Magen David Adom May Sever U.S. Ties

By Nathan Guttman March 15, 2010

The dispute between Israel’s Magen David Adom and its American fundraising arm has reached a critical point as the Israeli organization has formally announced its intention to sever its contractual ties with American Friends of Magen David Adom.

A letter sent on March 10 from a New York attorney representing MDA, which is the Israeli organization similar to the American Red Cross, informed AFMDA that the group “intends to cancel/not renew” the contract that has made AFMDA the exclusive representative of the Israeli body for the purpose of raising funds in the United States.

The announcement, while harshly worded and filled with allegations against the American group, still leaves the door open for further negotiations. On March 14, MDA’s attorney sent another letter to AFMDA, in which he clarified that while the notice of termination is in effect, MDA would still “like to continue to negotiate possible renewed agreements between MDA and AFMDA as soon as possible.”

AFMDA is the largest funder of MDA and has raised nearly $30 million annually in recent years from American donors. Relations with the Israeli body, however, have been rocky and marred by mutual mistrust, due to complaints on the Israeli side that the American body has been too tight in releasing funds, and to arguments made by the American side that MDA is trying to intervene in its work.

The contract defining the relationship between the two organizations stipulates that AFMDA is the sole representative of MDA in the United States. The seven-year contract, set to expire in September, also allows the American group to use the Magen David Adom symbol for fundraising purposes. It requires a six-month warning in case MDA wishes not to extend it.

The dispute was discussed in a meeting March 7 and 8 of the AFMDA board in New York and in talks held on the sidelines of the meeting between leaders of the American body and MDA. These talks did not succeed in yielding an agreement on renewing the contract.

The failure to reach an agreement resulted in the March 10 letter written by attorney Joel Karni Schmidt on behalf of MDA. The letter, a copy of which was obtained by the Forward, lists a dozen grievances. Among them, MDA alleges “serious financial mismanagement” on issues relating to payments to the former CEO of the American group. The Israelis also complained that AFMDA “has not transferred millions of dollars of donated funds to MDA.”

Lewis Krinsky, national chairman of AFMDA, said in an e-mail to the Forward that MDA’s notice of termination was only a “technical and formal step” taken by MDA “pursuant to specific terms of the Corporation Agreement.” Krinsky defended the management of AFMDA, noting that independent financial audits of his organization in 2007 and 2008 were “clean” and that he expected the same for 2009.

In the e-mail, Krinsky said that further public discussion of the ongoing negotiations between his group and MDA “would not serve either organization well.”

AFMDA has been holding on to a significant cash surplus that, according to 2007 tax filings, exceeded $46 million. MDA would like to see the money transferred immediately for use in Israel, but AFMDA has cited a strict policy of remitting funds directly to vendors in Israel in exchange for invoices for work they’ve done for MDA. AFMDA also explained that most of the surplus money is already designated for projects in Israel and will be transferred as work on these projects progresses.

Contact Nathan Guttman at [email protected]