[News] How US "charities" break tax laws to fund Israeli settlements
news at freedomarchives.org
Sat Sep 3 11:11:14 EDT 2011
How US "charities" break tax laws to fund Israeli settlements
3 September 2011
In addition to providing $3 billion in annual military aid to Israel,
Americans are subsidizing the construction of Israel's illegal settlements.
In spite of US government statements about its displeasure with the
settlements, US based organizations are abusing the 501(C)3 section
of US tax codes to provide billions in subsidies to do exactly that.
There are hundreds of these tax-exempt, so-called charities funneling
money to illegal Israeli settlements, often with the names no more
creative than "American Friends of name an Israeli settlement."
One such organization, American Friends of Ariel Inc., paints a
picture of how these US based front groups collect tax-deductible
donations, and use them to build and expand illegal Israeli
settlements, and in some cases, purchase weapons for the settlers
within them. In many cases, including that of American Friends of
Ariel Inc., the organization does not make substantial efforts to
disguise the fact that the US based tax exempt entity is nothing more
than a shell organization being used to transfer money abroad.
For example, the president of American Friends of Ariel, Ron Nachman,
also happens to be the longtime mayor of Ariel. The sole programmatic
function of American Friends of Ariel is to transfer funds to a
non-exempt organization based in Ariel called the Ariel Development
Fund, also controlled by Nachman, which describes itself simply as
the "fundraising arm of the city of Ariel." Under Ron Nachman's
leadership, American Friends of Ariel transferred more than $5
million to the Ariel Development Fund over the last several years.
It is worth noting that much of the funding for American Friends of
Ariel has come from Christian Zionist groups, and in general, these
groups have played an increasingly dominant role in the financial and
political support for the illegal Israeli settlement enterprise.
The work of American Friends of Ariel Inc., and the many tax-exempt
organizations like it, is having a devastating impact on local
Palestinian communities. A recent report by the UN Office of
Humanitarian Affairs, covered by the Ma'an News Agency, described the
"alarming trends of forced displacement of Palestinians in Area C" as
a result of settlement expansion, and found that "more demolitions
have taken place so far in 2011 than in all of 2009 and 2010
Marked increase in forced displacement of Palestinians," 21 July 2011).
In addition to the gross human rights violations inherent in illegal
Israeli settlement expansion, US taxpayers simply cannot afford to
build homes and walls in illegal Israeli settlements while record
numbers of Americans are losing their homes, and unmet domestic needs
in the US are at an all time high.
American Friends of Ariel, and the vast number of organizations like
it, not only violate Palestinian human rights, they violate US laws.
American Friends of Ariel Inc. flouts US laws in two ways.
The first has to do with the structure of the organization, and the
fact that most of these tax exempt 501(c)3 organizations are simply
shells that transfer money to non-exempt organizations abroad, and
the second deals with the exempt purposes set forth by the Internal
Revenue Service (IRS) and Treasury Department.
The rule concerning the use of tax exempt entities as conduit
organizations is clear, and states that "the code would be nullified
if contributions inevitably committed to a foreign organization were
held to be deductible solely because, in the course of transmittal to
a foreign organization, they came to rest momentarily in a qualifying
domestic organization" (Section 170(c)(2)(A)). That is exactly the
case with American Friends of Ariel Inc., and hundreds of
organizations like it, a fact which is abundantly clear upon review
of their publicly available 990 tax forms.
Exacerbating poverty and neighborhood tensions
The second major legal violation occurs because these organizations
fundamentally violate the purpose for which charities can be
organized, namely to provide "relief of the poor, the distressed, or
the underprivileged; lessening neighborhood tensions; eliminating
prejudice and discrimination; defending human and civil rights
secured by law; and combating community deterioration and juvenile
Illegal Israeli settlements, mostly built on expropriated land and
operated with stolen resources, exacerbate poverty and systematically
create an underprivileged class of people. Race-based colonies
inherently increase neighborhood tensions, and they effectively annex
occupied Palestinian land through a system of apartheid
infrastructure that has been detrimental to Palestinian communities
across the West Bank, including occupied East Jerusalem.
The raison d'etre of illegal Israeli settlements is rooted in
institutionalized discrimination, and therefore technically violates
IRS regulations on a daily basis in the same way that Bob Jones
University violated those same regulations barring discrimination
Jones University v United States).
In 1983, the Supreme Court ruled that the IRS had the authority to
revoke the tax-exempt status of Bob Jones University because they
openly discriminated against interracially married individuals. The
court ruled that such behavior was "wholly incompatible with the
concepts underlying tax exemption," and clarified by stating that
"whatever may be the rationale for such private schools' policies,
racial discrimination in education is contrary to public policy."
Fundamental human rights like equality are not confined by
jurisdiction, and organizations operating abroad are similarly bound
to respect and uphold them.
The numerous and flagrant violations of the tax-exempt purposes set
forth by the IRS and Treasury department should be reason enough to
revoke the tax-exempt status of these organizations. It is hard to
imagine the US playing any constructive role as an "honest broker"
when in addition to providing $3 billion in annual military aid to
Israel, Americans are also being forced to subsidize the construction
and expansion of the same illegal settlements that our government is
politely telling Israel are very unhelpful.
Because of the US government's unwillingness to equally enforce the
law, or use the proverbial stick instead of just carrots, money that
would otherwise be going into our national treasury to pay down the
debt or build affordable housing in the US, is instead being used to
construct and defend Jewish-only colonies in the occupied West Bank.
Mike Coogan is a member of Virginians for Middle East Peace.
522 Valencia Street
San Francisco, CA 94110
-------------- next part --------------
An HTML attachment was scrubbed...
More information about the News