ZOA's Mort Klein Gets 38% Pay Hike

Leader's Salary Increased Despite Losing Tax Status

Rubbing Elbows: Zionist Organization of America President Mort Klein got healthy pay increases even as the group failed to file required tax documents.
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Rubbing Elbows: Zionist Organization of America President Mort Klein got healthy pay increases even as the group failed to file required tax documents.

By Josh Nathan-Kazis

Published September 28, 2012, issue of October 05, 2012.
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The Zionist Organization of America’s president received a 38% raise in the years that the group failed to disclose its finances to the Internal Revenue Service, according to documents obtained by the Forward.

The IRS revoked the tax-exempt status of the hawkish Israel advocacy group in February after the organization missed three consecutive years of tax filings, the Forward revealed.

ZOA National President Morton Klein earned $315,385 in 2007, the last year for which filings are publicly available. His base compensation in 2011 was $435,050.

Meanwhile, the group’s total revenue was $1.4 million less in 2011 than in 2007.

“Mort has raised a lot of money over the years for an organization that was bankrupt when he took it over,” ZOA National Executive Director David Drimer told the Forward. “He might even be in the upper tier of CEO compensation in organizations our size, but I would submit that Mort wields far more influence in the marketplace of ideas about Israel and the Middle East than organizations with far deeper pockets than ours.”

In documents prepared for the IRS, the ZOA claimed that it had $6.3 million in net assets at the end of 2011. Drimer also told the Forward that the group owns a building recently appraised at $18 million.

The ZOA lost its tax exemption after it didn’t file three consecutive years of Form 990s, the returns that charities are required to submit to the IRS and make available to the public.

The Form 990 serves as a charity’s disclosure of its finances. The forms include information useful to potential donors, along with a description of the group’s activities and budget, and the salaries of top employees.

The ZOA’s most recent properly filed Form 990 is from 2007. That year’s filing is the latest available online for the group.

At the Forward’s request, the ZOA provided its 990s for 2009, 2010 and 2011. These documents are not publicly available and have yet to be filed with the IRS.

Klein’s salary climbed dramatically during the tax years for which the records are absent from public view. He received one raise to a base pay of $385,000 in 2009, and then another to a base pay of $435,050 in 2011.

Klein’s salary for 2011 makes him one of the best-compensated Jewish professionals in the United States. Of the 75 not-for-profit executives studied in the Forward’s latest annual Jewish communal salary survey, only 16 outearned Klein. All but one of those 16 ran far bigger organizations than the ZOA.

Of the 16 Jewish communal executives in the Forward’s survey earning $435,000 or greater, most had budgets in the tens of millions of dollars and staffs of hundreds.

The ZOA had a staff of 31 and expenses of $3 million in 2011.

Over the same period that Klein’s salary has grown, the group’s fundraising has fallen. The ZOA received $2.5 million in gifts, grants and contributions in 2011, down from $3.7 million in 2007. The group’s total 2011 revenue was $3.1 million when investment income and other revenue streams are added. That is down from $4.5 million in total revenue in 2007.

“Mort doesn’t decide how much money he’s compensated,” Drimer told the Forward. According to Drimer, Klein’s compensation is determined years in advance by a schedule drawn up by a compensation consultant and approved by a board committee and the group’s entire board.

Drimer also noted that Klein worked full time without pay for the first six years of the 19 he has now served as head of the ZOA.

The Forward reported earlier in September that the board’s vice chairman, Steven Goldberg, said that the board exercised little oversight over the organization. Goldberg told the Forward that he had not seen an organizational budget since he joined the ZOA board in 2008. In response, Drimer said that the board has a finance committee that approves the budget.

Drimer said that the group is imminently filing its application to reinstate its tax-exempt status.

A spokeswoman for the IRS would not say how long it takes the agency to grant new tax exemptions to groups like the ZOA, whose exemptions have been lost for failure to file Form 990, but a former head of the division of the IRS that deals with tax-exempt groups said that those groups can sometimes get back their exemptions quickly.

“Assuming everything’s in order, my guess is it might take a number of weeks, maybe a month or two,” said Marcus Owens, director of the IRS exempt organizations division from 1990 to 2000 and now a lawyer in private practice at the firm Caplin & Drysdale. “The IRS is trying to expedite the reinstatement process.”

If the IRS has questions about a group’s application, Owens noted, the reinstatement process could take far longer.

Contact Josh Nathan-Kazis at nathankazis@forward.com or follow him on Twitter @joshnathankazis


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