Despite International Criticism, Israel Passes Contentious 'NGO Bill' Into Law
Critics say law, which mandates special requirements for NGOs that get most of their funding from foreign governments, disproportionately targets human rights organizations.
Justice Minister Ayelet Shaked addressing the Knesset plenum ahead of the vote on the NGO bill,
Israeli NGO law would apply almost solely to human rights organizations
Israel passes controversial NGO bill after marathon Knesset session
Israel's Knesset voted in favor of the so-called "NGO bill" late Monday, after holding a marathon debate over whether to grant final approval to the contentious bill, despite massive criticism both at home and abroad.
The law, which passed its second and third readings 57-48, mandates special reporting requirements for nongovernmental organizations that get most of their funding from foreign governments, and, according to critics, disproportionately targets human rights organizations.
The law, sponsored by Justice Minister Ayelet Shaked with full backing from Prime Minister Benjamin Netanyahu, requires NGOs that receive more than half their funding from foreign governments to state as such in their reports to the registrar of nonprofit associations and in all their official publications. Such publications must also state that a list of the NGO’s donor countries appears on the registrar’s website. NGOs that violate these rules will be fined 29,200 shekels ($7,500).
Prime Minister Benjamin Netanyahu lauded the bill's passing into law, saying that it would "prevent an absurd situation in which foreign countries meddle in the internal affairs of Israel by funding NGOs and without the Israeli public's knowledge.
"Contrary to claims on the left, the bill's approval will increase transparency, will encourage the creation of a debate which truly reflects public opinion in Israel and will strengthen democracy."
The final version of the bill is considerably milder than the original, due to changes introduced by the Knesset Constitution Committee. For instance, the committee decided that the law won’t apply retroactively to donations made this year, but only to donations made as of January 1, 2017.
Moreover, the first report to the registrar of nonprofits will have to be made only six months thereafter. The registrar will then have to publish a list of these organizations and the source of their donations on its website.
The committee killed a provision that would have required representatives of the NGOs in question to wear special name tags while attending meetings in the Knesset or government ministries. It also killed a provision requiring them to state their donor countries at the start of such meetings, but they will still have to provide this information when they register to attend the meetings. They will also have to respond if an MK questions them about their foreign donors.
The entirety of Monday’s plenary session was devoted to the bill. The debate began in the late afternoon and lasted over six hours, with the final vote taking place late Monday night. One after the other, opposition members accused the government of persecuting human rights groups and of trying to silence legitimate criticism of its conduct. MK Tzipi Livni (Zionist Union) warned of the international repercussions Israel will suffer as a result of the bill, which she said "shows us to be worse than any NGO that is forced to say that it's funded by foreign governments."
Shaked, the last to address the plenum after the lengthy discussion, read out the funds transferred by foreign countries to several leftist NGOs. "Imagine if Israel had funded British organizations and encouraged them to back the exit from the EU," Shaked said. "Britain has national honor. It would not have allowed Israel to meddle in its internal affairs."
According to the Justice Ministry, there are only 27 organizations in Israel that get more than half their funding from foreign governments. Of these, 25 are human rights organizations identified with the left.
“Human rights organizations are completely transparent,” argued MK Dov Khenin (Joint List), one of the bill’s most vocal opponents. “All their contributions are reported, and therefore, there’s no real reason for the government’s NGO bill except to divert the discussion and incite the public.”
“Where is transparency really needed? In extreme right-wing organizations,” he added, noting that these organizations receive millions of shekels from private overseas donors, “but there, the government has chosen to impose secrecy and obscure the money trail.”
Many European parliamentarians have voiced grave concern about the bill and warned that it could undermine cooperation between Israel and Europe.
Comment: US Equivalent There is no prohibition in U.S. law on foreign funding of NGOs. The only disclosure is to the Internal Revenue which in the US is Public disclosure . The arguement that was not emphasized in the Knesset debate is that NGOs even those bordering on being openly Anti Zionist and Anti Israel significantly enhance how Israeli Democracy is viewed from abroad. The NGO Law is more nuisance than inhibiting. It does not prevent Israeli NGOs from receiving Foreign Government Funding. It simply says, Hey Ho NGO Disclose . and hey ho Ayelet Shaket , the Justice Minister whose Bill this is, NGOs in Zion were already disclosing all sources of finance public-ally and to the Israeli IRS and VAT Services. Nice that Disclosure of foreign sourced finance in particular from Governments is now a legal requirement of all NGOs ( both left and right wing) but was it necessary to shoot itself in both feet getting their . Is this a pop eye badge for Bayit Yehudi and Ayelet Shaked...... hell no and neither will she and this bill be recipients of lolly pops either.
Non-Governmental Organizations (NGOs) in the United States
The United States firmly believes that a robust civil society—independent of state control or government involvement—is necessary for democracy to thrive. From the earliest days of U.S. history, civil society organizations have played a key role in protecting human rights, human dignity, and human progress. As Secretary Clinton has said, “civil society not only helped create our nation, it helped sustain and power our nation into the future.”
Civil society in the United States encompasses a broad range of organizations that allow individuals to achieve their social, economic, and political aspirations through organizing themselves unhindered, according to their own interests, needs, and priorities. We are committed to the idea that the public interest is served best when private citizens and members of civil society are able to choose the aims, organizations, and causes they support.
Accordingly, U.S. regulations that impact civil society organizations are designed to facilitate and support—not to discourage—the formation of non-governmental organizations (NGOs). U.S. regulations are designed specifically to avoid making judgments about the value or work of any given NGO. U.S. and international NGOs represent virtually every conceivable ideology, political cause, religion, social issue, and interest group. Some are deeply engaged in the political process; others are nonpartisan, operate far from the political process, and are involved only in social issues.
The following overview explains how NGOs operate in the United States, and how they are regulated.
What is Civil Society? Civil society includes many forms of social organizations formed voluntarily by citizens to advance shared goals or interests. This includes independent public policy research organizations, advocacy organizations, organizations that defend human rights and promote democracy, humanitarian organizations, private foundations and funds, charitable trusts, societies, associations and non-profit corporations. It does not include political parties.
Areas of Activity for NGOs in the United States
Approximately 1.5 million NGOs operate in the United States. These NGOs undertake a wide array of activities, including political advocacy on issues such as foreign policy, elections, the environment, healthcare, women’s rights, economic development, and many other issues. Many NGOs in the United States also operate in fields that are not related to politics. These include volunteer organizations rooted in shared religious faith, labor unions, groups that help vulnerable people such as the poor or mentally ill, and groups that seek to empower youth or marginalized populations. Indeed, NGOs exist to represent virtually every cause imaginable. Their sources of finance include donations from private individuals (American or foreign), private sector for-profit companies, philanthropic foundations, or grants from federal, state, or local government. Sources of finance may also include foreign governments. There is no prohibition in U.S. law on foreign funding of NGOs, whether that foreign funding comes from governments or non-government sources.
Legal Framework for NGOs in the United States
Starting an NGO
In general, any group of individuals may come together to form an informal organization in order to jointly discuss ideas or common interests, and they can do so without any government involvement or approval. If a group seeks particular legal benefits, such as exemption from federal and state taxation, it may choose to formally incorporate and register as an NGO under the laws of any of the 50 U.S. states.[1] Individuals do not need to be U.S. citizens to create a new NGO.
Registration requirements, and forms of organization, vary from state to state, but are generally very simple, so that anyone can incorporate an NGO in just a few days at the state level. The process typically involves providing a short description of the organization, its mission, name, the address of an agent within the state, and paying a modest fee. Most states have a general incorporation statute that makes this process a routine matter, not subject to approval by the legislature or any other government official. This approach removes the risk that a government official might abuse his or her power in determining which organizations should be allowed to exist or not. In several states, certain NGOs formed for religious, educational and other charitable purposes must also register with a state charity official charged with protecting charitable assets and regulating the charitable solicitation of funds from the public.
Tax-exempt Status
Many NGOs in the United States are qualified as exempt from state and federal taxes. This legal status makes it easier for NGOs to operate as nonprofit organizations because they do not have to pay tax on the income (funding) they receive. If an NGO wants to receive exemption from income taxation from the U.S. Federal Government, the NGO applies to the Internal Revenue Service. There are many types of NGOs listed in the Internal Revenue Code that are eligible for tax-exempt status, and the type of benefits available depends on the type of NGO and the type of activities conducted. In general, NGOs organized exclusively for educational, religious, charitable, scientific, testing for public safety, literary purposes, and certain sports, that are non-profit and do not play a partisan political role (e.g., by supporting candidates for election or attempting to influence legislation), can apply to receive exemption from federal income taxation on all income related to these purposes.
NGOs organized for political purposes receive limited tax exemption only for income received from contributions solicited from the general public, membership dues, or fundraising events. State governments often use the same standards for applying state income tax laws. Organizations seeking exemption from state taxes generally must file applications for exemption with the state tax authorities. Another feature of tax-exempt status is that contributions to some of these organizations may be tax deductible for the donor. This provides an important incentive for citizens and corporations to donate funds to these groups. It is important to note that the federal and state governments do not judge the value of an organization’s specific activity or mission in determining that these organizations are eligible for tax-exempt status. The U.S. government generally does not seek to influence an organization’s mission, determine how an NGO is structured, approve who runs it or serves on its board, or direct its financial management. Instead, U.S. law generally regulates organizations by requiring regular public disclosure – through filing of information returns with the government – of an organization’s funding, activities, and leadership. The regulations do not allow government officials to revoke permission to operate or tax-exempt status based on judgments about the merits of an organization’s mission, activities, budget, or leadership.
Freedom of Expression and Association in the United States
There is generally very little restriction on the freedoms of expression and association of NGOs under U.S. law. Although NGOs engaged in political activities may not qualify for the most preferential tax-exempt status, the U.S. government thus does not prevent NGOs from undertaking advocacy for political issues or criticizing the government. The U.S. constitution provides for robust protections for freedom of expression, and leaves open space for debate that is necessary in democratic societies, including protecting ideas that offend, shock, or disturb.
The United States has many laws and regulations on issues including immigration and visas, campaign finance and lobbying, terrorism financing, and money-laundering that may affect NGOs. However, these laws are applicable to everyone and to all organizations, not exclusively NGOs.[2]
Foreign NGOs in the United States
The United States hosts many foreign NGOs that do important and valuable work in our country. Foreign NGOs can register in the U.S. by filing a simple form as a non-profit entity. Some operate as non-partisan foundations, while others are affiliated with foreign political parties and operate as think tanks and liaisons to U.S. organizations concerned with foreign policy. These foundations organize programs for their respective politicians when they come to the United States, and organize conferences, youth exchanges, and fellowships/scholarships. They also provide funding to and conduct joint projects with American NGOs. Funded entirely by foreign governments, these foreign party institutes do not have special restrictions on their activities in the United States, can conduct meetings and publish materials freely, and are not required to provide reports to other U.S. federal government agencies, provided they register and file tax returns according to the requirements described below.
As Secretary Clinton said in Krakow in July 2010, “We welcome [foreign] organizations in the belief that they make our nation stronger and deepen relationships between America and the rest of the world. And it is in that same spirit that the United States provides funding to foreign civil society organizations that are engaged in important work in their own countries. And we will continue this practice, and we would like to do more of it in partnership with other democracies."
Regulation of Foreign Funding of NGOs and Foreign NGOs
Foreign Funding of U.S. NGOs As Secretary Clinton has said, “in the United States, as in many other democracies, it is legal and acceptable for private organizations to raise money abroad and receive grants from foreign governments, so long as the activities do not involve specifically banned sources, such as terrorist groups.” As a general matter, U.S. law imposes no limits or restrictions on the receipt of foreign funding by NGOs operating in the United States. Of course, laws that are generally applicable to all Americans may apply to NGOs, such as restrictions on receiving contributions from a terrorist organization. There are also restrictions on direct financial support of political candidates by foreign individuals.
Foreign NGOs Operating in the United States
Before foreign organizations are able to conduct activities in any particular U.S. state, they must apply for a license to conduct business in that state. This process is similar to the incorporation process for U.S. NGOs described above. Like domestic NGOs, foreign organizations can apply to the Internal Revenue Service for recognition as charitable or social welfare organizations under the Internal Revenue Code. Although such organizations are exempt from paying taxes on their income, contributions to foreign organizations are not tax-deductible (in the absence of a special treaty providing otherwise with the country of the NGO’s origin).
The Foreign Agents Registration Act (FARA)
This act requires any person or organization (U.S. or foreign) that is an “agent of a foreign principal” to register with the Justice Department and to disclose the foreign principal for which the agent works. Foreign principals can include governments, political parties, a person or organization outside the United States (except U.S. citizens), and any entity organized under the laws of a foreign country or having its principal place of business in a foreign country. FARA requires people acting as agents of foreign principals under certain circumstances to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts, and disbursements in support of those activities.
Some governments have misinterpreted FARA as restricting the ability of civil society to register and operate. On the contrary, FARA does not impose a tax, nor does it set a cap on foreign funding that an organization can receive. FARA covers all "persons," including individuals, corporations, and associations. FARA also includes a number of exceptions, including for persons whose activities are in "furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts." FARA also exempts from registration other NGO activities, such as certain solicitations of funds for medical aid, or for "food and clothing to relieve human suffering."
NGO Relations on the Local and International Levels
Once an NGO has registered according to the requirements summarized earlier, the U.S. government does not interfere with how the NGO accomplishes its purposes. NGOs are free to recruit participants for their organizations as they wish, and need not provide notification to any government agency about its membership, activities, or outreach. Like other U.S. organizations and companies, U.S. NGOs must refrain from working with governments or individuals under U.S. sanctions, as well as with groups designated as foreign terrorist organizations, but otherwise, they are free to collaborate with foreign NGOs or foreign governments to achieve their purposes. There are no regulations that restrict U.S. NGOs from attending conferences abroad, finding donors overseas, or performing work internationally.
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