Fight the Minotaur in the Tax Labyrinth

This past September, the Bureau of Jewish Education of Greater Los Angeles, the Zimmer Children’s Museum and representatives of more than 70 other organizations attended a seminar for nonprofits that I conducted at The Jewish Federation of Greater Los Angeles.

Like many taxpayers, nonprofit organizations need guidance to comprehend the labyrinth of federal and state tax laws. With the exception of accountants and attorneys, few people absorb the millions of words that make up state and federal tax codes, including rules and regulations. In addition, many nonprofits cannot afford the expense of maintaining counsel to steer them through the thicket of tax laws.

To facilitate seminars that provide vital tax information to nonprofits, I enlist experienced speakers from various federal, state and local agencies to break down our complex tax system into easily understood component parts. At The Federation seminar, experts discussed provisions of the state and federal tax codes that apply to nonprofit organizations, as well as laws that specifically govern their activities.

A rabbi who attended the meeting was unaware that an exemption from sales tax exists for sales of meals and food products furnished or served by any religious organization at a social gathering it hosts. To his delight, the rabbi discovered that the synagogue was eligible for a refund of hundreds of dollars of sales tax reimbursement paid to several restaurants (Revenue & Taxation Code, Section 6363.5).

Marina Arevalo-Martinez, an accountant at the Hollywood Sunset Free Clinic, took a particular interest in raffles. She heard one presenter say that under Penal Code Section 320.5 “no eligible organization can hold a raffle unless it has registered with the [state] attorney general’s office to hold raffles.” Arevalo-Martinez also learned that an eligible organization must use at least 90 percent of all gross receipts from raffle ticket sales for charitable or beneficial purposes.

The Hollywood Sunset Free Clinic constantly looks for ways to raise money, and Arevalo-Martinez said the information will enable the agency to sponsor raffles while adhering to the letter of the law.

Federation President John Fishel said, “The seminar provided the staff of The Jewish Federation and the staff of our affiliated agencies with vital information on reporting and compliance.”

But the reality is that in today’s fast-paced environment not every nonprofit organization or charitable contributor has the time to attend a seminar. With this in mind, here are some tax tips from the Board of Equalization and the Franchise Tax Board you might find useful.

Franchise and Income Tax Tips for Donors


• Confirm that the recipient of your gift is a valid charity before you give. You can do so by looking up the charity on the IRS Web site (” target=”_blank”>, which features sales and tax rates by county, frequently asked questions, a list of publications, and an online tutorial for sales and use tax.

John Chiang is chair of the California State Board of Equalization and member of the Franchise Tax Board.


Federation Vows to Help Jewish Poor

Jews have long had a reputation as being among the most successful minority groups in the country. For the most part, they are. But as a new report from The Jewish Federation of Greater Los Angeles makes clear, not all Southland Jews live large. While some big machers tool around in BMWs and inhabit Beverly Hills and Brentwood mansions, thousands of less-fortunate community members struggle just to survive.

About one in five local Jews, or 104,000 out of 520,000, earn less than $25,000 annually. An estimated 7 percent live below the poverty line, compared to 5 percent nationally, according to a study titled “Alleviating Jewish Poverty in Los Angeles.” In greater Fairfax, an area with a high concentration of seniors and immigrants, an estimated one in three Jewish households lives in poverty.

“There’s an enormous number of Jews who live at or below the poverty line, and I think it will shock many members of our community to see how many people just scrape by,” Federation President John Fishel said.

In light of the stark findings, The Federation plans to make fighting Jewish poverty an even bigger priority, Fishel said. The agency has already allocated funds to Jewish Vocational Service (JVS) to hire new employees to focus on the need of the working poor. Around the country, Jewish agencies have undertaken several ambitious programs. In Philadelphia, the Philadelphia Jewish Family Service helps poor clients pay outstanding utility bills. In New York, the Metropolitan Council on Jewish Poverty, has built four buildings for the elderly poor with federal funds.

Jews in Southern California have a harder time eking out a living than their counterparts in other U.S. cities. Los Angeles ranks only behind San Francisco and New York as the nation’s most expensive city. Skyrocketing rents, health care and other costs mean poor Jews can afford little beyond the basic necessities, the report said. And the situation appears to be getting worse. The cost of a one-bedroom apartment in most Jewish neighborhoods is $900 to $1,200 per month, putting it beyond the reach of the poor and many working poor.

Based on the National Jewish Population Survey (NJPS) poverty study, the disabled account for 48 percent of the Jewish poor, refugees and immigrants make up 22 percent, non-college educated are 12 percent, seniors older than 65 comprise 9 percent, single-parent homes are 8 percent, and 1 percent is classified as other.

Ironically, some local Jews working for Jewish nonprofit organizations fall into the ranks of the Jewish poor. At a time when executives at the L.A. Federation and other agencies earn upward of $200,000, plus benefits, nearly 20 percent of the 450 full- and part-time unionized workers at Jewish Family Service (JFS), the Federation and five other Jewish agencies earned less than $20,000 as of the beginning of 2004. Many Jewish day school teaching assistants also make less than $20,000.

In preparing its poverty report, the L.A. Federation collected no new data locally. Instead, the agency based its findings on a Jewish population study commissioned in 1997 and a 2000-2001 survey by the NJPS. That the L.A. Federation conducted no recent random samples undermines the credibility of its study, said Pini Herman, a demographer and author of the 1997 L.A. Jewish Population Survey.

“It looks like they grabbed their numbers out of thin air,” said Herman, who was not consulted for the new survey. “The data fails to account for mortality, migration and movement up and down the economic ladder. I think it is intellectually dishonest.”

Fishel said he stood behind The Federation’s study, adding that he thought information from the 1997 data was still relevant.

The increased patronage of SOVA by local Jews reflects how much tougher things have become for them, said Paul Castro, executive director of JFS, the food bank’s operator. About 1,000 Jews visit SOVA twice monthly for free groceries, a 15 percent increase from last year and a 100 percent hike since 2002, he said.

“From the street level, the economy doesn’t look like it’s getting any better,” Castro said. “It’s getting worse.”

At JVS, demand for job training and job placement services by poor Jewish refugees and immigrants has jumped by about 10 percent annually over the past four years, said Vivian Seigel, JVS chief executive and president.

A scholarship program for Jewish men and women in L.A. County living at or below the poverty line has also experienced a surge in interest. This year, about 500 young men and women applied for the higher education stipends, up from 350 last year, she said. Skyrocketing tuition costs, combined with surging rents and insurance costs, have placed a heavy financial burden on poor aspiring college students.

“They’re being pushed down,” Seigel said.

The poor are not the only Jews experiencing financial hardships. The report said an ostensibly middle-class family of two working adults and three school-age children must earn $79,750 to cover living and Jewish community expenses, which include religious school, two weeks of day camp and one month of residential camp. Parents wanting to send their children to Jewish day school would have to come up with another $20,400 per year.

“There are significant numbers of Jews in Los Angeles who can’t make ends meet because of the high costs of living [here] and often find that the costs of Jewish affiliation is beyond their reach,” the report said.

Congress Weighs Nonprofit Security

These days, U.S. airports, federal buildings and transportation hubs are protected by surveillance and armed guards. But what about everything else? What about the cash-strapped nonprofits like temples, schools and community centers whose ethnicity or religious affiliation might make them a potential target?

Some federal legislators have expressed concern that these so-called "soft targets" are going to need extra protection.

The High Risk Nonprofit Security Enhancement Act of 2004 currently before Congress would allocate $100 million in grants and up to $250 million in government-guaranteed loans for security improvements to nonprofit organizations in 2005, with similar amounts in 2006 and 2007, along with $50 million in grants to law enforcement.

The $350 million in assistance to nonprofits would pay for security firms to install better infrastructure, such as concrete barriers, metal detectors and video cameras, and to provide expert training for the nonprofits’ staff on operating the equipment.

"Any time [the nation goes] to Orange Alert, we hear estimates that in large urban areas like Los Angeles it can cost law enforcement up to a million dollars [per] day to comply with the additional security requirements," said Julia Massimino, spokeswoman for Rep. Howard Berman (D-North Hollywood), one of the local co-sponsors of the House bill. Rep. Brad Sherman (D-Sherman Oaks) is also a co-sponsor.

With law enforcement unable to simultaneously patrol all possible threat sites, the hope is that nonprofits would be able to better defend themselves by using the funds for technological improvements.

The pool of nonprofits that would be eligible for the funds is anticipated to be quite large. It would ultimately be determined by the Homeland Security secretary.

The bill pointedly does not provide funds for nonprofits to purchase any improvement that "would … [be] reasonably necessary due to nonterrorist threats." However, making that distinction could prove complicated in some cases.

Threats or prior violence directed against an organization by terrorists would be a factor in a decision on eligibility, as would having high "symbolic value" as a target or other information that the secretary would choose to accept.

"It is subjective," said Robyn Judelson, United Jewish Communities public affairs director, one of the most ardent supporters of the bill. "It will be up to the secretary of Homeland Security to determine how far to draw the net. As times change, what may be a high risk today may not be the case in a few months or [vice versa]. We wanted the funds to be there for the secretary to make that decision."

"Nonprofits protect our health [and the] social, religious and educational services provided to Americans, and we have to do what we can to protect them in a different way than is set up in for-profit [organizations] or airplanes," Judelson said of the special needs facing nonprofits.

Because of the U.S. economic problems of the past few years, grants and donations for nonprofits have been steadily drying up, making extra expenditures on security difficult.

David Rosenberg, a local security consultant with The Centurion Group, a subsidiary of Centurion Security Inc., noted that over half of his clients are nonprofit organizations conceivably at risk from international terrorism.

"Anything that’s happening globally affects us on a local level," Rosenberg explained. "There was the firebombing of a Jewish day school in Montreal recently, [and] that immediately affected our local clients, and we will step up our security."

He noted, however, that the biggest spike in demand for security services among Los Angeles-area nonprofits came after the North Valley Jewish Community Center shooting in August 1999, rather than after Sept. 11.

"You have to be prepared for anything from an earthquake to a terrorist attack, because there’s no way of knowing," Rosenberg said. "I personally am more concerned about domestic terrorism than international terrorism."

While home-grown violence may be far more common than international attacks, the bill before Congress is not designed to combat it. The security enhancements the bill would provide, however, may nevertheless do so as an unintended consequence.

Perhaps a more fundamental gap in the legislation is a lack of money specifically earmarked for salaries of hired guards who are not existing employees of a nonprofit organization.

"I’m a big advocate of using video cameras, but who’s watching the screen? Everybody who works in a synagogue, for example, is responsible for security, but you [still] want at least one specialist at the location who can respond to whatever emergency arises," Rosenberg said of the limitations of training a nonprofit’s existing staff.

"[For example,] who’s going to operate the metal detectors? And if you find a weapon on somebody, who’s going to ensure that that person doesn’t get inside the structure? I can’t imagine somebody who’s a security professional saying all you need is environmental changes — that’s a wild thought," Rosenberg said.

There is wide agreement, however, that nonprofits do need more protection than they currently have, and infrastructure enhancements are one step in that direction.

The House bill making its way through the Judiciary Committee has 21 co-sponsors. The identical Senate version has eight co-sponsors in the Governmental Affairs Committee. Little overt opposition to the bill has materialized.

"Everybody’s having a difficult time financially, and that just trickles down to nonprofits," Rosenberg said. "Donations are down, but many synagogues have had to add additional security."

"We’re at a point now where it could be dangerous to practice your religion," he said. "It may be dangerous to give your children a Jewish education. So in order to exercise those freedoms, we’re going to have to put precautions in place."

Match Lights Way for Terror Victim Aid

Israeli soldier Monique Goldwasser was not expected to live
after a Palestinian bus driver deliberately struck her and other soldiers while
they waited at a bus stop on Feb. 14, 2001.

“I thought, ‘If Monique lives, I’ll become the voice and
face of all victims of terror in Israel,'” her mother, Sharon Evans, vowed.

Evans founded Adopt-a-Family, a project of the Coalition
Against Terror, a nonprofit organization that matches Jewish organizations
worldwide. As terrorism in Israel reaches an all-time high, Los Angeles
communities have found that adopting victims of terror and their families has
allowed them to support Israelis both financially and emotionally.

Stephen S. Wise’s Young Congregation raised thousands of
dollars for Goldwasser’s recovery and has kept in touch with her. After 17
operations, the former dancer, whose left leg is paralyzed, came to Los Angeles
with Evans to tell her story and walk in the 5K Walk (3.3-mile) portion of the
Los Angeles Marathon on March 2 with her benefactors.

Members of the Young Congregation and StandWithUs, a
pro-Israel advocacy group, joined her in the walk.

While her limp is noticeable, Goldwasser’s radiant smile,
sparkling eyes and positive outlook downplay her handicap. “I never thought I’d
be able to do something like this walk,” she said.

Around the city, communities treat their adoptees like one
of their own.

Rifka Ben Daniel, director of Judaic studies at Abraham
Joshua Heschel Day School West in Agoura, contacted the Adopt-a-Family program
last year; the school raised nearly $20,000 last April through a jog-a-thon and
was able to adopt three Israeli families. Throughout the academic year,
students send gifts and cards to the families and call them on their birthdays.
Ben Daniel is in contact with all three families, offering emotional support
whenever it is needed.

“It empowers the children to think that they can help
somebody in Israel,” said Ben Daniel, who met all three families when she visited
Jerusalem last December.

Across town, students at Maimonides Academy in West Los
Angeles adopted the Hadad family, who lost their wife and mother in a bus
bombing in Haifa. The students raised $5,000 so that the father could buy a car
to take his two young children to school.

“We were hoping [the students] would feel connected to some
of the victims in Israel and know they are directly helping these children,”
said Marlene Kahan, one of the school’s PTA presidents. To reinforce the
emotional connection, the school raised money to fly the father and the two
children to Los Angeles for Passover this year. While they are here, they will
spend time with different Maimonides families.

The Young Israel of Century City was the first shul in the United
States to participate in Adopt-a-Family. Rabbi Elazar Muskin and his
congregation raised more than $40,000 for the Har-Sinai family in Susiya.
Muskin has led three missions to Israel to visit the Har-Sinais, whose husband
and father was murdered by terrorists.

“When you meet with [the family] in person and they know who
[you] are, it makes an emotional connection,” he said.

Rick Fishbein, the unofficial Los Angeles coordinator of
Adopt-a-Family, helps the 20-30 Israeli families adopted by Los Angeles
residents communicate with their benefactors.

Through the Wexner Heritage Foundation, a nationwide Jewish
leadership group, Fishbein and his Los Angeles Wexner counterparts have adopted
a family whose teenage daughter was injured in the Ben Yehuda Promenade
bombing. In addition to supporting the family, Fishbein spends two to three
hours each week talking to various Israeli adoptive families by telephone.

“It’s very therapeutic for the victims to talk to someone
who is not a part of the drama,” he said.

For more information on Adopt-a-Family, e-mail or contact Rifka Ben Daniel at (818) 707-2365.