Rabbi Dayan’s shul dedicated the yahrtzeit appeal on Shavuos to the local chessed fund; the community responded very generously.
The money that was pledged came in during the month after Shavuos. As the summer vacation began, a large sum of money sat in the chessed fund’s bank account, sufficient to cover its expected needs for the year.
The summer was quiet time for the chessed fund. Many of the people were away, and the large Yamim Tovim expenses were two months away.
“It’s a pity to have all this money just sitting in the bank when we don’t need it immediately,” the shul treasurer, Mr. Roth, said to the gabbai.
“What do you suggest?” asked the gabbai.
“We could invest half the money,” replied Mr. Roth. “This way we will have half available for immediate needs, and can meanwhile earn additional money with the excess.”
“How would you suggest that we invest the money?” asked the gabbai.
“There are several options,” replied Mr. Roth. “We could invest it in a money market account or a FDIC insured 3 or 6-month CD. The truth is, the stock market is doing well now. My broker told me, with a disclaimer that he may be proven wrong, that he expects the market to continue rising till the end of the year.”
“I’m hesitant, though, to move tzedakah money out of the bank account,” said the gabbai. “What if we suddenly had a great need for the funds around the Yamim Tovim, or if the market crashes...”
“You can always play it safe,” replied Mr. Roth, “but if things follow their expected course, we can earn a few thousand dollars extra for the chessed fund. I think it’s worth the risk!”
“We have to check with the Rav whether we can do this,” replied the gabbai.
The two met with Rabbi Dayan, and asked:
“Can we invest spare money of the chessed fund?”
“There is a dispute in the Mishnah (Shekalim 4:3) whether one can do business with spare money of hekdesh (Beis Hamikdash treasury) to earn expected profit,” replied Rabbi Dayan. “Halachah follows Rabi Akiva, that the treasurer of hekdesh or tzedakah should not do so.”
Yerushalmi (Shekalim 4:2) indicates that the concern is potential loss, so that if the treasurer of hekdesh or tzedakah accepts liability – Yerushalmi allows it. Bavli (Kesubos 106b), however, explains the reason otherwise; it is unbefitting to involve hekdesh in regular business, and there may not be sufficient tzedakah money available when needed (Y.D. 259:1).
The Acharonim therefore rule that if the investment is liquid, there are alternate resources to provide for the poor or the money is not needed right away for distribution (such as money being raised for a building fund), it is permissible to invest in a secure investment where there is minimal risk of loss and projected benefit to the poor (see Erchin 6a-b and Rashi; Rema Y.D; 259:1; Taz Y.D. 259:2; Aruch Hashulchan 259:4; Tzitz Eliezer 14:76).
When the money is being held in a bank, a CD is no less secure than a checking/savings account. However, the shul needs to ensure that it has sufficient funds to meet the tzedakah needs; it should not seek to earn profit if it could come at the expense of the primary purpose of the chessed fund. A money market would also seem sufficiently secure, and it provides liquidity.
However, the money should not be invested in stocks, etc., even if greater profit is expected, since there is accompanying greater concern of loss, especially short-term (C.M. 290:8; 290:10, citing Rashba 1:1094; see, however, Shevet Halevi 8:213).
“When the money is invested on behalf of the chessed fund,” concluded Rabbi Dayan, “the profit belongs to it, since the profit is earned from its money” (see Tzedakah u’Mishpat 8:11).
Verdict: Tzedakah money should not be invested, either because of concern of potential loss or so that the money should be available when needed. Acharonim allow a secure investment when it is liquid or there are alternate resources to cover the tzedakah needs.
Based on writings of Harav Chaim Kohn, shlita
