Based on Ahavas Chesed vol. 2 chapter 18

Previously, the Chofetz Chaim discussed setting aside money for a personal chesed fund. Now he gets into the nitty gritty.

One should habituate himself to setting aside ten percent of his income (called maaser; in English, a tithe). Of this, two-thirds should go to tzedakah – i.e., charitable giving – and the remainder should be added to his chesed fund (for extending loans). The reason for this distribution is that there are always more people who could use a handout than there are those who could use a loan. When one’s loan fund reaches a size such that he determines that no more is necessary, then he should designate the full ten percent he puts aside for tzedakah.

We see the greatness of tithing money from the Gemara in Taanis (9a). The Torah says “aseir t’aseir” – “you shall surely tithe” (Deut. 14:2). The Gemara interprets this as if it were read “aseir t’asheir” – “tithe so that you become wealthy.” And while we’re not normally permitted to test God, in this matter one is allowed to do so. This is derived from Malachi 3:10: “Bring all the tithes to the storehouse and it will be sustenance in My House. Test Me in this, says the Lord of Hosts, if I don’t open for you the windows of Heaven and pour out for you blessing without end.” So, God actively invites us to test Him as far as meticulous tithing leading to wealth. The permissibility of doing so is actually codified in halacha (YD 247:4).*

Here’s how to tithe: One starts by putting aside one-tenth of his principal (i.e., the money for his business). As time goes on, he continues by separating a tenth of his profits. Many people are exacting when it comes to separating a tenth of their profits, but they neglect to tithe the principal. Well-meaning though they may be, they are not actually in compliance with the halacha (CM 249:1); tithing the principal is non-optional.

Let’s be practical, the Chofetz Chaim says: the yetzer hara is such that a person is not inclined to give away all his money. Therefore, he suggests a workaround, as follows.

Let’s say that Yankel is starting a business and he has $200,000 in principal. He has to tithe that principal, but he’s disinclined to tie up $20,000 and just let it sit idle when it could be used for better growing his venture. So, Yankel should designate that $20,000 as a free-loan fund that he is also allowed to borrow from. He creates his loan fund with a stipulation: if someone comes to him for a loan and his funds are tied up, he will go to a third party and borrow money, then lend to the one asking. For example, if Motke asks Yankel to borrow $5,000, and Yankel is currently using the money from his personal loan fund, Yankel will ask Shloime for a loan of $5,000 and then lend it to Motke. (Basically, a certain amount is earmarked for loans, but it’s not necessarily just sitting in a safe waiting for borrowers – but it must be made available when needed!)

This fulfills one’s obligation in tithing his money because loans count as tzedakah, at least according to the Rambam (Maimonides), who considers extending a loan to be a form of tzedakah.

But what about the Ramban (Nachmanides), who doesn’t consider extending a loan to be a form of tzedakah? Yes, it’s still a mitzvah according to the Ramban, but it’s a mitzvah separate from one’s obligation in tzedakah, so it presumably wouldn’t be considered tithing.

It seems that one can be lenient in this matter even according to the Ramban. The poskim do allow maaser money to be used for other mitzvah purposes, such as purchasing seforim and lending them out. Nevertheless, one must make a condition when tithing the money that it will be used for some mitzvah other than the default manner of giving tzedakah. If one hasn’t done so, then he should only use the money as regular tzedakah funds, even according to the opinion of the Rambam.

This is the case when someone wants to use all of his maaser money for loans, rather than outright gifts to the needy. But what if someone has already tithed his money – so, by default it’s for tzedakah – and he now wishes to lend some of it to someone? In such a case, there is no need to be stringent, not even according to the Ramban. Rather, he should lend the money from what he has already tithed and put the money back into “the kitty” from elsewhere.

Let’s get back to how one manages his maaser money:

1. Before separating his maaser, he should verbalize his intention vis-à-vis how the money will be used, making sure to indicate that his stated intention does not constitute a vow. (Violating an oath or a vow is a serious matter in its own right.) He should also keep a notebook designated to maaser in which he records his profits after expenses.
2. One should audit his finances every six months. If he has incurred a loss, he deducts that loss from his profits and the rest of his profits are tithed.
3. He should record his charitable gifts in the notebook, even small amounts given to people who knocked on his door. These are deducted from the amount he set aside as maaser.
4. If he has money left when he performs his semiannual audit, he should do his best to disburse it ASAP. If he doesn’t have the opportunity to distribute the funds to his intended recipients, he can sit on the money until he is able to do so; he need not give it to other recipients just to get rid of it quickly. He may use that money in the interim, but when he sees the intended recipients, he must borrow if necessary to give them what he earmarked.

The details, of course, depend on the nature of his business. If he’s a shopkeeper, it’s simply impractical to record the profits realized on every individual item he sells. In such a case, he should make a more general audit of his business profits and household expenses. He balances that against the charity that he and the members of his household give. When he starts, he must stipulate his intention to use his best estimates of the actual numbers.

One must also tithe money that he inherits.

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*In fairness, it must be noted that there are authorities who disagree with this ruling, maintaining that it is limited to the tithing of grain, which is the context of the verse. The Chofetz Chaim, however, clearly agrees with the Shulchan Aruch.

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