WASHINGTON (JTA) — The American Task Force on Palestine, a group known for working together with Jewish groups, is downsizing because of the faltering peace process.

Ziad Asali, ATFP’s founder, said his organization canceled its annual gala, which usually takes place in the Fall and which comprised 50 percent of its fundraising for its annual $1 million budget, because backers were increasingly pessimistic about the prospects of the two-state solution they favored.

“We see disheartened two-staters,” Asali, a Jerusalem-born doctor, told JTA, after Buzzfeed first reported the story. “The guys who have come to the conclusion that it ain’t gonna happen now.”

Asali said another factor was the difficulties the group faced among Arab Americans, who are generally skeptical of the cooperation that he practiced with pro-Israel and Jewish groups, among them, Americans For Peace Now, with which ATFP runs a joint intern program, and The Israel Project.

“We’ve had financial difficulties from day one,” he said. “Because of what we say and how we say it, and the prevailing mood of the community’s thinking is ‘them vs. us,’ a zero sum game. We brought in another dynamic, we understood it was not going to be popular.”

The annual ATFP gala drew top officials of both Republican and Democratic administrations, which hailed the group for emphasizing two states as a solution. In 2006, just after Hamas prevailed in parliamentary elections, ATFP published an advertisement in major newspapers insisting that two states were a sine qua non of any longterm solution.

Asali’s group also worked closely with Salam Fayyad, the reformist prime minister, and Fayyad’s resignation last year left ATFP without a natural address in the Palestinian Authority.

He said it was not clear yet by how uch the group would downsize, but insisted it was still viable, even if limited.

“We are not closing down,” he told JTA. “We are trimming everything as much as possible.”