More on Tzedakah

My recent post on Gambling for Tzedakah attracted many interesting comments.

Among them:

A commenter suggested that one of the reasons that Chinese auctions and Casino nights are successful is that people write checks for less than $250 and deduct them (dishonestly according to the commenter) from their taxes.

I happen not to agree with his premise that the tax deduction is what makes these events popular but let's examine the tax deduction issue more closely.

I'm not a tax lawyer (it's bad enough I'm a lawyer; thank G-d for small things) but I'm not sure there is anything technically wrong with deducting amounts paid into a casino night or Chinese auction. I think the appropriate way to deduct these contributions is to reduce the amount by the fair value of any prizes won at the event (on top of the value of any meal served at such an event). Having said that, l'maisia, it's doubtful that many people really make those calculations and, therefore, the commenter's point is well taken. In reality, most people do just take the deduction. (If you are unlucky enough to lose everything at casino night or not win any of the Chinese auction prizes, you would seem to be onsides with the law).

I have a problem with a couple of other fundraising methods. One that comes readily to mind is the 'boutique". At a boutique, often held by charities before Chanukah, vendors sell their wares (usually in a shul or school) and all checks are written out to the organization. The organization then pays the vendors for the goods sold, deducting a percentage as their vig.

So, effectively, charitable organizations are facilitating tax fraud by encouraging people to write non-deductible checks in the name of the charitable organization. Lifnei Iver?

My shul has refused to engage in this practice. We run a couple of boutiques each year but insist that the checks be made either to the vendor itself (and the vendor then pays a percentage to the shul) or to cash. I can't adequately describe the grief our treasurer has have gotten over the years for sticking to his guns on this. We do the same thing with the musical events that we run. People either pay cash or checks to cash. We do not accept checks made out to the shul. Again, lots of grief. (The number of times we've turned away people interested in laundering their cash is another story).

On a similar vein, "scrip". You write checks to an organization, they give you scrip in the same amount that is accepted at various local stores in lieu of cash. (In many yeshivas, purchasing a minimum amount of script is mandatory). The stores, in turn, kick back 5% to the organizations. Even though many of the organizations make it very clear that the script purchases are not tax deductible, I still have a problem with it.

Unfortunately, the schools in particular, are desperate to raise funds and resort to these questionable tactics. There ought to be a better way.