by Nathan Guttman
Ties between Israel’s version of the Red Cross and its large U.S. fundraising arm are hanging by a thread – and that thread may be cut for good by March.
Top board members of Americans Friends of Magen David Adom announced their resignation Wednesday, following a lengthy dispute with the group they support in Israel – Magen David Adom.
“We take this step with heavy hearts because we are troubled that the leadership of Magen David Adom (MDA), and some of the members of AFMDA’s Board of Directors, do not appear to share our commitment to our roles as responsible and independent fiduciaries, exercising sound judgment in full compliance with the letter and spirit of American laws and donor expectations,” read the letter signed by AFMDA chairman Lewis Krinsky and three other executive committee members.
The contract between the two organizations, which makes AFMDA the exclusive fundraising vehicle for MDA in the U.S., expired over the weekend and intensive discussions led only to an understanding extending the contract in 45 days.
The dispute between the two groups stems from a basic lack of trust between the leadership in the U.S. and in Israel. The American organization, which raises over $20 million a year for the Israeli group, has installed restrictions on the way Israel’s MDA can use the funds, essentially making sure the money goes directly to contractors, not to the Israeli organization. Sources within AFMDA have pointed in the past to an ongoing criminal investigation against Eli Bin, the CEO of Israel’s MDA, as one reason for the mistrust. Bin and MDA’s chief financial officer Ofer Dan were arrested on June 29 and accused of tax evasions totaling in 175 million Shekels ($46 million).
The Israelis, on the other hand, have claimed that AFMDA is wrongfully withholding donations from MDA and that it was building a huge cash surplus at a time when needs in Israel are great.
Deteriorating relations between the two groups led MDA to threaten it would not renew its contract with AFMDA, which expired last year. A temporary extension did not bring the sides any close and on Saturday the agreement between the two parties legally ended.
Following the expiration of the contract with Israel’s MDA, AFMDA board of directors met on Sunday in New York to discuss its response. The meeting, which was also attended by Israeli MDA CEO Eli Bin and his lawyers, was heated and was described by one source as “nasty.” Since at that moment AFMDA was no longer the U.S. representative of Israel’s MDA, the group immediately took down its website, posting a brief message which said the site was undergoing maintenance.
The board meeting ended with no agreement. But afterward, representatives of the both sides worked out an interim agreement which extended the contract for 45 days. During this time period AFMDA will be allowed to continue its activity as the sole representative of MDA in the U.S. and will continue its fundraising activity. The American group also agreed to approve MDA’s budget for 2011, thus ensuring that all funds promised for projects in Israel will be provided.
But the 45-day extension did little to quell the tensions between the two groups. On Wednesday, four executive committee members, including Lewis Krinsky, announced their resignation from the board. “We are proud to have had the opportunity to serve and enhance this successful organization, but we refuse to abdicate or compromise in any way our fiduciary duty to AFMDA and its donors,” the resigning leaders concluded in their letter.
AFMDA sent out a letter to donors [Thursday] evening, updating them on the resignation and assuring supporters the group is still in business.
“We are negotiating a long-term agreement with all the same fiduciary safeguards we have maintained in the past. Our Board is united in its goal to help ensure that Israel’s people will continue to be served loyally by AFMDA through our fundraising for MDA,” wrote Robert Kern, AFMDA’s director of marketing and communications. “The Board of AFMDA will continue to serve our ultimate beneficiary, the people of the State of Israel.”
This article originally appeared in The Jewish Daily Forward; reprinted with permission.
Here’s Wednesday’s resignation letter referred to above.
Here’s the letter AFMDA sent last night:
January 20, 2011
Dear Colleagues, Friends and Supporters,
We would like to update you on certain developments with American Friends of Magen David Adom (AFMDA) and its relationship with Magen David Adom in Israel (MDA).
AFMDA has been working for the past year on a long-term renewal of its relationship with MDA. Our current agreement with MDA will expire on March 6, 2011. At a Board meeting of AFMDA on January 19, 2011 the members of the Executive Committee of AFMDA tendered their resignations which were accepted by the Board.
While these developments have been challenging, the Board is set in its purpose to move forward in a positive manner to raise funds to save lives in Israel through the valiant and courageous work of MDA. We are moving quickly to elect a new and capable Board leadership team that will work closely with our talented new CEO Arnold Gerson. AFMDA is continuing all fundraising events currently planned, including an upcoming fundraiser in Palm Beach, Florida, as well as major fundraising events in Los Angeles and San Diego, California, to name but a few. Plans have been set for an elected delegation from AFMDA to meet with MDA management in New York in February to work out the final details of the ongoing relationship between our two organizations.
As we are sure you know, we at AFMDA are dedicated to raising funds for MDA and supporting the important work they do. In our 71-year history of continuous and exclusive support of MDA, we have raised hundreds of millions of dollars in America for our mission of saving lives in Israel. Funds raised by AFMDA have helped to build Israel’s National Blood Services Center at Tel Hashomer – run by MDA – and a number of new or renovated emergency first aid stations throughout Israel. We have provided financing for paramedic training, computer programming for blood safety, communications equipment and the bulk of MDA’s fleet of ambulances and mobile intensive care units. Over the past five years alone, we raised more than $100 million. In the past two calendar years, we have remitted more funds for MDA projects than at any time in our history. And even in the midst of ongoing discussions with MDA about a renewal of our agreement and the challenges posed by changes on our national board, we have been unwavering in our support of MDA.
We are negotiating a long-term agreement with all the same fiduciary safeguards we have maintained in the past. Our Board is united in its goal to help ensure that Israel’s people will continue to be served loyally by AFMDA through our fundraising for MDA. There is so much hard work yet to be done and so many vital projects yet to be fully funded.
The Board of AFMDA will continue to serve our ultimate beneficiary, the people of the State of Israel. With your continued support and G-d’s help, we will move forward, m’hazak l’hazak – from strength to strength.
Members of the Board of Directors of AFMDA