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December 22nd, 2014
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Where Are Your Donation $$$ Going? A Look Into The JNF/KKL

Where Are Your Donation $$$ Going? A Look Into The JNF/KKL

Besides being classified as ephemera of a bygone era, when one conjures up the vision of the iconic blue and white charity boxes (pushkas) that were once a permanent fixture in our homes, any Jew over the age of 50 will surely associate it with the Jewish National Fund.  Moreover, we can vividly recall the exhortations of our respective afternoon Hebrew schools; calling upon us to pound the pavement seeking donations for the organization’s “plant a tree” campaign in Israel while encouraging others to do so as well.

It appears that the Jewish National Fund has come a very long way over the decades. Also known by the acronym JNF and KKL for its Israeli counterpart, Keren Kayemet LeYisrael, the organization was founded in 1901 as a non-profit charitable entity. It was tasked with buying and developing land in Ottoman Palestine (later British Mandate for Palestine, and subsequently Israel) for Jewish settlement.

By 2007, it owned 13% of the total land in Israel in such prime areas as Jerusalem, Tel Aviv and Haifa. Since its inception, the JNF/KKL says it has planted over 240 million trees in Israel. It has also built 180 dams and reservoirs, developed 250,000 acres (1,000 km) of land and established more than 1,000 parks. In 2002, the JNF was awarded the Israel Prize for lifetime achievement and special contribution to society and the State of Israel.

As of late, however, numerous questions have arisen in the Israeli press concerning precisely how and where donator collected funds are being used by the organization. Here are some examples of what is being discussed in any given newspaper.

What do KKL’s financial reports contain? On what does the organization spend its funds? How much money is designated for the salaries of the workers, how much for pensions, and how much is budgeted for donations? How much does the organization pay for salaries for Shlichim (envoys) abroad? What is the value of the land which it owns? And the high cost of the team which collects donations which eat into most of the funds that it collects?

The Israeli “Calcalist” got its hands on the complete financial reports of the organization for the year 2013; first of all exposing and analyzing the scope of the expenditure on salaries in the organization, the impressive cash funds at its disposal, the investment portfolio of which most is pledged for the pensions of the workers, and many additional expenses. On its internet site KKL publishes a summary of its annual budget and of its financial balance, but does not go into detail. In a couple of months time the situation will change, and KKL will be obliged to publish its financial reports. This after the Israeli Ministry of Justice forced it and registered it against its will as an organization which benefits the public.

$29.7M of pension payments to pensioners

According to the report, most of the employees of KKL, at least those who started work in the organization before 1995, are entitled to a funded pension, which promises them a regular income for the rest of their lives. Financial pensions of KKL are more generous than those to employees of the State. According to the financial report, employees who have worked for KKL for 15 years will be entitled to a pension of 40% of their salary (compared with only 30% for employees of the State who receive a budgetary pension). For every additional year of seniority they are entitled to an added 2%, to the maximum of 70% of their final salary.

In other words, according to what was implied in the report, a KKL employee who receives a financial pension can receive from KKL, after thirty years work (for example, at age 50, if he started work for the organization at age 20), a pension of 70% of his final salary until the end of his life.

This commitment costs KKL a lot of money. According to the agreement that was signed between the management and the employees in April 2013, KKL designated up to $550 million to fulfill the obligation to employees and retirees of KKL. One of the assumptions in calculating this sum is that the salaries of the employees will go up every year at an average rate of 3%, and that is after taking off the increase in cost of living. (That is to say, that the nominal increase in salaries is even greater).

Pension payments to KKL retirees in 2013 amounted to $29.7 million  Altogether the increase in KKL salaries in 2013 amounted to $75.1 million.

$2.21 Billion – Evaluation of assets of KKL

KKL began 2013 with the vast sum of more than a billion shekels in cash, yet by the end of the year its reserves had dwindled, and the balance had been reduced to $124.9 million. In addition, the evaluation of the funds of the organization (land and securities), stood at $2.21 billion at the end of the previous year, while at the beginning of the year it stood at $2.76  billion. Where did nearly a half a billion dollars disappear to? As facts emerge from the financial report, it seems that much of this amount was put aside as agreed in the promise to KKL’s employees.

$280 million-  KKL income

Income of KKL last year amounted to more than $280 million; most of the significant sum was from the management of Israeli lands. The State manages KKL’s land holdings for KKL, markets and sells them, and transfers the income (minus management fees) to KKL according to the contract that was agreed between them.

The income from the management came to more than $270 million last year, and this is the amount under dispute between KKL and the State, and which the Ministry of Finance has been fighting over during the last couple of weeks. This money gets to KKL as agreed, but the Ministry of Finance wants to receive it to divide it between infrastructure and housing projects which is the opposite of the administrative decisions of the professionals of government offices, and not according to the transparent criteria of KKL.

While in areas of high demand (the center of the country and Tel Aviv) KKL has significant ownership  of the lands, in the Ministry of Finance they believe that, like the rest of the country, the State will do more marketing in those areas, and the income to KKL  from the State will only continue to increase.

KKL not only receives management funds from land in Israel, but also from the obligation to bear a third of its management costs – a sum that amounted to $25.9 million.  Altogether, KKL paid more than $175.93 million to the Administration (most of it on levies for municipal improvement). But even after all those expenses, it received more than a billion shekels from the Administration – a leap of 55% compared to what it received in 2012.

KKL stresses in the report that part of the sum is designated for funded pensions but does not go into details.

$26.6 million- expenses of the fundraising team

The fundraising team of KKL is very active particularly abroad. Last year it succeeded in raising 139 million shekels. But the work of the team, which includes public relations and ‘shlihim’ (envoys) in several countries, also costs tens of millions of shekels every year. According to the financial report, the expenses of the public relations unit within the fundraising team amounted to $13.8 million, and expenditure of the fundraising team stood at $12.8 million.

That is to say that last year the total expenses of the fundraising team were $26.6 million – a sum that is equal to 84% of the donations it received.

$1.68 billion - the value of the land of KKL

The organization holds about 13% of the total land in Israel, most of it in areas of high demand; its total worth being $1.68 billion. According to the data manager of Israeli lands in the central areas, KKL holds more land than the State, and in the Tel Aviv area the amount of land held by KKL equals that of the State.

$52.3 million – the profit from the land portfolio

How is the portfolio of KKL’s funds, which are in the region of $880 million seen?  ($550M of that sum are designated to cover the obligations of the pensions of the employees). KKL prefers safe investments: 73% of the investments (about $650M) are in State bonds, another 13% are in stocks, and another 13% in trustworthy funds.

After the securities which are designated for the employees are deducted, KKL is left with a portfolio of securities worth $330M and it recorded a profit of $52.28 million last year. The portfolio is managed by external investment managers, but KKL does not give details of the management fees it pays to them.

KKL’s reports tell of more activities. For example, it points out that in 1999 it established a local company in Romania, with the aim of returning Jewish property to the State of Israel. The agreement that was signed determined that KKL would receive 40% of the value of the property to cover expenses.

$29.1 million- transfer to other organizations

Last year KKL transferred $4.02 million to the non-profit organization Nefesh B’Nefesh, which encourages and helps Aliya; it transferred $3.27 million to “youth movements, organizations, alliances and activities”; another 6m million shekels were transferred to groups which advance habitation in the periphery of the country, and additional sums were moved to the Zionist Organization and to the Jewish Agency.

$39.96 million were paid to a company to return holocaust money

Last year KKL and its subsidiaries paid $39.96 million to a company to return holocaust money. This is in addition to $25.13 million from the previous two years. KKL points out that the disbursement from 2013 is the final payment, which removes all claims against KKL. In total KKL signed agreements last year to the extent of $9.30 million against heirs of holocaust money.

$1.01 billion – debt of the State of Israel to KKL

KKL claims that the State owes it $1.01 billion in respect of its outgoings on care and treatment of forests and that, according to the report, the last financial statements between KKL and the State on this matter were in 1991. In 2011 there were said to be additional accounts, but they were cancelled. If, at the end of the matter the State will legally force KKL to transfer funds to it every year, there are those in KKL who claim that they will work for the return of the funds to the organization.

In response to the piece in the “Calcalist”, KKL announced: “The smear campaign against KKL which is being carried out jointly by political factors and stakeholders is intended to hinder the ability of the Zionist movement to protect its legal interests”.

The attempt to harm the fund by making false, inaccurate arguments, and the attempt to deceive elected officials was a total failure. KKL is a non-governmental organization which gives a substantial contribution to Israel, to look after open territories, for forestation of the country, to establish settlements in the Negev and in the Galilee, to strengthen settlement in the periphery of the country, and to assure development of sustainability all over the Land of Israel."

Recently, Jewish Voice publisher David Ben Hooren had an opportunity to ask some pointed questions of JNF Chief Executive Officer Russell Robinson in New York regarding the matter of fundraising and expenditures. Robinson appeared to be in quandary as to precisely what the Israeli government’s agenda is, vis-a-via the KKL. He replied that he doesn’t “know what the Israeli government wants from them (the KKL).”  He mused that “on the one hand, the government of Israel thinks we have too much money and on the other hand they accuse us of not giving them enough money.”  Ben Hooren retorted by asking, “Doesn’t this mean the same thing?”  Robinson expressed exasperation with the perceived indirect tones of the Israel government. “I really don’t know what’s going on with their attitude towards us. I have no clue.”

Reliable sources who wish to remain anonymous told the Jewish Voice that many JNF donors were severely perturbed by the organization’s “outrageous spending practices.” One source revealed that their decision to withhold further funding of the JNF came in June of 2013. “When I heard that the JNF was paying Bill Clinton to appear at the 90th birthday celebration and conference dedicated to Shimon Peres, that’s when I could no longer, in good conscience donate any longer.” The source added that, “There was a hue and cry by the public that the JNF backed down on the contract. Obviously some other party picked up the tab as Clinton showed up. To me and many others, if they are paying that type of money for a speaker and it wasn’t even a JNF fundraiser… the ship was out of control.”

According to a June 2013 article that appeared in Ha’Aretz, the JNF’s motivation for offering to fork over the hefty sum of $500,000 was to “generate positive PR for itself abroad – where pro-Palestinian activists have been attacking the agency – by inviting Clinton to speak on sustainability at its annual conference, while at the same time introducing some of its biggest donors to Clinton. This was in the hope of facilitating the JNF’s long term fundraising goals.”

The article added that the JNF’s financial position is “good, mainly on account of the estimated NIS 8 billion value of its assets. Until two years ago, the agency’s annual budget was NIS 650 million, 70 percent of which was earmarked for expenses. JNF officials say the bill for the banquet is being footed by the donors who attend the annual conference.”

 

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