and thus give even more tzedakah!”
“
We needed a way to simplify our tzedakah, and a Donor Advised Fund at The Foundation was the ideal solution.”
– Rachel Teller Foundation Client
– Jeff Astrof Foundation Client