Watchdogs: Zionist Charity Shortchanging Programs

By Nathaniel Popper

Published March 25, 2005, issue of March 25, 2005.
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Philanthropy watchdogs are criticizing the percentage of funds that a venerable tree-planting charity is spending on its programs.

In the late 1990s, the American branch of the Israel-based Jewish National Fund was wracked by scandal over the small share of its revenue that was reaching the parent charity in Israel for land and water development programs. In 1997, a committee was established to help reform the American organization. It issued a report calling for 70% of JNF America’s “gross receipts” to be “transmitted to Israel” by 2001, according to a copy of the report, shared with the Forward.

The charity’s most recent tax filings, however, show that the 70% goal is still distant.

Slightly more than 35% of the money raised in America was sent to Israel in grants during 2003. JNF officials say they are focusing more on education in America, but in 2003 education consumed only 8% of JNF’s income. The bulk of the remaining money went to pay for fund raising, salaries and administrative costs in the United States.

“This charity is woefully behind their peers in how much they allocate to their cause,” said Trent Stamp, executive director of Charity Navigator, which evaluates the financial records of 4,000 charities each year.

Marc Hager of the Urban Institute’s Center on Nonprofits and Philanthropy said: “If the numbers [they present in their tax forms] are accurate, it’s not surprising that watchdogs are raising questions about them. These numbers are well on the high side for any kind of nonprofit organization.”

This week the chief executive officer of JNF America, Russell Robinson, said, “If any independent reviewer was assessing a grade for the objectives laid out in 1997 by the task force, JNF America would get an A plus.”

In an interview published two weeks ago in the Forward, before a copy of the 1997 report surfaced, Robinson dismissed earlier newspaper reports of the 70% goal as a “misquote” or “exaggerated.”

Jewish National Fund was established in 1901 to buy land for Jewish settlement in the area that was to become Israel. The American branch of the charity began operating in 1926, and it quickly became one of the most prominent symbols of American Jewish philanthropy with its blue tin collection boxes, or pushkes. Today the blue boxes advertise JNF as “Your direct link to the land of Israel.”

Members of JNF’s executive committee in America voiced support to the Forward for the changes that Robinson has effected since coming to JNF in 1997. But, in addition to the complaints from philanthropy watchdogs, criticism of JNF has surfaced from some members of JNF’s board of directors, who were involved in the 1997 reform.

In 1997, members of the American charity’s board of directors called for reform after public dis-closures that less than 20% of the money raised in America was reaching Israel. Tax forms from 1996 indicate that 16% of the $32 million spent by Jewish National Fund in America went that year to Jewish National Fund in Israel.

An investigation that followed found that no money had been stolen, but pointed to a number of inefficiencies at JNF, including a plethora of regional offices, which the report recommended should be reduced to 10. It was then that the report set the “goal of sending 70% of our funds to Israel by the year 2001.”

Since Robinson took over in 1997, JNF has cut salaries and benefits in its American offices from $13.5 million in 1996 to $10 million in 2003. The agency also has cut back to nine zones of operation, but it has kept open 26 offices around the country.

By 2003, while JNF America was spending $29.3 million, the amount going to Israel had risen to just $11 million. A 2003 audit says that $15.8 million went to “Israel Programs,” but according to the chief financial officer, Mitchell Rosenzweig, a little more than $11 million of this was grants to Israel. The rest, about $4.7 million, went to administering and processing that grant money in America.

Moshe Kagan, who co-chaired the 1997 task force that set the 70% goal, said: “There was a commitment on the part of the JNF to do much better than they had been doing. To date, very little has been improved.”

Current members of JNF’s executive committee were more encouraged by the post-1997 changes. Joseph Hess, the other co-chairman of the 1997 task force, said, “Where I stand at this moment, I’m satisfied with the direction we’re going.”

Hess and other current JNF leaders offer two main explanations for why JNF has not reached the 1997 goals. The first is that JNF America is intent on reaching the largest number of donors possible — many of whom may not give large sums, but can nonetheless feel connected to Israel by dropping their change into a blue pushke.

Last year the Jewish National Fund had 500,000 donors, Robinson said, and it costs money to process each individual donation. By comparison, American Friends of Hebrew University managed to send 80% of the money it spent to its Israeli cause, but it only had 10,000 donors providing all its funds.

“We’re trying to get people on the grass roots involved,” said W. James Schiller, JNF’s vice president for Israel relations. “I think that takes a whole lot more detailed work, but it’s something that a person feels connected to.”

Watchdog groups dismissed this reasoning, however. Stamp, at Charity Navigator, said that his organization looks at “countless numbers of large organizations relying on large numbers of lower-level donors, but who are able to keep their fund-raising costs within reasonable levels.” Last year, fund-raising expenses alone consumed 20.4% of JNF America’s budget. Stamp said that the average charity they evaluate keeps those costs below 10%.

Aside from their fund-raising techniques, Robinson and the executive board members said that Jewish National Fund differs from groups like American Friends of Hebrew University because JNF has its own educational programs in the United States. Those programs are glossed over in the continual attention to the sum reaching Israel, they say. JNF’s vice president for education, Robert Levine, said that the goal of sending 70% to Israel was good, but the programs in the United States are becoming more important.

“That was a goal that was going to be worked toward,” Levine said, referring to the 70% target. “It was discussed that it would be nice if we could do that. Realistically, though, I don’t think it will happen with the worldwide antisemitism rising, and anti-Israel sentiments on college campuses.”

While Levine called educational work a “major thrust” of the organization, JNF America spent $4.4 million of its $29.3 million budget in 2003 on education and scholarships. This is just $700,000 more than was spent on these items in 1996. The expenses listed as education in 2003 included wages for staff members like Robinson, when they spoke in front of other Jewish organizations.

JNF has won plaudits for its honesty in reporting all these intricacies. In October 2004, the Better Business Bureau determined that JNF America met its Standards for Charity Accountability, a status given to 70% of the philanthropies evaluated. In making this determination, the Better Business Bureau looks beyond a philanthropy’s finances to its governance and transparency in reporting.

One member of the 1997 task force, Mel Parness, said that JNF is now run “very professionally.” But in terms of financial results, Parness said, “I don’t believe there’s been a tremendous change in the course of operations, from what I can see.”

Parness, who has been on JNF’s board of directors since before the 1997 scandal, qualified his observation. Before Robinson took over, Parness said, the board of directors, which is now called the board of trustees, was invited to regular quarterly or monthly meetings where they learned about the organization’s finances. Now, Parness said, the board meets only once a year to elect a smaller executive committee, which runs the organization. “Now they don’t keep us involved,” said Parness, who represents the Bnai Zion Foundation on Jewish National Fund’s board.

A JNF spokeswoman said that changes were made in 2003 in order to allow “for better governance of our organization.” But Parness said the 1997 reforms were sparked because, “in those days, we knew that the hell was going on.” Now, Parness said, “we should be kept more in the loop, so we can be helpful one way or the other.”






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