Aliyah Organizations Take Parting Shots As Stage Set for Fund-raising Battle

A feud between the two leading organizations promoting immigration from North America to Israel is turning increasingly bitter.

The Jewish Agency for Israel, a quasi-governmental agency that has processed new immigrants to Israel since the state’s founding, and the upstart Nefesh B’Nefesh, a privately run U.S.-based non-profit group that recruits and provides grants to new Israeli immigrants, decided recently not to renew their three-year working agreement.

Under the deal each partner, as well as the government of Israel, paid $1,000 per new immigrant from North America.

As the partnership unravels, both organizations have touted their programs and criticized the other side through the media.

In interviews with reporters, Nefesh B’Nefesh has accused the Jewish Agency of failing to live up to its financial commitments. The agency counters that it is owed a refund of $1.2 million to $1.5 million – money paid in advance to Nefesh B’Nefesh in 2004 and 2005 based on immigration targets that the Jewish Agency says Nefesh B’Nefesh failed to meet.

Also, in discussions with the media, agency officials claimed that Nefesh B’Nefesh targeted only Orthodox recruits and warned local Jewish federations that they could face legal problems if they donate to the organization.

The split comes as the low rate of North American immigration to Israel reached its highest point in two decades, increasing from 2,640 in 2004 to 3,201 in 2006. But Jewish Agency officials claim that total falls well short of the 5,000 to 10,000 new immigrants per year that Nefesh B’Nefesh had promised. They argue that essentially, Nefesh B’Nefesh ended up overpaying to bring those who would have immigrated to Israel anyway.

With both organizations pledging to push forward on their own, the stage is set for a battle over donations from the network of local Jewish charitable federations and other North American philanthropic services.

“It is true that we could have brought many more had there been money from JAFI,” said Daniel Ayalon, co-chairman of Nefesh B’Nefesh and Israel’s former ambassador to the United States. “The fact that they don’t pay us just means that we have to raise more money from philanthropists, which we are doing. Our goal is to bring 10,000 a year, which means we need to raise $20 million a year.”

Ayalon and other Nefesh B’Nefesh officials adamantly denied claims that they favor Orthodox Jews, who in recent decades have comprised the bulk of North American immigration to Israel. That was even before Nefesh B’Nefesh was started five years ago by Joshua Fass, an Orthodox rabbi, and Tony Gelbart, a Florida businessman.

According to a Nefesh B’Nefesh spokeswoman, of the families that make aliyah through the organization, 68 percent are Orthodox, 25 percent are Conservative and 5 percent are Reform. About 65 percent of the singles that make aliyah with the help of Nefesh B’Nefesh are not Orthodox, she added.

Until now, Nefesh B’Nefesh has depended largely on private contributions in doling out more than $30 million to new immigrants in recent years. But as Nefesh B’Nefesh seeks to expand its efforts, the organization is expected to turn increasingly to local Jewish charitable federations, which currently send upwards of $140 million a year to the Jewish Agency.

In a potential blow to such fund-raising hopes, Jewish Agency officials are suggesting that federations could face legal problems if they direct donations to Nefesh B’Nefesh, which is registered as a 501c3 charitable organization.

Through a spokesman, Nefesh B’Nefesh insisted its operations are above board.

“Nefesh B’Nefesh has had 501c3 status since its inception, a non-profit organization that is regulated by the laws of the United States,” the spokesman said. “Nefesh B’Nefesh complies with all routine reviews by the IRS. We categorically deny all accusations that there are any special inquiries regarding Nefesh B’Nefesh’s 501c3 status.”

The questions raised by Jewish Agency officials revolve around a 1960 ruling by the Internal Revenue Service involving the United Israel Appeal, the organization used by the federation system to send tax-exempt donations overseas. The IRS ruled that the UIA could only provide such funds to help resettle new Israeli citizens if the people in question were refugees. In accordance with the decision, Jewish Agency officials say, all money raised to help the agency fund the immigration of American citizens comes from donors outside the United States.

In recent weeks, Jewish Agency supporters have been citing a May 10, 2005 letter regarding Nefesh B’Nefesh written by Leonard Leiman, legal counsel to the UIA, in which he advises that the UIA not give money to Nefesh B’Nefesh because “persons making aliyah in Israel from North America are neither refugees nor do they come from a country of distress.”

Taking its lead from Leiman’s recommendation, the federations’ national arm, the United Jewish Communities, does not give to Nefesh B’Nefesh, according to a UJC spokesman. But some individual federations could technically donate to the organization on their own if their understanding with the government allows it, the UJC spokesman said.

Still, some Jewish Agency officials are warning against such donations.

“Our overall concern – and I am not a tax lawyer – is that if federations give money to Nefesh B’Nefesh and ultimately the IRS rules that those monies cannot be tax deductible to the donors, then federations are going to have a big problem,” said the chairman of the Jewish Agency’s budget and finance committee, Jay Sarver.

Such concerns were downplayed by Robert Katz, a professor of law and philanthropic studies at the Indiana University School of Law in Indianapolis.

Katz said that because Nefesh B’Nefesh grant money goes to pay for education and job training, the group can be classified as a charitable organization. If the IRS does not have a problem with the organization’s activities, he added, federations should not be overly concerned about giving money to Nefesh B’Nefesh.

“It sounds to me like they are pulling out all the stops,” Katz said of the Jewish Agency’s suggestions. “It sounds like a kitchen-sink argument – here are 20 different situations why we are uncomfortable, and here’s another.”