Challenging Gifts to Israel

By Rex B. Wingerter

A lawsuit filed 13 months ago to revoke the tax-exempt status of six major Jewish organizations is still pending in Federal District Court in Washington, D.C., and lawyers for the plaintiffs say they do not know when the long-awaited decision will be made.

The suit was filed against the U.S. Internal Revenue Service (IRS) in October, 1983, by a group of 14 Americans, Palestinians, and Israelis who charged that a "substantial portion" of the activities of the six Jewish groups named in the suit are not religious, charitable, or educational as required by the IRS for tax-exempt eligibility. In addition, the suit alleges that some activities of these groups "contravene the basic and fundamental policies" of the U.S. government by abetting the confiscation of Palestinian-owned land in the West Bank. The suit further alleges that five of the six are ineligible to receive tax-exempt money because they act as "mere conduits" for agencies within the Israeli government.

Last December the Justice Department, acting on behalf of the IRS, filed a motion to have the suit dismissed. Lawyers for the plaintiffs formally responded to the government's arguments early this year, and have been waiting ever since for a ruling by District Court Judge Thomas Penfield Jackson.

Among the plaintiffs are Charlie Bitton, a member of the Israeli Knesset; John Davis, former commissioner general of the U.N. Relief and Works Agency (UNRWA); and four elected Palestinian mayors who have been dismissed by the Israelis: Kareem Khalaf of Ramallah, Bassam Shaka'a of Nablus, Ibrahim Tawil of El-Bireh and Wahid Hamdallah of Anabta.

The tax-exempt organizations named are: Americans for a Safe Israel, the Jewish Agency American Section, the Jewish National Fund, the United Israel Appeal, the United Jewish Appeal, and the World Zionist Organization American Section.

In March of 1983 Charles Fischbein resigned as Washington director of the Jewish National Fund (JNF)—one of the groups named in the suit—and himself became a plaintiff. In an affidavit, Mr. Fischbein charges that funds raised in the U.S. by the JNF go to a general fund in Israel and are used both for settlements on the West Bank and for the war effort in Lebanon. He says that JNF bulldozers—which, he claims, constitute virtually all the bulldozers in Israel—areused "in the razing of Palestinian homes to create 'security areas"' on the West Bank. He says he was told by a JNF official during a trip to southern Lebanon in August, 1982, that JNF bulldozers "went in front of the Israeli tanks to cut roads for the (invading) Israeli army."

As another example of the misuse of funds, Mr. Fischbein says that he raised a $75,000 gift from a couple in Washington, D.C., for the construction of a playground in Israel bearing their name. Eighteen months after the funds were transferred the husband and wife decided to visit "their" playground. What they found when they arrived there was an Israeli Defense Force staging area littered with garbage and beer cans.

Attorneys Linda Huber and Mark Lane, who are representing Mr. Fischbein and the other 14 plaintiffs, estimate that the six organizations combined account for at least $750 million in funds sent to Israel each year by Americans. Charitable transfers alone from the U.S. to the Jewish state have been estimated to run between $950 million and $1 billion for each of the last several years, according to a study published last year by the Middle East Institute in Washington, D.C. "The principal sources," wrote author Thomas Stauffer, "are the prominent national Jewish charities, such as the United Jewish Appeal, but significant sums also flow through many smaller channels, especially since any charity recognized under Israeli law automatically qualifies for tax-deductible status in the U.S. under the Internal Revenue Code, a privilege not generally accorded other foreign states." Mr. Stauffer concluded that "these charitable transfers are part of the estimated $5 billion in total resources that the U.S. transfers to Israel yearly."

Rex B. Wingerter, a long-time student of U.S. foreign policy and the Middle East, currently studies law in Washington, D.C.