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Shabbat Parashat Vayishlach| 5771

Pninat Mishpat: The Halachic Status of the Directors of Non-Profits

(condensed from an article by Rav C. Rosental, Shurat Hadin IV, pp. 274-280)

     Determining the halachic status of the directors of non-profit organizations impacts on several halachic questions. Are they considered like the owners of the operations so that they can be summoned on behalf of the institution and are invalid to testify on behalf of the organization like a party to the conflict, or do they have the status of a gabbai or apputropus (legal guardian) who can separate himself from the conflict in those regards?

The Maharam Shick (Choshen Mishpat 18) distinguishes in this matter between a case where beit din, representing a community, appoints someone to be in charge, in which case he has the aforementioned special status of apputropus, and a case where a group of people get together to form an organization, in which case they are essentially owners. In the latter case, they can make decisions that do not require public approval, even if the funding comes from a broad spectrum of the public. One of the signs of what type of director we are dealing with is whether the public is able to have him removed from his position (based on Nimukei Yosef to Bava Batra 46b regarding a “sharecropper from the fathers’ house”).

Another distinction emanates from the gemara (Megilla 26a). Rav Ashi said that he could sell his local shul even though it was financed by a broad group of people. His authority stemmed from the fact that people donated having in mind that he would make the relevant decisions. This certainly seems to apply in any case where an individual founded and clearly leads an institution, and it may be linked to the aforementioned factor of if the director can be removed.

Irrespective of the above, all directors should be subject to being summoned to court as a defendant. The Torah describes the litigants as they “who have the conflict” (Devarim 19:17). Thus, this depends less on technical ownership and more on practical involvement in the operations involved. It is likely that while whether one with tovat hana’ah (indirect interest) can testify depends on whether tovat hana’ah is considered like money, the status of a litigant would not depend on that but on actual involvement.

One can learn from the Rashba (Shut I, 1157) that the only time a gabbai can be believed regarding consecrated funds is regarding the question of which funds belong to the institution. However, regarding questions of how the money was handled, which is under his stewardship, he is a party and is not believed. 

 In our case, where most of the funds that sustain the institution are from the government, one cannot claim that he has the special status of a gabbai of tzedaka. Since the practice of society is that directors are treated like litigants in respect to the workers they hired, workers accept their jobs based on the publicly accepted practice even if no stipulation is made. Therefore, for a variety of reasons, directors are to be treated like normal defendants. 

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