The Shomrim Society Scholarship Fund Inc. – A Not-for-Profit “Government Associated Entity” – Scholarships? Part I



A Shomrim Scholarship Fund That Doesn’t Seem to Offer Scholarships

The notion of “scholarships implies that there is money being granted to help students or young people study, become scholars. Perhaps the notion of “scholarship” in this context is for Yeshivas or other schools. Perhaps it is intended that the beneficiaries will attend a college. Perhaps it is intended that the beneficiaries will have a better opportunity afforded to them to become productive members of society.  But a Scholarship Fund that does not seem to offer scholarships raises questions. And we can’t seem to add up the numbers nor can we find that this organization really does offer scholarships.

We question the validity of this organization which bills itself as having a governmental affiliation. If there is a governmental affiliation, we question the plausibility of that notion and how that ties into scholarships. We question the use of monies of a not-for-profit/tax exempt entity referring to itself as a scholarship fund for anything but scholarship. Follow the trail of breadcrumbs below.

In 2016, the last year for which the Shomrim Society Scholarship Fund Inc. has an available publicly filed tax return (990), there were $464,846 in Net assets (page 1) That number was up from the year before which was $459,947 in Net Assets line 22. The difference, or the increase is $4,899.00.

The entity claims $11,000.00 in expenses (See Page 2 Line 4e) (which is listed as scholarships in one place and separate expenses in another) which technically means, the increase in total is $15,899.00.

Under the Checklist of Required Schedules (Page 3) they answer “Yes” to whether or not the entity is a 501(c)(3) or a 4947(a)(1) entity which is then later described in Schedule A. 

Under the Checklist of Required Schedules (Page 3) they answer “Yes” to whether the entity has “other assets in Part X, line 15 that is 5% or more of its total assets reported in Part X, line 16” and if so there should be a Schedule D, Part IX.

On Page 4, line 22 they answer “Yes” to “Did the organization report more than $5,000 of grants or other assistance to or for domestic individuals on Part IX, column (A), line 2” and if so there are schedules to be attached. Presumably, that is part of the $11,000.00 listed earlier.

On line 34 they answer that the organization is related to other tax-exempt organizations (we already know the Shomrim are interconnected entities, so this is no surprise).

Then on line 38 they say that there are other explanations to be added.

Interestingly, and something we do not understand, there is a “funeral liaison” (Page 8). Given that this entity bills itself as offering scholarships, one must ask why there needs to be a funeral liaison. 

Page 9 lists losses, though de minimus in “investment income” and gross amounts of sales from “other assets”. The “other assets” listed are securities in the amount of $75,569 which had an initial basis of $79,998 (thereby indicating a loss of $4,429). But there is also $5,569 in Investment income and total revenue of $1,700.00.

On Page 10 line 2 lists grants of $11,000.00 (as expenses) and then other functional expenses in the amount of $2,192 for a total amount of expenses being $13,192.00

Page 11, otherwise known as Part X (Balance sheet) is where things get interesting. There was a beginning of the year non-interest bearing asset of $213,280.00 with an end of the year at $202,184.00. The difference is -$11,096.00. That is listed on line 1. On line 11, the Sholarship Fund lists publicly traded securities, beginning of the year $245,962.00 and end of the year $157,662.00. One would have expected that the difference would have been the -$75,569.00 number listed on page 9 – losses from securities. But the difference actually comes out to -$88,300.00. It is unclear what happened to $12,731.00 or the difference between what is listed on page 9 as losses and what is listed on Part X as losses from securities.

There is then a number listed as $105,000 as “other assets” line 15 which was not there at the beginning of the tax year. One would think that that number would have added $105,000 to the previous year’s net assets; but that is not done. Somewhere money disappeared and then reappeared in the form of “other assets.”

Line 16 of Page 11 lists Total Assets of $460,047 at the beginning of the year and E/O/Y at $464,846 or a difference (increase) of $4,799.00.  We think that the total liabilities line which is 26 may help to make that number match the difference of $4,899.00 on Page 1 Line 22.

There is a net unrealized gain on investments listed on page 12 of $16,391 (line 5); but there was a loss in the equity position and then this intangible that seems inexplicable.

Schedule A claims that the entity is a line 6 – “federal, state or local government or governmental unit” 170(b)(1)(A)(v). But aren’t the Shomrim separate from our government? Aren’t they private security entities within the communities? And, are their “Scholarship Funds” government scholarship funds?

On Supplemental Schedule I “Grants and Other Assistance to Organizations, Governments and Individuals in the United States” there is nothing listed. So what happened to the $11,000.00 supposedly granted to 5 individuals. Where did that money go? And if not within the United States, why is an entity claiming to be part of our governmental entities giving money to non-US Governments or Individuals?

The Grants to the 5 individuals is, indeed, listed on Page 2 of Schedule I – an award of $11,000.00 presumably pro-rata to 5 recipients. 

Schedule R lists two affiliated entities: 1) Shomrim Society Inc. (Cemetery) – 501(c)(13) and Shomrim Society I (Fraternal) 501(c)(4). Presumably, the money runs by and between these entities which is the extent of their affiliation. 

We outright question the validity of an organization that refers to itself as a scholarship fund but gives no scholarships. It liaises with cemetery organizations but, again is listed as a scholarship fund. To avoid being heartless, we recognize that perhaps this organization helped to fund the burial of 5 individuals, which could very well be. But there again, it refers to itself as a “scholarship” fund. 


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