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The Jewish Ethicist: Charitable Competition

May 9, 2009 | by Rabbi Dr. Asher Meir, Business Ethics Center of Jerusalem

Do-gooders are ruining my business!

Q. I have a grocery store in a poor area, but lately I have been losing business due to a charity organization which is giving out food parcels. Is this ethical?

A. Like last week's question, this too is one I have received many times but never articulated a convincing answer. Like last week's question, I will answer by presenting the analysis in Rabbi Aaron Levine's important new book, Moral Issues of the Marketplace in Jewish Law.

The case discussed by Rabbi Levine is of a philanthropist who identifies needy families and sends them food parcels. The impact of this program is significant enough to threaten the livelihood of two local grocery stores.

The scenario seems fanciful. First of all, how many needy families can there be? And if they are so needy, how much food are they buying in the first place? It seems far-fetched that this program could have such a ruinous impact on local merchants. Yet I have encountered real-life situations which are not far removed from Rabbi Levine's test case.

In religious neighborhoods holiday purchases can be a substantial portion of yearly grocery bills, yet holiday time is the most popular time for giving out food parcels. I have heard of cases where merchants have actually suffered a loss during the holiday after spending a large amount on perishable holiday produce and finding few customers because of an unanticipated volume of charity distributions.

Rabbi Levine approaches this question as one of unfair competition. He views the philanthropist as in effect opening a rival delivery business which engages in the ultimate form of predatory pricing. Given that the same objectives can be achieved without ruining the existing stores, the book's conclusion is that this is an inappropriate way of giving charity. Rather, the philanthropist should give a cash grant.

I would add that another option exists that can help all involved: a store credit. The donor can go to the existing stores and negotiate a discount for charity recipients; then he can provide some kind of scrip for the needy families. In this way, the donor provides food for the families in a way which is effective, nearly anonymous (only the storekeeper knows who the recipients are), in-kind (the money can't be diverted for some other use), and actually helps the storekeeper.

I think an additional caveat is in order. Sometimes charity distributions are made not by buying food but by soliciting donations from businesses. Often these are agricultural surpluses which would otherwise be discarded, or merchandise which is dated for sale but not yet forbidden for consumption. Since stores are not allowed to sell such merchandise, giving cash gifts or coupons is not an effective substitute, and Rabbi Levine's analysis would have to be modified accordingly.

My belief is that when it is practical, providing aid through existing merchants should be preferred over direct deliveries of food parcels. In this way we provide more dignified and flexible aid to the needy while also strengthening the storekeeper.

I again commend Rabbi Levine's book, which combines learned Jewish legal analysis with thorough ethical reasoning, and also includes a very thoughtful discussion of the interrelationship between these aspects and the secular law in the United States.

The Jewish Ethicist presents some general principles of Jewish law. For specific questions and direct application, please consult a qualified Rabbi.

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