ORT Network In Chaos

The worldwide organization that runs an independent school system for more than 90,000 students in Israel has been thrown into chaos amid charges of a lack of financial transparency, slander and turf warfare, The Jewish Week has learned.

Millions of dollars are at stake in the battle that pits World ORT against ORT Israel, which has just broken away from its parent body. Caught in the fray is ORT America, which is charging that ORT Israel is perched to pounce on its American donors.

ORT Israel said it broke away from World ORT in September because it was receiving only about 15 percent of the money raised by its parent body even though it is by far the largest institution in the ORT network.

But Sarina Roffe, ORT America’s national director of communication, said the real issue “has to do with accountability and transparency” at ORT Israel. ORT stands for Organization for Rehabilitation through Training, the agency’s original name.

“American donors are very savvy and they want to know how their money is being spent, and the Israelis told us that they will not tell us,” she said. “A [IRS form] 990 and an audit is not enough. We need budgets to know how the money is being spent and the outcome in terms of programs. We are in 56 countries and all the other [ORT chapters] have complied.”

Roffe hastened to add: “No one is saying there is any problem. We don’t think anything questionable has been done. We are just saying we need the reports.”

But Zvi Peleg, director general of ORT Israel, insisted that the real issue has to do with the constant cutback of World ORT funding to ORT Israel. Just a few years ago, he said, that figure was in excess of $7 million. Now it is less than $3 million at a time when World ORT is raising more than $20 million.

“We are more than 70 percent of the pie of World ORT and they give us less and less money,” he said. “They say they are sending money to other countries,” but ORT Israel with more than 90,000 students, 162 institutions and more than 7,000 employees has by far the largest ORT operation in the world.

Since the separation, ORT Israel has raised $5 million from donors in Israel and Europe, Peleg said.

Roffe said the records she had showed that Women’s American ORT and American ORT raised about $4.5 million to $5 million for World ORT each year and that World ORT gave about $3 million to ORT Israel every year. She said the latter figure has been relatively constant for the past 10 years.

Although World ORT claims to operate in 56 countries, Peleg said it is truly active in only 10 countries and none anywhere near the scale of its Israel operations. He added: “Until recently we didn’t have a problem from World ORT regarding our reporting. We gave them all the reports they requested.”However, Roffe provided a copy of an e-mail from ORT Israel to World ORT dated last Nov. 29 in which ORT Israel wrote that it has “never been required to submit reports on ‘ordinary projects,’ and we are not willing to do so now.”

Judy Menikoff, president of ORT America (a new organization comprised of the newly merged Women’s American ORT and American ORT), said her organization has 70,000 donors and that all of her leaders nationally and locally have been contacted by ORT Israel in recent weeks.

“Prior to that, their material was sent through us,” she said, adding that American donors who contribute directly to ORT Israel are not permitted to receive a tax deduction.

Menikoff said the ORT Israel literature does not ask for money but that “one or two donors” sent money anyway.

Peleg said his organization is aware of American tax laws and is now “only exploring” how ORT Israel could comply with those laws and fundraise here. “We are consulting with professionals,” he said. “There are all kinds of possibilities. … More than 10 big donors have contacted us.”

Peleg took issue with the way ORT Israel’s educational programs are promoted in the United States.

“The last time I was in the United States, they asked me if ORT Israel is still a vocational school,” he said. “I said no, it has high-tech schools. They thought we were still running vocational schools. … We want to come directly to Europeans and Americans and describe to them what our needs are and we work. We are very transparent and our auditors are very prestigious in Israel. We don’t understand how they can say we are not transparent.” He noted that ORT Israel receives more than $200 million in government money and that the Israeli government “controls us very closely.”

In a statement, ORT Israel said it is “prepared to undergo an audit by a neutral external accounting firm” and said a similar audit should be conducted of World ORT. And it questioned the transparency of World ORT, saying last year’s salary increases for World ORT executives were not made public nor authorized.But Roffe, speaking for World ORT, insisted that the issue is not an audit but rather “accountability” and complying with “program and project reporting standards … [that are] over and above the regular auditing procedures complied with by all nonprofit organizations.”

She said the issue of salary increases was nothing more than a “diversionary tactic” because the World ORT General Assembly approved them in 2004. Menikoff agreed on the need for transparent reporting, saying: “We owe it to our donors to make sure that the money they give us is spent the way it is earmarked.”

She noted that she has been involved with ORT since 1967 “mostly because I believe in education.”

“The Jewish child in Kiev is just as important as the one in Karmiel,” Menikoff explained. “That was part of the beauty of the program — it reached the Jewish population around the world.”

In response to ORT Israel’s charges against World ORT, Roffe questioned why ORT Israel has to have 172 cars. Peleg said every principal of an ORT school must have a car and that a “comprehensive economic analysis” found it was “cheaper to lease cars rather than giving them travel expenses.”

But he stressed that donors’ money is not used to lease cars. “It comes from the governmental money that pays every expense in the schools,” he said. “The money we get from donors is used only for projects — to buy lab equipment for the research institutes. It is not to pay salaries or any expenses. That is real slander.”

Recently, Peleg and other representatives from ORT Israel met with Jewish leaders here and elsewhere to discuss his organization’s actions. Among those they met was Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations.

“They told me about the nature of their activities and invited me to see it,” Hoenlein said. “If we can help in any way to heal the rift, we would be happy to do so. From what I heard, there is good will all around to make that possible. [But] a lot of things have to be clarified before they are ready for that.”

Peleg, however, dismissed the suggestion.

“We don’t trust World ORT anymore,” he said flatly.