Since it was formed, J Street, the pro-peace process lobby and political action committee, has fought for credibility in the face of charges from the right that it is anti-Israel. This week it was reeling after revelations in the Washington Times that the group has received substantial contributions from controversial financier George Soros — despite two years of denials.

Early indications suggest J Street’s membership base is holding fast, but there were reports that some members of Congress connected with the group may be reconsidering their affiliation.

“It’s a huge setback, in terms of ‘corridors of power’ stuff and trust with reporters and congressional aides,” said Jacques Berlinerblau, director of the Program for Jewish Civilization at Georgetown University. “So many people have been rendered vulnerable by their actions — people of good conscience who care about the issue of Middle East peace.”

There are also claims the controversy is affecting J Street’s friendly relationship with the Obama administration. On Tuesday the Washington Times reported that the White House is “distancing itself from the liberal advocacy group… that it once embraced,” citing a White House spokesman’s refusal to answer a question about whether J Street will be included in future conference calls with Jewish leaders.

But, in a contrary indication, some 80 participants in J Street’s Washington leadership forum met with a State Department official on the current round of Middle East peace talks — and with Israeli Ambassador Michael Oren, who earlier this year had spurned contact with the group.

Still, even some strong supporters concede that J Street’s credibility has been damaged among the constituency it needs the most — pro-Israel and pro-peace process members of Congress.

Staffers in several congressional offices with ties to the group said they are taking a wait-and-see approach to the unfolding crisis, but they expressed strong feelings about J Street’s prevarication on the Soros funding issue.

“There’s a lot of anger here,” said an aide to a prominent congressional Democrat, “a lot of questions being asked: Is this an organization people can trust not to get them in trouble? Some members went out on a limb supporting them when the Soros charges were the most intense. Now they’re vulnerable.”

When J Street was created in the spring of 2008 as a counterweight to a pro-Israel lobby seen by some on the left as overly hawkish, there were reports Soros, a major funder of liberal and human rights causes – including some with a sharp bias against Israel – was a major player.

At the time, J Street founder and director Jeremy Ben-Ami insisted that Soros, a Hungarian-born Jewish billionaire who has given to Palestinian causes but not Israel, had opted not to be involved. But reports of Soros funding persisted, and Ben-Ami, when asked, denied those reports — even after Soros and his family began making substantial contributions to the group two years ago.

On Friday the Washington Times’ Eli Lake reported that the Soros family contributed $750,000 to J Street over a three-year period in which the group had raised $11 million overall.

Lake cited Soros’ funding for liberal domestic groups like MoveOn.org and Media Matters for America as a source of controversy—and his strong criticism of U.S. Middle East policy, “including the Bush administration’ decision in 2007 not to recognize a Palestinian unity government that included the militant Islamist Hamas movement.”

Soros has said that AIPAC was “closely allied with the neocons and was an enthusiastic supporter of the invasion of Iraq,” according to Lake.

Lake also revealed that J Street’s biggest contribution during that period came from a Hong Kong resident, Consolacion Esdicul, with no previous history of Middle East activism.

In a statement to J Street supporters, Ben-Ami said, “I accept responsibility personally for being less than clear about Mr. Soros’ support once he did become a donor.”

While arguing that most 501c(4) do not reveal the names of contributors, he admitted “my answers regarding Mr. Soros were misleading. I deeply and genuinely apologize for that and for any distraction from J Street’s important work created by my actions and decisions.”

Then he lashed out at J Street’s detractors.

“We’ve tapped into a pent-up longing in the Jewish community and beyond for a home that marries a love of Israel with a deep desire for long-term peace and security through a two-state solution to the Israeli-Palestinian conflict,” he said. “And a lot of people don’t like that. They attack us as anti-Israel. As self-hating Jews. They equate us with the worst enemies of the Jewish people — even as we fight for what we believe is the only way to save Israel’s Jewish and democratic soul.”

There were reliable reports from activists close to J Street that other members of the group’s senior and lobbying staffs were not aware of the Soros donations.

On Capitol Hill, much of the negative reaction this week seemed directed at Ben-Ami himself; the most immediate concern was the controversy’s impact on hotly contested House and Senate races involving incumbents with ties with J Street—almost all Democrats.

By Tuesday, Republican candidates were on the offense.

In the Pennsylvania Senate race, widely seen as a critical test of J Street’s political clout even before this week’s Soros controversy, GOP candidate Pat Toomey strongly criticized Rep. Joe Sestak, the Democratic nominee and a major J Street recipient, for his J Street ties.

In a statement, the Toomey campaign called on Sestak to “cut his ties with the radical George Soros-funded group, J Street” and said the Soros disclosure was “further evidence that [Sestak’s] allegiance with far-left groups puts him far outside the Pennsylvania mainstream.”

In New Jersey, Rep. Rush Holt’s connection to J Street prompted ads by the new Emergency Committee for Israel, a group created by leading Republicans — which has also gone after Sestak. GOP sources say they expect Holt’s J Street connection to become a factor in the strong challenge by Republican Scott Sipprelle.

Matthew Brooks, executive director of the Republican Jewish Coalition, said the J Street flap “is a thread that will run through a number of races — both because of who the donor is, and because of the way J Street handled it. That’s made a number of people who have supported J Street very uncomfortable, and they will have to make some hard decisions.”

But Gilbert Kahn, a Kean University political scientist, said, “These revelations will reinforce existing biases about J Street, but I don’t expect there will be a huge impact at the polls.”

In the Toomey-Sestak slugfest, “the Jewish vote is important, and this could have a marginal impact if the race proves very close,” he said. “But overall, I just don’t see a huge impact.”

And while Soros is a red flag to Republicans, “the name ‘Soros’ doesn’t hurt among progressive Democrats,” Kahn said.

Possibly more dire for J Street – but harder to measure – will be the impact on Capitol Hill, where legislators, lobbyists and campaign funders operate in a complex environment that depends heavily on trust.

Capitol Hill insiders say it’s too early to gauge the damage, and that what happens next will depend on how J Street officials respond, starting with Ben-Ami.

“They could be in deep trouble,” said Tom Dine, the
onetime executive director of the American Israel Public Affairs Committee (AIPAC) who has been affiliated with pro-peace process groups in recent years. “They can recover, but it will be difficult. In the world of lobbying, your word is your coin.”

The only way to reclaim the momentum that has seen J Street raise more than $11 million in less than three years and become an inside player with a Democratic administration is to come clean — and then some, said Dine.

“They have to stop the bleeding, and the truth becomes the tourniquet,” he said. “If I were them, I’d name their top five or 10 donors and say to the public, look, this is who we are — and look at what we’ve accomplished the last two years.”

Georgetown’s Berlinerblau said, “in terms of organizational sophistication, what J Street did here was a bush-league move” that could have a big impact on their lobbying. “At the highest levels of leadership, they may have to consider a change.”

Douglas Bloomfield, the former legislative director of AIPAC and now a columnist for Jewish newspapers, said that overall, J Street’s playing fast and loose with the truth about Soros’ role “will make it harder for people on Capitol Hill to take them at their word and trust them. But it’s probably not fatal; this is a town of short attention spans and a lot of forgiveness. How else can you explain why so many sinners continue to do well in politics?”

Bloomfield predicted that the extreme anger of some J Street’s critics may work to the group’s advantage.

“They will probably be saved by enemies who greatly overstate their case,” he said. “That hysteria is part of what put J Street on the map in the first place, and overreaction of those same enemies may save them from more damage.”