Who should decide what is in the public interest?
May 13, 2021
When, a century ago, the US Congress, needing to pay the cost of WWI turned to the Federal Income Tax, they feared that they might be harming charitable organizations. Wealthy donors, facing a bill from their government, would turn away from the donations that were supporting a wide range of organizations that were serving people in ways the government would not. To combat this feared harm they created a premium, the charitable tax deduction.
Senator Henry F. Hollis, speaking in support of this innovation, laid this out very clearly as the nation’s leadership debated the details of this new tax. “Look at it this way: For every dollar that a man contributes for these specific charities . . . the public gets 100 percent. . . . If it were undertaken to support such institutions through the Federal Government or local governments and the taxes were imposed for the amount . . . instead of getting the full amount they would get a third or a quarter or a fifth.”
In 2021 the charitable deduction remains, tweaked and tuned over time, but still in place to reward those with the money and desire to give a discount on their taxes. The reason that we continue to do this remains rooted in the concept of “public benefit”. It has been seen as in the public’s benefit to encourage charitable contributions and reduce the responsibilities that might otherwise become those of government.
Over the course of 100 years, we have seen the definition of the range of activities that fit this objective expand. While they have started when the vision of charities worthy of this public support included organizations that help the poor, take care of the sick or treat the ailing they now include a much broader range of organizations; organizations whose missions seem more political and ideological than focused on serving the “public.”
During a week in which the decades-long conflict between Israel and Palestine has tragically again become a shooting war, the “public’s interest” has inclu9ded supporting organizations that are fomenting the violence? Is it really in the American public’s interest to have tax-deductible donations help central to, as described by the Israeli newspaper Haaretz, weeks of violence between Israelis and Palestinians, including attacks by Palestinians on Jews in Jerusalem and Jaffa and nightly clashes between Palestinian youth in East Jerusalem and police after the unexplained closing of the stairs near the Damascus Gate, a longtime gathering place for Palestinian teens and young adults during Ramadan”?
According to Rabbi Jill Jacobs is the executive director of T’ruah, the “Central Fund of Israel, the largest by far of the U.S. foundations channeling funding to Israeli extremists, made close to $40 million in grants in the last year for which tax information is available…Grantees include Honenu, which defends Israelis arrested for terrorism and has also given direct cash to Israelis convicted of terrorism; Od Yosef Chai, a yeshiva infamous for violence against Palestinians, one of whose rabbis was recently convicted of incitement; the Israel Land Fund, which uses semi-legal or non-legal means to acquire Palestinian property; Mishmeret Yesha, which trains and outfits vigilantes in the West Bank; and Im Tirtzu, which incites against Israeli human rights leaders.” Funding from the Central Fund is believed to have been used to support the eviction of Palestinian residents in east Jerusalem to replace them with Jewish settler, an action which helped light the fuse of the current violence.
The Central Fund dutifully files their IRS Form 990s, the tax filing required of all nonprofits. We trust them to report what they do with the funds they have been given. The Central Fund describes its activities this way to the Federal Government: “PROMOTING CHARITABLE ACTIVITIES IN ISRAEL” On its website it goes further, “Our goal is to make sure your donations go to charitable causes in Israel…Our reason for being is the promotion and advancement of the people of Israel in the land of their ancestors.”
Honenu, which Rabbi Jacobs described as defending “defending Israelis arrested for terrorism and has also given direct cash to Israelis convicted of terrorism,” makes the most of The Central Fund’s charitable status. On its web site, it tells those wanting to provide it with funds that “Your contribution is tax-deductible (IRS Tax ID number 13-2992985) Please make checks out to: Central Fund of Israel Donations made in this way are allocated to providing legal defense only & not for other purposes.“
So why do these activities remain tax-deductible? Why do they deserve the ability to take money from our national priorities and funnel them toward their particular and very questionable activities?
With a severely underfunded IRS and a lack of will to confront wealthy donors (who may also be political supporters), there is little, if any oversight. There is no meaningful process to assess whether this approach, ceding to organizations and their donors the ability to determine what is in the public’s interest, works.