Magen David Adom and its U.S. arm feud over their future relationship amid charges that funds are misused.

by Nathan Guttman

American Friends of Magen David Adom is a staple of American Jewish charity for Israel. Children give their bar and bat mitzvah money to it, communities take group photos in front of ambulances they donated to Israel through it, and sons and daughters dedicate plaques at Israeli medical centers in memory of their parents. The U.S. funding arm for Magen David Adom – Israel’s version of the Red Cross – symbolizes the most basic kind of heartfelt consensus giving by Jews to help Israel.

But behind the scenes today, this well-endowed and iconic charity is torn by strife. Suspicion and mistrust between the U.S. fund-raising organization and its Israeli beneficiary are threatening to end their lucrative partnership. Within AFMDA itself, feuding senior officials are making charges of misconduct. Six senior officials have been forced out of or resigned from the American group since last spring.

Meanwhile, an investigative report by a major Israeli paper is charging senior officials of the Israeli group with misuse of MDA funds and equipment. MDA strongly denies the allegations.

The contract between MDA and AFMDA expired on December 31. Signed seven years ago, the contract, which establishes AFMDA as the Israeli group’s “sole authorized fundraising and advocacy organization in the United States… representing Magen David Adom in the U.S. in all matters,” must be renewed within 90 days of its expiration, according to the agreement’s renewal clause. If it is not, the relationship terminates.

“The relationship between American Friends of Magen David Adom and MDA is an internal matter for both organizations and is being handled by the boards of the two organizations,” said Robert Kern, director of marketing and communications for AFMDA.

Formal talks on renewal of the contract are scheduled to take place in several weeks, but unofficial conversations are already being held between New York lawyers representing MDA and AFMDA. According to one official close to the negotiations, discussions are “tense.”

But Lewis Krinsky, AFMDA’s national chairman, in a written response to questions presented by the Forward, said that the Israeli group “has indicated to us definitely that it wants to continue its association with AFMDA.”

Information for this article is based on conversations with six informed sources and on a significant number of internal e-mails and memos obtained by the Forward. Though they may differ in their positions on the major issues dividing the two groups, at least three sources confirmed each of the issues of contention described in this story.

With the exception of their chairman, all AFMDA board members contacted by the Forward declined to speak on the record or to be quoted on background.

Krinsky provided several brief written statements. “We do not comment publicly on the relationship between AFMDA and Magen David Adom in Israel,” he said. “Our organization’s mission is to help save lives in Israel and for 70 years we have been doing that through our support of MDA and its lifesaving and life-giving activities.”

According to sources, this crisis is fed by mutual suspicions of inappropriate use of funds. There is also a strong conviction on both sides of the divide that the other partner is meddling in their business. The parties appear to be communicating mainly by angry e-mails and through lawyers.

AFMDA is by far the largest of 32 similar organizations around the world that raise funds for Magen David Adom – an organization in charge of medical first responders, blood banks and emergency services in Israel. Its ambulances are the first to arrive on terror-attack scenes, and a vast network of medical facilities provides immediate care all across Israel, including along the Gaza and the northern borders.

The U.S. fund-raising arm was created seven years ago after a merger between two groups: American Red Magen David for Israel and MDA-USA. This year, the merged organization is celebrating the 70th anniversary of support for MDA by its predecessor organizations, an event it intends to mark by setting an ambitious $70 million campaign goal.

But according to AFMDA’s latest publicly available tax filings, from 2007, the U.S. group has a cash surplus of more than $46 million – a fact that infuriates the Israeli group. Money given by American donors to support MDA should be expended on MDA, Israeli MDA officials say. An individual with access to the organization’s financial reports told the Forward that the American group raised $23 million in 2009, and has seen a continuous rise in donations over the past four years. AFMDA sent $21 million to MDA in 2009, a record amount. But in previous years, less than two-thirds of the funds raised in the United States were actually distributed in Israel.

“They treat us like natives,” an Israeli activist with MDA complained, speaking of the withheld surplus. “People here are tired of it.”

The dispute reached its boiling point last spring when members of AFMDA’s board suggested changing the group’s bylaws to allow it to fund any Israeli emergency organization, not only MDA. This idea was met with anger in Israel and is now one of the main issues being debated in the contract-renewal talks.

AFMDA explains its large surplus by citing its allocation procedure. Requests for grants for specific purposes are received from MDA in Israel and decided upon by AFMDA’s board. After approval, funds are transferred only in return for invoices documenting that the work in question was actually done or the goods in question were purchased.

“This type of funding is critical to such projects advancing to completion,” said Krinsky, the AFMDA national chairman. “AFMDA currently has a relatively large volume of liquid assets almost entirely designated for projects and programs to advance our mission of saving lives in Israel.”

The Americans’ insistence on close supervision was reinforced recently by a series of articles in Israel’s second largest daily, Yisrael Hayom.

Veteran investigative reporter Mordechai Gilat, citing unnamed current and former officials with the group, alleged misuse of MDA equipment and resources. Gilat wrote of medical emergency vehicles commandeered for private business; the unnecessary purchase of all-terrain vehicles, and benefits, such as expensive English courses in the United States, for MDA officials. Employees were said to be promoted and demoted based on their loyalty to the organization’s director general.

In the newspaper report, MDA denied some, but not all, of the allegations. It promised that such abuses would not happen going forward.

A spokesman for MDA in Israel did not respond to requests by the Forward for comment.

Years before, in order to oversee the use of its funds by MDA, the AFMDA set up an Israeli liaison office, much to the chagrin of Israel’s MDA leadership. The American group’s representative and his staff inspect projects and are required to approve each invoice before money is transferred from AFMDA. The American organization is the only MDA support organization worldwide to maintain such a presence in Israel.

The MDA officials in Israel see this tight monitoring as second-guessing their decisions. The top leaders therefore refuse to meet directly with AFMDA’s representative on issues related to funding.

The already shaky relationship between AFMDA and MDA turned into an all-out battle of accusations last spring, as both sides engaged in a heated argument stemming from Israeli complaints regarding AFMDA’s practices.

At issue were payments to AFMDA’s then CEO, Daniel Allen, and investment procedures regarding AFMDA funds. As outside auditors began reviewing Allen’s benefits and expenses, Uri Heller, the interim chair of AFMDA’s audit committee, warned board members not to renew Allen’s contract before he provided documents requested by the auditors. Allen was widely praised for increasing AFMDA’s fundraising throughout his tenure, although his relations with MDA directors in Israel were strained.

“The Audit Committee strongly advises the Executive Committee to cease all contract talks with Danny Allen until he cooperates fully with the auditors,” Heller wrote in an e-mail to board members on April 24.

Three weeks later, Heller was removed from his position as acting chair of the audit committee, though he remains on the board. Krinsky explained in a letter that he took this action because Heller “violated the trust placed in him” by going to the full board with his objections to Allen.

This move sparked an angry response from the Israeli side. MDA President Yehuda Skornik wrote to Krinsky on May 14, warning that unless the audit is completed, “we will have to take immediate steps to terminate AFMDA’s license to use Magen David Adom and American Friends of Magen David Adom marks.”

Krinsky shot back: “People who live in glass houses should not throw stones.” Skornik replied that he viewed Heller as a whistle blower, and then demanded responses to questions surrounding the benefits paid to AFMDA’s CEO.

An angry exchange of e-mails, including one in which Heller warns that his dismissal would “set us back to the ‘good old days,’” culminated in a demand by MDA in Israel to fire Daniel Allen. “Mr. Allen’s contract with AFMDA should be terminated as soon as legally possible,” Skornik wrote to Krinsky on June 24. “MDA will not tolerate such an attitude from people or organizations who name themselves ‘friends.’”

Allen’s contract with AFMDA was not renewed last summer, and Jeremy Fingerman was chosen to replace him on an interim basis. Several months afterward, Fingerman took on a position as head of the Foundation for Jewish Camp.

In response to questions from the Forward, Allen said, “I am proud to have served as the CEO of American Friends of Magen David Adom, and believe we accomplished much value during my professional tenure.”

But the events left their marks on the American charity. For board members it was further proof that Israel’s MDA was trying to intervene in their affairs. AFMDA’s board was seen as split between the “Allen camp,” which also supported providing funds to groups other than MDA in Israel, and an opposed camp that wanted to continue the exclusive arrangement with MDA. Five of the group’s 24 board members have since resigned.

In private conversations, some former members said the board had been “taken over,” and warned that Israeli interference in the work of AFMDA could endanger the group’s tax status in the United States. Under American charities law, a group cannot act as a pass-through for a foreign entity. The American board must meet regularly and vote on allocations of funds.

This article originally appeared in The Jewish Daily Forward; reprinted with permission.