Hadassah Stumbles as Centennial Nears
Image by hadassah/facebook
By Josh Nathan-Kazis February 10, 2012
Questions Raised: Allegations of mishandling funds have been raised against Hadassah national president Marcie Natan (left) and immediate past president Nancy Falchuk (right). Image by hadassah/facebook
Hadassah, the international women’s Zionist organization, is entering its centennial year amid signs of increasing dysfunction.
On February 7, the group confirmed that it is investigating allegations that two leading members of the governing board’s executive committee misused charitable funds.
The allegations were made in a January 12 letter to Hadassah board members from Larry Blum, Hadassah’s chief operating officer and most senior staff member. Blum himself was placed on administrative leave last November over separate allegations that he had misused his corporate credit card.
The brewing scandal comes as relations deteriorate between the organization’s shrinking staff and its powerful membership, and amid claims by former employees that the volunteers have little regard for the professional staff. Blum’s charges raise additional questions about the volunteer leaders’ guidance of the billion-dollar charity.
In his letter, Blum accused Hadassah’s national president, Marcie Natan, and its immediate past national president, Nancy Falchuk, of misusing Hadassah funds. Both hold volunteer but elected positions.
Calling himself a “whistleblower,” Blum charged that Falchuk had run up personal expenses on a Hadassah credit card. He also alleged that she had moved items worth between $10,000 and $20,000 to her own home from a Hadassah-owned apartment.
Blum alleged that Natan had used Hadassah funds to buy favors for members who supported her candidacy for national president.
Through a Hadassah representative, both Natan and Falchuk declined to comment on the charges. Blum also declined to comment to the Forward.
A standing committee of Hadassah board members tasked with following up on whistleblower allegations is investigating Blum’s charges. The committee has secured attorney Daniel Kurtz, leader of Skadden, Arps’s exempt organizations practice, as outside counsel for the investigations. Kurtz is a former head of the New York State Attorney General’s Charities Bureau.
In a statement emailed to the Forward, Hadassah said that the investigations of Blum’s allegations and of Blum’s alleged misuse of his corporate credit card were “ongoing.”
“No conclusions have been reached,” the statement read. “Until there is a final resolution, Mr. Blum is on administrative leave.”
People with knowledge of the situation say that Blum showed up uninvited at a Hadassah board meeting at a South Florida hotel in January, slipping copies of his letter, with its allegations against Falchuk and Natan, under the doors of board members’ hotel rooms.
Founded in 1912, Hadassah today claims more than 300,000 members. The group held more than $1 billion in net assets as of December 2009, according to a consolidated balance sheet reflecting Hadassah and its related entities that was submitted to state authorities in 2010.
That number includes a portion of the assets held by Hadassah Medical Organization, which operates large hospitals in Israel and over which the American organization has only limited oversight.
Despite its huge size, Hadassah has a highly unusual management structure. Top volunteer board members are given desks at Hadassah’s offices in Manhattan and are expected to work there four days a week. Each major staff position within the organization has an associated volunteer tasked with the same portfolio.
Former employees describe an atmosphere of tension between staff and volunteers. The volunteers, former staffers said, are often disdainful of the staff. Staffers, in turn, note that the volunteers often have barely any work experience outside the home.
According to one former Hadassah employee, volunteers “basically rule the roost and give orders without necessarily having experience… to back it up.”
“The way we were treated when we walked into the room, when we were presenting to a meeting, was as if we weren’t people,” the former staff member said. “It was very cruel.”
Staff members have been let go in large numbers since December 2008, when $90 million in purported Hadassah assets invested in Bernard Madoff’s Ponzi scheme evaporated.
Hadassah laid off 80 people in January 2009. That May, executive director Morlie Levin left the organization. Her position was never filled. Instead, Falchuk, the organization’s unpaid, elected national president, effectively led the group. She was replaced as national president in July 2011.
Hadassah is currently in the process of searching for a new staff executive director.
Following Levin’s departure, Blum became Hadassah’s highest-ranking staff member. He has been the group’s chief operating officer since the early 2000s. In the mid-1990s, Blum was executive vice president of Lillian Vernon, the mail order clothing company. Previously he had served as human resources director of Crazy Eddie Inc.
In his January 2011 letter to the board, Blum portrayed himself as a reluctant whistleblower.
“Over these 10 years I have worked with many of you on conventions, issues in the country, personnel and operational problems, and filled in for a total of five years when there was no executive director. Never have I ever been ashamed to say ‘I worked for Hadassah’ until now,” Blum wrote. “Individuals’ interests have been put ahead of mission and politics have replaced Jewish values.”
Blum alleged in the letter that Falchuk, who served as Hadassah’s national president from 2007 to 2011, spent “thousands of dollars on wine for entertainment and personal trips to Florida which she charged to her corporate card.”
Blum wrote that the alleged transfer of $10,000 to $20,000 in “furniture and fixtures” from Hadassah’s corporate apartment to Falchuk’s home was made without the approval of the organization’s leadership.
Of Natan, Blum wrote that she had given supporters of her candidacy for national president flight upgrades and extended their trips to Israel made on Hadassah business, all using Hadassah funds.
Natan was elected national president in July 2011. She previously served as Hadassah’s national treasurer.
Blum also claimed that the allegations that he had misused his Hadassah credit card were motivated by an effort on Hadassah’s part to free the organization from the terms of his contract. He claimed that the specific questions about his expenses dealt with sums less than $100. And he alleged that his suspension came soon after his attorney had informed Hadassah that it was possibly breaching his contract.
Blum did not specify how he thought his contract was being breached. A representative for Hadassah would not comment on the charges.
Following inquiries from the Forward about the allegations, Natan and Falchuk emailed board members February 7 to assure them that the charges were “being reviewed by an independent committee with an independent outside investigator.”
“We welcome this review and we are confident that the committee has in place a sensible and fair process for reaching a conclusion as to the allegations and the appropriate action to take, if any, that will protect the interests of Hadassah, its members, employees and officers,” the two leaders wrote.
Kurtz said that he couldn’t say how long the investigation would take, and that the result of his process would be a confidential report to the organization’s board.
Contact Josh Nathan-Kazis at nathankazis@forward.com or on Twitter @joshnathankazis
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