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New Israel Fund accused of tax scheme—report

The NIF is incorporated as a foreign company in Israel and therefore its Israeli donors aren’t entitled to tax benefits.

A New Israel Fund ad.  Credit: NIF.org.
A New Israel Fund ad. Credit: NIF.org.

New research suggests that the New Israel Fund (NIF) directed donors to make contributions through another NGO so that they could claim tax benefits, an apparent violation of Israeli law.

Research by Ad Kan and Lavi, first reported by journalist Elhanan Gruner of online Israeli news site HaKol HaYehudi on Tuesday, indicates that NIF may have acted fraudulently, telling its donors to give money through an NGO called “Signing Anew.”

As the NIF is incorporated in Israel as a foreign company, its Israeli donors aren’t entitled to tax benefits. According to article 46a of Israel’s Income Tax Ordinance, only donors giving to recognized public institutions under the article are entitled to such benefits.

HaKol HaYehudi reported that about a month ago, the NIF held an end-of-year fundraising campaign. According to the NIF, the campaign raised 2,300,000 shekels (~$683,199). Unable to offer tax benefits to donors itself, according to the report, NIF directed major contributors to Signing Anew, which is registered as an eligible association under article 46a. Text conversations that came into the possession of Hakol HaYehudi appear to show NIF personnel directing donors in real-time as they made donations through Signing Anew.

When one donor wanted to understand how Signing Anew would know that his donation was intended for the New Israel Fund, he was allegedly told that all funds that went to Signing Anew would ultimately be part of a grant from Signing Anew to NIF.

Organizations under article 46a promise not to donate to groups that don’t enjoy tax benefits— in other words, not to practice the sort of behavior that NIF and Signing Anew allegedly engaged in, HaKol HaYehudi reported. They are even required to include a statement to that effect in their terms & conditions.

One NIF employee who allegedly directed donors to Signing Anew, Tal Segev Cohen, Human Resource Manager of Shatil, NIF’s Israeli operating arm, had earlier provided an explainer on Shatil’s website detailing why it would be “problematic” for a donor to receive a tax benefit by giving through one organization recognized under article 46a to another that wasn’t, according to the report. She wrote that “such an action is considered a tax offense,” it said.

The New Israel Fund did not respond to requests for comment.

NGO Monitor, a watchdog group, told JNS: “It is strange that the NIF, which is so influential in internal Israeli political discourse, is actually not Israeli at all. One would think that an organization so deeply involved with Israeli civil society would have figured out how to receive tax deductible donations from Israelis.”

This isn’t the first time the NIF has been in the news in recent weeks for controversial actions. At the start of the month, it openly took credit for funding the first major demonstration against the Israeli government’s legal reform plan, on Jan. 7.

Channel 14 described its open stance as “precedent-setting,” as the New Israel Fund generally “works behind the scenes.”

Prior to that, Israeli investigative journalist Sharon Shpurer raised questions about whether NIF violated U.S. law by contributing to a group whose leader had strong ties to the Meretz Party.

“It’s forbidden for the New Israel Fund to support party activities or those suspected of having party ties, mainly due to legal reasons regarding American law,” she wrote.

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