WHAT'S WITH THE ZOA -- A CAUTIONARY TALE

Michael Goldblatt, Stanley Benzel, Mel Rubin, Ben Chouake, Harvey Friedman, Leonard Getz, Joshua Landes, Irwin Hochberg -- these are just a few of the Officers and Board Members of the Zionist Organization of America.* If you know these men or any of the men and women and women who serve as Officers or Board Members of the ZOA, my suggestion is, warn them: run, run very fast, from ZOA Board service (whatever that means in the ZOA context) because you may incur personal liability for the excess compensation being paid Morton Klein, your President for life. Let me explain...

Guidestar has explained:

"The IRS is charged with enforcing the Federal Private Inurement Prohibition, which strictly forbids a tax-exempt organization’s decision makers—board members, trustees, officers, or key employees—from receiving unreasonable benefits from the nonprofit’s income or assets. Excessive compensation paid to nonprofit executives is the most common violation of this prohibition,  and it can cause the IRS to levy hefty fines on the persons involved."

And, "persons involved" includes far more "persons" than the recipient of excessive compensation -- to Board Members and officers who have approved or ignored the compensation paid.

Why should this be of concern at the ZOA? Hmmmm. As The Jewish Voice of New York disclosed:

"In early 2014, during the campaign for the election of the President of the Zionist Organization of America (ZOA), there was much controversy about the compensation paid to President Mort Klein in recent years. The Form 990s that were filed and publicly available showed that Klein had been paid more than $3.4 million for the five year period from 2008 through 2012, an average of almost $700,000 per year. This was extraordinary both in absolute and relative terms, as Klein's compensation exceeded 30% of total donations received by the ZOA during that time period. 

The Jewish Voice of New York has now seen the Form 990 filed by the ZOA at the end of 2014 for calendar year 2013. It shows that Klein had his most lucrative year yet, with total compensation of more than $1.5 million, out of total donations to the ZOA of only approximately $5 million."

I have written about the Zionist Organization of America before -- when the IRS revoked its charitable status after the organization failed to file its requisite tax returns for some years while its continued to raise the small amount of contributions it does apparently deploying those to pay and promote the same Morton Klein.

For purposes of this Post I will assume that the Internal Revenue Service will conclusively determine that the compensation paid Morton Klein has been as excessive as it has been egregious. Again, Guidestar:

"Penalties for excess compensation range from fines to revocation of an organization’s tax-exempt status. Fines are the more likely consequence. Known formally as excess benefit transaction excise taxes and informally as intermediate sanctions, the fines can be levied on both the executive who received the overpayment and the board members who approved it or who knew about the excess but did nothing to prevent it. For example:

Say the executive director of ABCD Charity received a compensation package of $250,000 in FY 2008. After an examination (or, in layperson terms, an audit) of the organization, the IRS establishes that $150,000 was the appropriate compensation for the position at that time. As a result of this determination:

• The IRS requires the executive director to repay the $100,000 overpayment to the organization—with interest. If the executive director fails to repay this amount, or repays only part of it, a 200 percent excise tax may be imposed on the amount yet to be repaid.
  
• The IRS may require the executive director to pay an excise tax equal to 25 percent of the overpayment. In this example, the excise tax would be $25,000.
  
• The IRS may require each board member who approved the excess compensation, or any board member who knew about the excess but failed to prevent the overpayment, to pay an excise tax equal to 10 percent of the overpayment, not to exceed $20,000 per transaction. In this example, should the IRS decide to impose the excise tax, each board member would owe $10,000. "

Then there is the $1.6 million "bonus" just granted Richard Joel by Yeshiva University. As The Forward disclosed less than one month ago:

"As his college's finances continued to crumble last year, Yeshiva University's president, Richard Joel, publicly took a pay cut. Then months later, he privately pocketed a deferred compensation payment of $1.6 million (which)...took Joel's total compensation for 2014 to $2.8 million, among the highest packages for college presidents nationwide." http://forward.com/news/325050/richard-joel-gets-16m-windfall-a...

An anonymous faculty member was quoted as expressing "wonderment and concern" about the payment -- a sentiment to which I would add "disgust." Wonder what the IRS will think.

We have noted on these pages the excessive compensation paid at least one other non-profit CEO -- that, however, reflected upon excessive compensation based upon performance. What we have referenced here is something else entirely.

Yet another example of a failure of fiduciary responsibility. I can guarantee that in our Jewish non-profit world, CEOs and CEO-applicants will be using Morton Klein's and Richard Joel's compensation figures in attempting to rationalize their own. 

No wonder our donors have lost trust in our organizations.

Rwexler