Israeli NGOs & Foreign-Government Funding: The Real Story & its Significance

"Flags" by RambergMediaImagesI am donning my Superman cape (doesn’t everyone have one?) in the hopes of accomplishing the near-impossible task of setting the record straight on what could potentially be a turning-point for Israeli charities.

Since early January of this year, the topic of Funding from Foreign Governments to Israeli NGO’s (Non-Governmental Organization) has been making headlines. Two ideas to promote Transparency, though, in very different contexts — a proposal put forth in January and a bill approved in February — have politicians, nonprofits, and European Governments lamenting the destruction of democracy and human-rights in Israel.

However, the pursuant rhetoric, innuendos, politicking, and here-say makes it near impossible to filter out fact from fiction and to distinguish these two very different initiatives.  


January 5, 2011 – The House Committee of the Knesset (Israel’s Parliament) proposes establishing a Parliamentary Panel of Inquiry into “left-wing” Israeli organizations that allegedly participate in “delegitimization campaigns again Israel Defense Forces soldiers.” (Ha’aretz)

February 21, 2011 – The Knesset gave final approval to a bill that “requires nonprofit organizations to report which foreign entities contribute to them, whether governmental or government supported.” (Ha’aretz)

Some background:
The Bill was submitted in 2010 way before the Proposal to establish Knesset panels to probe left-wing groups. After passing its first reading (bills need to pass three readings to become law), the Bill lost momentum, finding itself in cryogenic-stasis. A number of months later as the controversy surrounding the Panel Proposal heated up, the Bill got a “push” in late January of 2011, quickly passing both its second and third readings in February. The day after the Bill was passed, the Proposal for the Parliamentary Panel fizzled out, its proponents having asked for the vote to be postponed (effectively shelving the matter entirely).

To summarize:
Parliamentary Panel of Inquiry of only left-wing organizations doesn’t exist.
Bill requiring all nonprofits to report foreign-governmental funding does exist.


Immediately after the introduction of the Panel Proposal in early January, critics quickly labeled it anti-democratic, comparing it to the investigations initiated by Joseph McCarthy against Communists in the United States during the 1940′s and 50′s.

These claims of witch-hunting were subsequently hurled onto the Bill, as well, seemingly because both the Proposal and the Bill were within a short time of each other and both dealt with Transparency. The ensuing result was the distortion of the vast differences between the two ideas and in some cases, confusing the pubic into thinking that the two were one-and-the-same.  And I’m not referring to the unknowing masses either – even newspapers and government officials were intentionally or inadvertently grouping the two together.

(See Appendix B below for specific examples.)


On February 21st when the Bill was approved, a Member of Parliament who had voted against it “criticized the government for becoming increasingly McCarthyist.” And he wasn’t the Bill’s only opponent, not by a long shot.

But here is the punch-line: The Israeli Government hasn’t become increasingly McCarthyist (if a law pertaining to all nonprofits can even be labeled as such). The requirement for charities to report on foreign-governmental funding has existed for years!

Ofer Katz, a lawyer and expert in Israeli nonprofits who participated in Knesset discussions about the bill, said as much in a recent radio interview: February’s bill represents “nothing new.”

A careful review of the Law of Charities [Chok Ha’amutot], Paragraph 36a, shows the pre-existing stipulations:

Charities — with a yearly turnover of more than 300,000 NIS and whom have received at least a combined 20,000 NIS from foreign governments — must state in their financial statements the (1) name of the foreign government or governmental entity (2) amount of the donation (3) purpose or objective of the donation and (4) if applicable, the conditions of the donation.


While not as earth-shattering as some would have us believe, the new law does introduce additional reporting measures.

  1. Charities are now required to report foreign-governmental funding four times a year, within a week of the closing of each quarter (in addition to the yearly report in its financial statement).
  2. The reporting requirement isn’t dependant upon yearly turnover or aggregate amount of donations. Any organization that receives any amount.
  3. If the foreign grant was for a printed ad — billboard, flyer, newspaper, magazine etc. — the ad must state the source of the funding.
  4. Everything that is required to appear in the quarterly report, must also be clearly and easily found on the charity’s website.


The collapse of the Knesset the Panel of Inquiry was a good thing.

Rules and stipulations of charities should be objective and established by a strict set of criteria.  These conditions can then be used to select relevant charities.  When one of the Proposal’s initiators immediately declared a list of “left-wing” nonprofits that should be examined, the objectivity of the Proposal was called into question.

Furthermore, an adhoc committee isn’t the place for this debate, but rather laws established by Israel’s Parliament (Knesset) and the Registrar of Charities (Rasham Ha’amutot).

(For a more detailed analysis, please see “NGO Inquiry Committee Has Wrong Focus, Framework” by Jason Edelstein and Prof. Gerald Steinberg of NGO Monitor.)


Israel’s charitable-waters are a little murky.

Israel allows political advocacy groups to be considered charities and for their donations to be tax-exempt.  In America, for example, donations to political advocacy groups (designated as “c4″ organizations) are not tax-exempt and, as such, other tax-exempt charities are not allowed to forward monies to these 501(c)4 organizations.

Before February’s adoption of the new bill, the only place where one could find details about foreign funding was in an organization’s financial statements and reporting to the Registrar of Charities.  There was a large consensus that the Public was not seeing this information.

Generally, countries interact and influence each other through diplomacy.  Not so with Israel’s nonprofits.  The bill is aimed at NGOs that are advocacy and education nonprofits that are receiving grants from foreign governments.  This financial support is bypassing the diplomatic arena and is appearing in the guise of homegrown nonprofit organizations; thereby, allowing these foreign powers to push their own agendas in a much more unassuming manner.

The new bill forces charities to be more transparent on their printed media so that those seeing the content of these billboards, advertisements, and websites can get a clearer picture of whose interests are being represented.

Additionally, nonprofits that receive foreign-government funding will now report these donations quarterly, instead of yearly; thus, allowing the Israeli Government to react much faster should the need arise.

(For a more detailed argument, please read, “Transparency for NGOs is not Anti-Democratic” by Prof. Gerald Steinberg of NGO Monitor.)


The claim that the new law was made to single out government funding — while leaving other types of foreign-funding untouched — is correct.

Dissidents, though, should not be so quick to judge the unfairness of the new Bill.  Yes, the Knesset passed a law only about foreign-government funding, but this is because the foundations for the extra reporting-measures were already in place in the preexisting, previously mentioned paragraph of the Law of Charities.

However, the true significance of the Bill, what makes it a potential turning-point for Israel’s nonprofit sector, is that it lays the groundwork for further transparency measures for all types of foreign-funding.

How’s that for democratic?

Tizku Lemitzvot,


: This blog expresses my own personal opinions and is for informational purposes only, not advice.  As charity laws can be quite complex and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Photo Credit: “Flags” by RambergMediaImages

Appendix A: Additional Recommended Reading

The President and staff of NGO Monitor (Amuta for NGO Responsibility) have written various reports and op-eds in the previous years that are dead-on.

  1. NGO Inquiry Committee Has Wrong Focus, Framework” by Jason Edelstein, Communications Director of NGO Monitor, and Prof. Gerald Steinberg, President of NGO Monitor. January 12, 2011 in the Jewish Telegraphic Agency.
  2. Transparency for NGOs is not Anti-Democratic” by Prof. Gerald Steinberg, President of NGO Monitor. February 23, 2011 in Ha’aretz.
  3. Manipulating the Marketplace of Ideas” by Prof. Gerald Steinberg, President of NGO Monitor. November 2009 in Ha’aretz.
  4. Resetting Europe-Israel Relations” by Prof. Gerald Steinberg, President of NGO Monitor. June 2010 in The Jerusalem Post.
  5. Europe’s Hidden Hand” June 2008 Report by NGO Monitor.

Appendix B: Examples of Inadvertent or Intentional Misrepresentation

  1. In the March 25th weekend-edition of Ha’aretz, an author wrote that “Peace Now [a left-wing organization] is on the brink of a parliamentary investigation.” As the Proposal has been shelved, the author’s wording is incorrect.
  2. Ha’aretz headline on February 22nd read “Knesset Passes Bill to Make Israeli NGOs Report Foreign Contributors.”  In reality and as detailed previously, the Bill didn’t “make” NGOs report anything, this requirement already existed. The new Bill only adds additional reporting measures.
  3. In the above article, on the day the bill was passed a government official asked: “Why is money from the Netherlands’ government, by definition, dangerous, but money from radical evangelist organizations permitted?”  By using the word “permitted,” this minister is misrepresenting the true nature of the new bill.  February’s bill only relates to transparency and reporting; it does not touch upon what is permitted or not allowed. (Not to mention, money from the Netherlands’ Government is permitted anyway.)

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