The Zionist Organization of America has canceled its annual fundraising dinner as the result of the recent loss of its tax-exempt status.
The gala event, which has traditionally been held shortly before the end of the year, has been the group’s major showcase, highlighting its fervently pro-Israel activities and alliances with such influential figures as conservative talk show host Glenn Beck; Congresswoman Michelle Bachman; and Republican Rep. Eric Cantor, the House majority leader.
While David Drimer, the ZOA’s executive director, claimed that the dinner might still take place sometime next spring, its cancellation takes on extra import as internal critics continue to question its management of the fiscal crisis, and as the organization makes notable cuts to a number of its programs.
As initially reported by the Forward in September, the Internal Revenue Service revoked the century-plus-old Zionist group’s tax-exempt status in February after it neglected to file required financial disclosure documents for three consecutive years. Morton Klein, the Zionist Organization of America’s national president, Morton Klein, was given a salary increase of 38% during that three-year period.
Drimer explained that financial complications in connection with the revocation of the tax exemption made it impossible to hold the annual dinner. Following the revocation, the ZOA opened an outside account to accept organizational donations; however, the group is unable to access the funds in that account until it regains its tax exemption. All funds that would have been raised in conjunction with the dinner beyond expenses would have been placed in the outside account.
Various factions within the ZOA are presently debating the propriety of the administration’s actions with regard to the loss of its tax-exempt status. Orit Arfa, the Los Angeles-based executive director of the organization’s Western Region, has been identified as a key internal critic. The Forward obtained a memo that Arfa sent out several weeks ago to the ZOA’s national leadership. The memo expressed her concerns about the group’s handling of the tax exemption matter.
In that memo, Arfa accused Klein of directing her to minimize the importance of the issue, and to avoid openly mentioning it in a solicitation letter. “He said mentioning the loss of the tax exempt status will only increase the number of people who know about it, and that not ‘everyone in America’ knows about it,” Arfa wrote.
In a response memo, Drimer spoke to Arfa’s complaints. “I have already been unambiguous with you that neither you nor any other ZOA employee should ever misrepresent the ZOA’s tax status,” Drimer wrote. “We are acting in accordance with independent tax counsel’s advice and direction and we expect you and all other ZOA employees to do the same.”
In an attachment to her original memo, Arfa sent out an e-mail from Jesse Rosenblum, president of the ZOA’s Orange County chapter. Rosenblum stated therein that he was unaware that the ZOA had lost its tax exempt status until he read about it in the Forward.
Rosenblum later confirmed the points outlined in the e-mail, explaining that the Orange County chapter, which is included in the national organization’s tax exemption, maintains a bank account into which chapter members occasionally make donations. However, seven months elapsed between the time that the ZOA’s national office found out that it lost its exemption and the time that Rosenblum discovered that his chapter would no longer be able to accept donations. Rosenblum asserted that no one had donated to the account during that period.
“I’m sure they had a lot on their minds,” Rosenblum said. “I hope in no way does this affect the excellent work that the ZOA does in protecting the State of Israel and the Jewish people.”
Rosenblum further disclosed that a member of the Orange County board has resigned his position at least partially due to the exemption issue.
“If he wasn’t informed, it was an oversight,” Drimer said, claiming that the national organization communicated directly to the directors of some of its chapters, that regional directors spoke to others and that some chapter leaders who also serve on the national board would have been aware of the situation in any case. “It is possible that some people were missed,” Drimer conceded.
According to ZOA national vice chairman Steven Goldberg, who unsuccessfully tried to get the organization this past summer to publicly reveal the loss of its tax exemption, alleged that the administration suppressed public disclosure of the information on purpose. “Nobody was missed inadvertently. There was a deliberate attempt to conceal the loss of tax exempt status as long as possible,” Goldberg said.
Despite still having some considerable assets, the ZOA has been making some notable budget cuts. Its office in Los Angeles is closing, and the regional director will be expected to work from home. Additionally, the Zionist organization is cutting the number of college students on its annual leadership trip to Israel from 24 to 15. “We are trying to continue, to pursue our mission as vigorously as ever before, but we’re trying to be prudent with our out-of-pocket expenditures,” Drimer said.