Amid overseas outcry, gov’t said rethinking bill targeting foreign funding for NGOs
US, Germany, other EU states denounce proposed law to radically limit donations to human rights groups, reportedly prompting Netanyahu, Foreign Ministry to consider postponement
The government is weighing its approach to a proposed law that would significantly limit Israeli civil society groups’ ability to accept donations from foreign governments, after numerous allies including the US, Germany and France voiced opposition to the bill, a Thursday report said.
The Foreign Ministry and Prime Minister’s Office have received protests against the bill from key allies, and Prime Minister Benjamin Netanyahu is personally involved in the response, a senior diplomatic official told Channel 13.
The legislation, drafted by a member of Netanyahu’s Likud party, is set to be brought before the Knesset’s high-level Ministerial Committee for Legislation on Sunday, but officials are considering postponing the bill in light of the objections, the report said.
The bill states that any nonprofit group that engages in public advocacy two years before or after receiving a donation from a foreign government will lose its status as a public institution and will no longer be eligible for tax exemptions. In addition, those non-profits will be hit with a 65-percent income tax.
It is viewed as targeting left-wing groups that are considered adversaries by Netanyahu’s right-wing government.
Germany is the most perturbed by the legislation and has voiced its disapproval through several channels. Berlin has requested a phone call with Foreign Minister Eli Cohen to discuss the matter, and the conversation is expected to take place early next week, Channel 13 reported.
Germany’s ambassador to Israel, Steffen Seibert, said, “The draft bill on NGO taxation is a matter of grave concern to us and to many of Israel’s international partners.”
“Lively and unhindered relations between civil societies are of essential value in our liberal democracies,” Seibert said.
On Friday, the German Foreign Office tweeted that its ties with Israel “are characterized by a variety of precious people-to-people exchanges, especially between actors of our respective civil societies. This draft law jeopardizes what we’ve built.”
The Dutch, Belgian, Irish, Norwegian, Finnish and Swedish embassies to Israel also expressed concern about the legislation in similar public statements on Thursday.
The draft bill on NGO taxation is a matter of grave concern to us & to many of Israel's international partners. Lively and unhindered relations between civil societies are of essential value in our liberal democracies. We will continue to raise the issue with our Israeli friends.
— Steffen Seibert (@GerAmbTLV) May 25, 2023
The bill would likely cripple the ability of human rights organizations to operate in Israel and the West Bank, as many of them rely on funding from foreign governments.
The legislation was drafted by Likud MK Ariel Kallner.
Human rights organizations — such as B’Tselem, Breaking the Silence and the New Israel Fund — have long been targeted by the Israeli right wing and the political center over their exposure of alleged Israeli human rights abuses against the Palestinians.
The way right-wing lawmakers have sought to criticize the largely left-wing organizations has been by highlighting their funding and arguing that it represents interference in Israel’s internal affairs.
Left-wing activists point out that right-wing civil society groups also take funding from foreign investors. Those donors might be individuals, not countries, but the funds are often transferred with far less transparency, the left-wing activists claim. Israel also funds civil society groups abroad.
Such Knesset legislation has been proposed in the past but, amid pushback from abroad, has never been approved.
The new initiative appears to have a better chance of becoming law given the hardline, pro-settler makeup of Netanyahu’s coalition. A pledge to pass such a bill was also included in the coalition deal Likud signed with the far-right Otzma Yehudit party.
The US State Department came out against the legislation on Wednesday.
Asked to comment on the bill during a press briefing, State Department spokesman Matthew Miller said, “I won’t speculate on things that might come to pass. I will just say that as a general matter, the United States supports the essential role of NGOs that are part of civil society.”
“We believe that they are critical to democratic, responsive and transparent government, and we firmly believe that civil society should have the opportunity and space to operate and raise resources around the world,” Miller added.
The legislation would significantly complicate landmark 2020 Congressional legislation backed by both parties known as the Middle East Partnership for Peace Act. MEPPA earmarked $250 million in US funding for coexistence organizations that promote Israeli-Palestinian dialogue and Palestinian business development.
The Biden administration has touted the legislation as critical for creating the grassroots conditions necessary for a future peace agreement between Israelis and Palestinians. But if Kallner’s bill passes, organizations that receive MEPPA grants would have to transfer massive amounts of those funds to the Israeli government.
The French Embassy in Israel weighed in on Wednesday, noting that it had already raised concern over a 2021 Israeli decision to designate six Palestinian rights groups as terror organizations, indicating that it viewed the latest bill as an extension of that effort to target Israeli and Palestinian civil society.
The bill “is equally and deeply concerning. We reaffirm our commitment to the critical role of civil society in the life of every democracy, in Israel and throughout the world,” it said.
“It is the responsibility of states to create and maintain a space and environment conducive to their work, for a vibrant civil society can also bring a culture of peace and diversity,” the French embassy added.
The New Israel Fund, which serves as an umbrella group funding dozens of progressive civil society organizations operating in Israel and the West Bank, came out harshly against the bill, calling it the “next step” of the government’s effort to overhaul the judiciary.
“Netanyahu and his government of extremists want to tax civil society out of existence — especially those working to defend the rights of the most marginalized in Israel and under Israel’s control: women, the LGBTQ+ community, Palestinians living under occupation, and Arab citizens of Israel,” said NIF CEO Daniel Sokatch in a statement Wednesday.
“This is precisely the way that autocrats shrink democratic space. This law could force the closure of hundreds of organizations in Israel — and it specifically targets the ones that speak truth to power. Choking off funding from advocates for change is not what democracies do,” he said.