September 14, 2012
ZOA’s lost tax-exemption status prompts demand for new leadership
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Drimer, however, said the ZOA board had been informed early on. “We called a meeting as quick as we could and explained the problem,” he said. The meeting, a conference call with “a good portion of the board of directors,” Drimer said, took place less than two weeks after ZOA received notice from the IRS.
Goldberg said he remembered the call taking place at the end of February, and he estimated that fewer than a dozen board members participated. (The exact number of current board members appears to be in dispute. Goldberg and Drimer said ZOA has 38 board members, Klein said there are 52, and the 2011 990 lists 59 board members, a list that includes Hochberg and the now-deceased Newton Becker.)
On the call in February, Goldberg said, he and others urged the organization to disclose the revocation, but he said Klein had opposed it, “and that vote carried the day.”
“To the best of my memory, that’s not correct,” Drimer said.
According to Goldberg, the dispute over how and how much to disclose about the revoked status continued for the next six months, with Goldberg arguing — with increasing urgency, he said — in favor of full disclosure. In August, he circulated to the entire ZOA board a memo written by Kent Seton, an outside attorney hired by Goldberg, that found donors had a right to know about the loss of tax-exempt status and called the failure to disclose it “inexcusable.”
Klein and Drimer rejected the conclusions of the memo on the grounds that Seton is a California-based lawyer not admitted to the New York State Bar and that he did his analysis without the permission or cooperation of ZOA.
Instead, they rely on the ZOA’s outside counsel, who, according to Drimer, was retained in February.
“We have a first-rate tax attorney; we’ve done everything that he has said we need to do that is appropriate and legal and moral,” Klein said. “Every donation to ZOA remains fully tax-deductible.”
In the course of discussing his grievances about Klein and ZOA, Goldberg did not limit his criticism to the lost tax-exempt status. In an hour-long conversation with the Journal, he expressed frustration at having never seen an organizational budget, especially given the significant chunk of that budget allocated for Klein’s salary.
Compared with other nonprofit organizations, Klein’s salary — $435,050 in 2011 — is very high. According to a 2010 report on CEO compensation by Charity Navigator, nonprofit organizations of ZOA’s size paid their CEOs a median salary of $157,056.
Some Jewish charities of ZOA’s size appear to dedicate a greater share of their annual spending to CEO compensation, but even there, Klein’s package sits at the higher end of the spectrum.
According to the 990 forms prepared by ZOA, the organization made expenditures of $3.3 million in 2009, $2.9 million in 2010 and $3.1 million in 2011. The documents show that Klein was given a compensation package totaling $717,700 in 2009, $467,000 in 2010 and $518,800 in 2011, which translates to 21.65 percent, 16.19 percent and 16.97 percent of the organization’s total spending in any given year.
Drimer said that in 1993, when Klein took over the then-indebted ZOA, he worked without pay for six years. He added that Klein’s pay has been calculated with the help of a compensation consultant. Klein said that his cumulative salary, averaged out over his 19-year tenure as president, was “well under $200,000” per year.
The board, Klein said, was responsible for any raises he had been given over the years.
“They did it because of appreciation for my working for free, being a very successful fundraiser,” Klein said. “Anything I got in terms of income, they decided, I never asked for it.”
Orit Arfa, the executive director of ZOA’s Western Region, has also been drawn into the political battle between Klein and Goldberg.
Arfa sent a memo on Sept. 5 to Goldberg, Drimer and Michael Goldblatt, chairman of ZOA’s board, in which she stated that Klein had told her “several times” to “remain secretive about the tax-exempt status issue.”
Drimer dismissed the idea that Klein would have asked Arfa to refrain from publicizing the loss of tax-exempt status.
“It wouldn’t make sense,” Drimer said. “It’s not a secret.”
Arfa, formerly a frequent writer for the Journal and who currently blogs on a ZOA-focused blog hosted at jewishjournal.com, declined to speak to the Journal for this article.
In her memo, shared with the Journal by Goldberg, Arfa wrote that her immediate reason for contacting the organization’s national executive director and top two board officers was a “disturbing” phone call she received on Sept. 5 from Klein.
“Mort reiterated several times that he is the president and pays my salary, implying that he could therefore fire me at will if I do something that does not please him or is perceived as being disloyal to him,” Arfa wrote.
Drimer said that ZOA had retained counsel to look into Arfa’s complaint.
“We take those kinds of matters very seriously, and we try to treat them in an appropriate way,” he said.
Accusations of bullying ZOA employees have dogged Klein in the past. In 2006, an article in The Forward reported on complaints from former employees and one former board member about Klein’s behavior. According to the article, in the 13 years since Klein had taken over as president in 1993, ZOA had at least eight executive directors, two of whom reportedly “told The Forward that they had left because of frequent verbal abuse from Klein.”
Arfa’s immediate predecessor in Los Angeles, Shelly Ventura-Cohen, lasted just six months before resigning her post.
In her resignation letter to Klein, dated July 24, 2011, and shared with the Journal by Goldberg, Ventura-Cohen mentioned “recent interactions with you, and the manner in which you communicate” as reasons for her resignation.
“He screamed at her, abused her, was vicious to her,” Goldberg said. “She couldn’t take it.”
Goldberg also shared a copy of an e-mail from Klein to Ventura-Cohen sent just three days before her resignation. Under the subject line, “thoroughly unacceptable and embarrassing memo to zoa board you wrote,” Klein called Ventura-Cohen’s writing “worse than what i would expect from an 8th grader.”
Ventura-Cohen was 74 when she died at the end of 2011.
Goldberg referred to Arfa, who has worked at ZOA for less than a year, as an outstanding employee, but said she was “in danger” of being fired because Klein “worries that she’s not loyal to him.”
Klein said that whether Arfa keeps her job is strictly dependent on ZOA’s bottom line.
“ZOA cannot continue to lose significant funds by funding an office when the director is not raising any funds,” Klein said. “I made it clear to her that if she isn’t able to raise significant funds, we may have to close the office.
“That’s something that any national president would say to any local executive director where there is a fundraising problem,” he added.
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