The Zionist Organization of America has regained its tax exemption more than a year after its failure to file financial disclosures led the Internal Revenue Service to revoke its nonprofit status.
The 116-year-old Jewish group’s tax exemption was reinstated on May 15, according to a statement from the ZOA.
“We’re delighted and gratified,” said ZOA National President Morton Klein in an interview with the Forward. “Now we can be raising money directly for ZOA.”
Donations intended for the ZOA given between February 2012 and May 2013 went to a donor advised fund maintained by an outside organization.
The ZOA, which occupies a decidedly hawkish slot on the pro-Israel Jewish spectrum, faced deep internal strife following the loss of its tax exemption in February 2012. ZOA National Vice Chairman Steven Goldberg emerged as a strident critic of the organization’s professional leadership, criticizing Klein for what Goldberg alleged was an effort to keep the loss of the tax exemption from the public.
The ZOA also fired Orit Arfa, the Los Angeles-based executive director of the ZOA’s Western Region, who had complained internally that the group was not doing enough to inform donors that the group’s tax exemption had been revoked. A ZOA spokesman said at the time that Arfa’s firing was not retaliatory. Arfa has sued the ZOA for wrongful termination in federal court in California. The ZOA has filed a motion to dismiss the case. Klein declined to comment on Arfa’s suit, though he called it “without merit.”
The ZOA’s loss of its tax exemption was not revealed until the publication of a Forward exposé in September, eight months the revocation occurred. A March email from ZOA national executive director David Drimer, submitted as an exhibit in Arfa’s lawsuit, asked ZOA staffers to keep the revocation quiet.
“In general, please do not broach this subject with donors unless it is absolutely necessary or they ask about it specifically,” Drimer wrote. “We firmly believe we can turn this around quickly through retroactive reinstatement so that assertively publicizing the current state of affairs will not be advantageous for the short and long-term interests of the ZOA.” An attached set of talking points prepared staffers to answer questions raised by donors.
The revocation came after the ZOA failed to file three years’ worth of Form 990s, required financial disclosures filed annually with the IRS by not-for-profit organizations. Subsequent filings revealed that Klein received a 38% bump in his base compensation for the period during which ZOA failed to file its tax reports.
Klein told the Forward that ZOA has now instituted organizational protections to prevent such filing errors from recurring, including the creation of a board committee to oversee the organization’s accounting operations.
As of May 15, the ZOA is again able to accept donations itself.
“There’s been zero impact, zero, on our work,” Klein said. “Our campus work, our work on [Capitol] Hill, our Title XI [civil rights] work, my speaking, my writing, my doing TV and radio. Nothing organizationally changed.”
The ZOA canceled its annual gala in 2012, citing the loss of the group’s tax-exempt status and a serious illness from which Klein was recovering at that time. The group says its 2013 gala will now go forward. The keynote speaker will be Mike Huckabee, former Republican presidential candidate and Fox News host. Loews Corp. CEO James Tisch will also be honored.
“We’re coming back with major people,” Klein said.
This story "ZOA Regains Tax-Exempt Status After Yearlong Hiatus" was written by Josh Nathan-Kazis.
Josh Nathan-Kazis is a staff writer for the Forward. He covers charities and politics, and writes investigations and longform.