Citing budgetary pressures, the Zionist Organization of American (ZOA) will vacate the small office it has rented in The Jewish Federation of Greater Los Angeles headquarters on Wilshire Boulevard later this month.
The pro-Israel nonprofit exercised an opt-out clause in October, passing up the chance to renew its one-year lease on a small office space on the building’s fifth floor, for which it has paid somewhere between $800 and $1,000 each month, according to officials from ZOA and Federation.
National Executive Director David Drimer called the move part of an effort to cut costs; ZOA’s tax-exempt status was revoked earlier this year, and the organization is currently unable to access any new donations.
“It’s prudent to show that we’re managing the company in a cost-conscious way, no matter what the expense,” Drimer said.
Drimer said the decision to move the office occupied by Los Angeles Regional Executive Director Orit Arfa out of the Federation building is not yet final, but as of Oct. 29, both Drimer and Federation confirmed that no talks had begun to discuss the group’s continuing on as a tenant. “This is what happens in the office-space business,” Federation President Jay Sanderson said.
Drimer said ZOA, which has also put its annual fundraising dinner “on hold” this year, is paring back in many ways.
Of the five regions where ZOA has a full-time executive director, one already works from home, Drimer said, adding that cuts were being made throughout the organization, including reducing the number of students participating in the upcoming mission to Israel to 15 from the usual 24. Drimer also said that at least one ZOA staff position that has been vacant since August will remain unfilled to reduce spending.
But whether the spirit of austerity extends to the man who has held ZOA’s top job for the past 18 years is unclear.
According to documents shared by ZOA with the Journal, ZOA National President Morton Klein has received a total of $1.7 million in compensation from ZOA over the years 2009-2011, and could be owed as much as $1.4 million in additional deferred compensation. Asked on Nov. 2 whether Klein himself had taken any voluntary pay cuts to ease the current burden on his organization, Drimer referred the Journal directly to Klein, who Drimer said was traveling in California.
An e-mail sent to Klein and Drimer on Nov. 2 garnered no response, and on Nov. 5, Drimer wrote in an e-mail that Klein was unwell and would not speak with the Journal.
Arfa also declined to be interviewed.
The austerity measures trace back to the Internal Revenue Service revocation of ZOA’s tax-exempt status in February 2012, after ZOA failed to file its required tax forms for three consecutive years.
The 115-year-old organization filed the required forms belatedly on Oct. 31 of this year, Drimer said; for now, however, all new donations to ZOA are being redirected to a nonprofit entity that will hold the monies until ZOA’s tax-exempt status is reinstated.
ZOA hasn’t ceased operating, though. With assets of about $6.3 million in cash and other investments and a building owned by the organization valued at $18 million, ZOA has been funding its operations with existing funds.
“We try to prioritize, just like any company, Drimer said of the possible closing of the L.A. space. ZOA National Vice Chair Steven Goldberg, however, saw the cut as possibly an attempt by Klein to retaliate against Arfa, who has been a vocal internal critic of the organization’s handling of its loss of tax status.
In an internal ZOA memo dated Oct. 12 obtained by the Journal, Arfa expressed significant reservations about what she said were Klein’s requests that she conceal ZOA’s lost tax status, calling such actions “unethical and disingenuous.”
“There’s no longer any pretense by Mort Klein that he’s acting in the best interests of the ZOA,” said Goldberg, who called for Klein’s resignation in an interview with the Journal in September. “It’s all about being spiteful and punitive against Orit Arfa and me for insisting that the organization behave legally and ethically.”
Goldberg, a Los Angeles-based lawyer who has emerged as the lone, loud voice of dissent on ZOA’s national board, was referring to his belief that the organization should proactively inform donors and the public about its loss of tax-exempt status.
Drimer, who dismissed Goldberg as a “rogue board member,” rejected one claim Arfa made in her Oct. 12 memo, that Klein had instructed her “not to mention the loss [of tax-exempt status] at all” to potential donors.
“Neither she nor any other ZOA employee has ever been encouraged to mislead anyone about the ZOA’s tax status,” Drimer said.
The loss of tax-exempt status appears to have discouraged contributions from at least some potential ZOA donors; along with her Oct. 12 memo, Arfa submitted three e-mails as evidence of this. One came from Jesse Rosenblum, president of ZOA’s Orange County chapter, who said, “the ZOA image in the community is now at an all time low.” Another came from Mark Tannenbaum, who, in response to Arfa’s invitation to join the local board, wrote that he was “too uncomfortable” with ZOA’s loss of tax-exempt status and with Klein’s “excessive” salary to join.
The third e-mail attached to Arfa’s memo was from Lew Groner, director of marketing and communications at the Jewish Community Foundation of Los Angeles. In an e-mail sent to Arfa on Sept. 28, Groner called ZOA’s loss of tax-exempt status a “game-stopper.”
“I can imagine the ZOA’s non-filing of tax returns is an impediment for your fundraising efforts; don’t see how it could be otherwise,” Groner wrote. “Quite frankly, it doesn’t look good, smell good or feel good to any reasonable donor.”
In addition to the uncertainty surrounding her future tenancy at Federation’s headquarters, Arfa has been getting other mixed signals from ZOA’s leadership.
On Nov. 2, Arfa, after being informed by another ZOA employee that her account of her region’s activities would be omitted from ZOA’s upcoming annual report, sent an e-mail to Klein and Drimer asking why. The decision was reversed a few days later, but Goldberg, who was copied on Arfa’s e-mail to Drimer and Klein and shared it with the Journal, said he believes Klein has been threatening Arfa with termination, and that she wasn’t the only ZOA employee to feel that way.
“The vast majority of employees, including in New York, are concerned about what’s going on,” Goldberg said. “Most if not all of the employees are working in fear of losing their jobs.”
Drimer rejected Goldberg’s assertion about Arfa.
“Orit Arfa’s job has never been threatened in any way because of her questions on these matters,” Drimer said.
But if the loss of tax-exempt status and the subsequent controversy has roiled ZOA’s leaders, members and donors in Los Angeles, the same can’t be said of all the organization’s chapters.
The ZOA Michigan chapter in suburban Detroit is known to be the most independent of the regional chapters, and its president, Eugene Greenstein, told the Journal that his group was not involved in the internal politics playing out at the national level.
“We are minding our business and running our programs,” Greenstein said. “And we support the good work of the national organization.”