Dividing Government Funding

Based on ruling 75043 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: The plaintiff (=pl) and the defendant (=def) are organizations that do overlapping work in strengthening the religious/social fabric of a certain city. Def was looking for a grant from the Department of Education (=DOE) and was missing a couple of eligibility components – the operation of a kollel and reaching a certain number of hours of community work. Def suggested to pl that they join forces so that def could be eligible, and they would give 25% of the funding to pl. They signed a contract with terms. Thus, a few avreichim who had been involved with pl, including one with certain qualifications required for the grant proposal, went to work under pl. In 2012, the grant request was originally turned down because one of these avreichim was rejected by DOE. Eventually, def received 306,341 shekels and gave pl 32,640 shekels (far less than 25%). In 2013 they received no funding. In 2014 they negotiated terms of agreement but did not sign a contract. Def received 281,111 shekels, but they could not agree on the amount due to pl. Pl claims they deserve the full 25% for 2012. Def claims that pl agreed to a reduction because they were responsible, by providing an ineligible avrech, for the proposal’s rejection. This caused def to have to work very hard to receive funding, which is not attributable to pl. They also pointed out that pl did not ask for a full portion for 2012 until the argument regarding 2014 arose, which proves that pl had agreed. Pl argues that it took a long time until the funding came, and they did not know how much they deserved until later; there was no mechila. Regarding the avrech, def was aware of the issue and decided to proceed with the funding request anyway. [We will discuss 2014 next time.]



Ruling: Def’s claim that the agreed upon formula for payment was changed is similar to claims that a debtor paid, in this case, partially. When there is a written agreement, if there were a change, we would expect that def would replace it with a new agreement. A delay in demanding more money is not proof of mechila (Shulchan Aruch, Choshen Mishpat 61:9).

The Radbaz (I:364) rules that one is believed to say that the other side was mochel only in a case that he could have claimed that he paid. Rav Shmuel Rozovski explains the weakness of the claim of mechila in that while debts are made to be paid eventually, they are not normally made for there to be mechila. Even if there is logic in a specific case for there to have been mechila, there still needs to be proof. In this case, since payments of this magnitude are done with checks or bank transfers, def would not be believed to say they paid, and therefore they need proof of mechila, which def did not bring.

As far as the claim that pl did not provide the prescribed help and was not responsible for the funds received, it appears logical that the important resources pl provided were part of the basis of the eventual funding. However, due to the fact that pl had to engage in a long campaign to receive funding, which should have been automatic, we are reducing the amount due to pl for 2012 from 25% to 20%.