Sunday, July 3, 2011

[Shefa] USCJ - Transparency and Trust


As the immediate past treasurer of my synagogue and executive director of another USCJ synagogue (and long-time reader of this listserv), I, too, have questions about USCJ transparency.

Regarding governance of USCJ, Fred Passman wrote:

"the Board will be the primary governance body. This is consistent with best not-for-profit organizational practice. ... Of course, centralized governance requires a substantial level of stakeholder trust."
Trust in any nonprofit - on the part of donors, members, staff, board, and those served by that nonprofit - is essential. Transparency is a crucial element in establishing that trust.

If the "practice has been for the USCJ Treasurer or other member of the financial team to review the documents with anyone who is interested in the details [to ensure] that questions can be answered as they arise" I would argue that this does not demonstrate transparency, but rather the control of financial information.

If USCJ were not a "church" according to the IRS, it would be required to file a Form 990, Return of Organization Exempt from Income Tax, each year. Organizations that file a Form 990, which includes detailed financial information based on audited financial statements, must make them available for public inspection. (Form 990s for any organization that files them can be found at the Foundation Center, the National Center for Charitable Statistics, and Guidestar.)

Filing a Form 990 fulfills the legal obligation but does not, however, fulfill the standards for recommended best practices with regard to nonprofit transparency. The following are some of the practices recommended by Guidestar (see its report on The State of Nonprofit Transparency, 2008: Voluntary Disclosure Practices) and the Charities Review Council (see its Accountability - Public Disclosure Standards), among others:

Non profits should post the following on their website:
  • Annual reports
  • Audited financial statements
  • Their IRS letter of determination
See the website of Independent Sector, which works to strengthen the nonprofit and philanthropic community, for a good example of best practices with respect to transparency.

While USCJ is not required to file a Form 990, there is nothing preventing it from adhering to best practices and posting its audited financial statements on its website. The Union for Reform Judaism makes its financial reports available on its website: three years of reports, which include audited financial statements, as well as extremely detailed budgets - the 2011-2012 budget is 41 pages long.

Promoting transparency among Christian organizations so that they can earn the public's trust, the Evangelical Council for Financial Accountability (EFCA) sets high standards for membership. ECFA Standard 5 - Transparency requires members to "provide a copy of their current financial statements upon written request" to anyone who requests them. ECFA Standard 3 - Financial Oversight  sets out in detail what must be included in those financial statements.

As individual members of congregations, and as representatives of congregations that are members of USCJ, we should expect accountability and transparency from USCJ. If Magen Tzedek, a joint project of USCJ and the RA, wants to reflect the "highest standard on a variety of important issues," one of which is corporate transparency, perhaps USCJ should take the opportunity to lead on this important issue.


Rochelle Rudnick
Immediate past treasurer, Congregation Beth Sholom, Teaneck, NJ
Executive Director, Temple Emanuel of North Jersey, Franklin Lakes, NJ

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