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Tax Breaks for Colonization?

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Diala Shamas (@dialash) is a Senior Staff Attorney at the Center for Constitutional Rights

This post is part of the Law and Settler Colonialism in Palestine Symposium.

In this series, George Bisharat looks at private action and violence of the “frontier rabble” as a principal means of the settler colonial state’s expansion. He notes that private violence is a “feature, not a bug, of Israeli settler colonialism.”  Darryl Li describes the racialized origins of Israeli colonialism as in part fueled by the movement of private capital from the rest of the world to Palestine. This piece starts to look more deeply at this private form of support, particularly as it flows from the United States through the vehicle of charities, as another form of third-state action (or inaction) that also entails third-state responsibility. Such deeper scrutiny is all the more timely as the Israeli authorities this week enter into another round of mass-demolition of Palestinian homes and stores in the East Jerusalem neighborhood of Silwan in order to make way for a “biblical park” that has been heavily backed by U.S.-based private foundations

Much attention has been rightly paid to the billions of dollars that the U.S. government hands over to Israel every year, regardless of Israel’s war crimes, or even the warnings of military and diplomatic experts that such support might harm U.S. strategic interests in the region. Less public scrutiny has been trained on the U.S. government’s indirect support to the Israeli settlement enterprise through the export of private actors, ideology and capital. But the colonization of Palestine has always been a multinational endeavor that extends beyond state-based support and that is inextricably intertwined with private forms of action. U.S. citizens have been particularly strong supporters: some of the most notoriously violent, even deadly, settler leaders – Meir Kahane and Baruch Goldstein, were born in the United States. The U.S. Ambassador under Trump, David Friedman, is a longtime champion of the U.S.-based settler movement who swung the symbolic sledgehammer underneath the neighborhood of Silwan, likely slated for another round of mass-expulsions of Palestinian residents. Christian Evangelical groups, which have deep ties with the settler movement, raise money and operate volunteer programs in settlements. Thousands of Americans join the Israeli military every year through its lone soldier program. There are approximately 60,000 US citizens in the West Bank, not including East Jerusalem 

This support isn’t limited to a few extreme ideological supporters, or individuals who have moved from the U.S. to the settlements: deep American pockets have sustained and fueled the illegal actions of the Israeli settler movement through charitable giving. While these US-based charities receive tax exemptions, they have been confronted with little to no scrutiny by federal and state regulators (and U.S. citizens living abroad enjoy a tax exemption on their first $100,000 in income earned overseas, among other likely benefits). The IRS, the US Department of Treasury, the Department of State, state attorneys general and local oversight boards are all among those tasked with regulating not-for-profit organizations to ensure that their activities are aligned with a charitable purpose and that they are not engaged in any illegal conduct. The Department of Justice is charged with prosecuting international crimes. As anyone working with Muslim or Arab clients is painfully aware, these agencies do know how to flex their enforcement muscles in quite draconian ways under the auspices of “combatting terrorism,” often with devastating impacts on charitable giving and freedom of association. Counterterrorism laws are then further weaponized by private actors against those with whom they disagree, many of whom are Palestinian. 

As this year marks 20 years post-9/11, it is high time to address the wildly different political calculuses that trigger enforcement of international and human rights law, and re-calibrate our warped priorities by centering key international norms. Training our sights on preventing private U.S. actors from directly funding internationally recognized crimes seems to be a good place to start. Indeed, private actors cannot aid and abet, or otherwise directly support, apartheid, war crimes, or the slew of other U.S. and international law violations that are associated with the Israeli settlement enterprise. At the very least, they should not be given tax deductible status.

Non-Profits and Wealth Transfers to Support Displacement

The pioneer: The Jewish National Fund

From its inception and well before the establishment of the State of Israel, the Zionist project has been implemented under the auspices of charitable work. The Jewish National Fund–a household name in many Jewish communities throughout the world through its omnipresent blue donation boxes–was and continues to be a key vehicle of dispossessing Palestinians of their ancestral land through the transfer of lands from Palestinian possession to Jewish possession. After Israel took control over much of historic Palestine in 1948, the newly established Israeli government implemented various legal mechanisms to legitimize the massive transfer of lands from Palestinian possession to Jewish Israeli possession. Among those, in 1953, Israeli legislation bestowed quasi-state-like functions upon the Israeli JNF, also known as Keren Kayemeth LeIsrael (KKL-JNF).

Although the KKL-JNF postures as an environmental organization, it has functioned as a ‘land-laundering body’ through both land acquisition and afforestation. The adage that Palestine was barren and empty before the Zionist project and the JNF planted (often foreign and unsustainable species of) pine and cypress trees has been thoroughly debunked. What is more, the sites it claims to have “greened” or “made bloom” are often ethnically cleansed Palestinian villages, the ruins of which the Israeli state sought to conceal. Palestinian sites of trauma and memory have been replaced with world-renowned hiking trails and other leisure attractions for Israelis and tourists. KKL-JNF is a custodian and trustee of land for Jews alone: Palestinians are explicitly excluded from benefiting from land held by KKL-JNF. Today, KKL-JNF owns at least 10% of lands in Israel, and exerts control over much more through its special relationship with the Israel Lands Authority. Thus, through private fundraising in the name of “planting trees,” the JNF, in the U.S. through the vehicle of 501(c)(3)s, has acquired land and implemented projects on lands with the aim holding them exclusively for Jews in perpetuity, playing an essential role in the broader trajectory of the Nakba, or the ethnic cleansing of Palestinians. 

The JNF-KKL is also actively engaged in expanding the Zionist settlement project beyond the Green Line. It covertly set up a unit to engage in activities in territories occupied by Israel in 1967 (including reportedly forging sale documents) and has long been involved in settlement expansion in East Jerusalem. More recent public announcements by KKL-JNF that align its activities with the aims of the settlement movement have caused some angst amongst a subset of supporters of the JNF charities in the U.S. and Jewish organizations that long held up the Green Line as a red line.

The next generation: Israeli settler organizations

The JNF is not alone. Today, across the West Bank, a frontier of the ongoing Nakba, a panoply of U.S. non-profits continue to transfer millions annually to the Israeli settlement project. Every few years, published investigations uncover another effort to fundraise to directly support war crimes and apartheid. These reports fall on ears uninterested in listening. There has been little to no real scrutiny by the federal and state agencies responsible for overseeing charitable entities. 

Not much investigation would be needed. Many of these organizations are unabashed about their unlawful ends. The Central Fund of Israel is one such example. Founded in 1979 in order to, as they describe it, “redeem” or “reclaim” Jewish land, its founders overtly articulated their project of funding Jewish-Israeli expansion beyond the 1967 Green Line, engaging in a campaign to facilitate such funding. Other prominent U.S. 501(c)(3)s are similarly dedicated to settlement expansion – the Irving Moskowitz Foundation, American Friends of Ateret Cohanim, American Friends of Beit El, to name only a few. 

Rethinking the IRS’ Role

Over the years, critics of this form of colonial enterprise and capital transfer have sought to highlight the JNF’s role in the disposession of Palestinian lands. Advocates in the US and in other countries have petitioned various regulating agencies to investigate their respective JNF branches’ charitable status, arguing that their activities cannot meet the legal requirements of the various domestic regulating authorities: mainly, that the kinds of activities that the JNF funds do not meet the definitions of “charitable activity” (See examples in Canada; UK; and the US). Settlement charities have also been the targets of various campaigns in the US, usually urging the IRS to exert its oversight responsibilities and more recently, of direct action. However, at least in the U.S., such efforts do not appear to have translated into meaningful scrutiny.

What is more, the U.S. Supreme Court has been clear that “the purpose of a charitable trust may not be illegal or violate established public policy.” Charities, of course, just like any other entities, cannot engage in unlawful activities. Conspiring to commit, or aiding and abetting apartheid and war crimes is simply unlawful. Continuing to allow these organizations to operate in settlements could also violate international law, in light of states’ obligations to not “render aid or assistance” to the settlement enterprise, and third states’ duty of non-recognition of an unlawful situation. As a matter of law, giving money to support apartheid and discrimination is not only not charitable – it is also illegal. 

Though the direct harm caused by the groups these organizations support to Palestinian communities in the Occupied Palestinian Territory is severe, scrutiny of their activities by charity regulators is nil.

US advocates and some members of Congress are calling into question US complicity in war crimes and systematic discrimination under what is a system of apartheid. This has primarily taken the shape of calling for ending military aid, particularly where it can be traced to direct involvement in war crimes. Although the total number of dollars sent via tax-deductible donations from the US to Israel pales in comparison to the billions provided in foreign and military assistance, the dollar-to-dispossession value is arguably more significant. That it is provided under the guise of “charity” does not shield it from the requirements of the law, either.

Concerns about bolstering the IRS’s role in overseeing charities have been raised on both sides of the aisle by those uncomfortable with the state making decisions about what should count as charitable. Yet the law and institutions are far from neutral and are, in fact, inseparable from politics. The IRS and its enforcement priorities, or even its enforcement capabilities, are the outcome of political processes. The same goes for any of the other agencies who are tasked with overseeing these groups. Far from being “neutral” or “hands off,” the decision to not scrutinize bad actors in the face of such overwhelming evidence of involvement in unlawful activity, is at best the result of a politicized process that has gutted these agencies, and at worst, a necessarily political act itself. As the public and this administration turn their sights on the various failures of the IRS as well as our tax regime, a focus on these settlement funders not only offers progressive lawmakers an opportunity to exercise political coherence. Such a focus may also be among the most impactful avenues to halt Israeli settlement expansion, and give space for Palestinians.