On March 1, eleven Israeli political NGOs addressed a letter to Members of the European Parliament (MEPs), calling attention to Knesset consideration of NGO funding transparency issues.  The letter misrepresents the proposed “Bill on Disclosure Requirements for Recipients of Support From a Foreign Political Entity - 2010” and falsely depicts it as anti-democratic and anti-human rights.  Ironically, in criticizing what they allege are threats to democratic dialogue in Israel, these NGOs have responded by a) boycotting a Knesset conference held to discuss the issue, and b) requesting EU intervention. All of the NGO signatories to this letter receive significant funding from Europe, and are therefore promoting their own interests in seeking to maintain the conditions that have led to this financial support.
Background- European Funding for Israel NGOs
The European Union and European governments provide millions of Euros annually to Israeli NGOs involved in intense political activity in Israel, using both direct allocations and secondary transfers from government-funded organizations Unfortunately, this NGO funding process is characterized by the absence of transparency and accountability, despite its major impact on Israel and the Middle East.
The EU recently announced new grantees under its “European Instrument for Democracy and Human Rights” (EIDHR). Grantees include: Israeli Committee Against House Demolitions (€169,661 euro), Yesh Din (€226,00), Machsom Watch-Women’s Fund for Human Rights (€77,632), Adalah (€627,526), The Association for Civil Rights in Israel (€231,769), The Arab Center for Alternative Planning (€157,319), and Bimkom (€174,116). 
All of these NGOs are active in promoting highly politicized objectives. As a result, the lack of transparency in EC and European government funding practices for these NGOs have created a great deal of concern in Israel, as reflected in the Knesset discussion. Indicative of the widespread concern, the Knesset bill seeking greater transparency was sponsored by members of four out of the five largest parties, spanning both the coalition and opposition.
Examination of NGO Claims Opposing Bill
Claim: The bill is not about transparency but about harming Israeli democracy by stopping European government funding for NGO activities.
Response: The proposed law in no way prohibits or limits the channeling of European government money to Israeli NGOs. Its aim is to ensure that this substantial level of foreign government support for a narrow range of political organizations, which is unique to Israel and does not exist in any other democratic framework, takes place in full public view.
Claim: It is inappropriate to define “organizations serving the public good” and “social change organizations” (as the 11 organizations signed on the letter define themselves) as political organizations.
Response: The signatories include many NGOs which explicitly oppose the policies of the elected government of Israel. These NGOs actively lobby members of the Knesset, present their opinions in committee hearings, promote and oppose legislation, seek court injunctions against government ministers, and condemn Israeli policy in external frameworks, including the UN, the US Congress, and the European Parliament. Many of the issues on which they focus are at the core of the Israeli political and public debate, including issues of war and peace, and responses to terror. Their self-definition as “organizations serving the public good” is a subjective one: that claim could just as easily be made by NGOs on the other side of the political divide, or by groups that advocate on many other controversial political issues.
Israeli law defines a public institution for tax-exemption purposes (Income Tax Order 9(2)) as one working towards a public purpose relating to religion, culture, education, science, health, aid or sport. The NGOs self-definition as “social change” or “human rights” organizations should not obscure the fact that many of their activities employ explicitly political means for explicitly political ends.
Claim: The law is unnecessary and redundant. As the NGO letter puts it, “each nonprofit organization in Israel is already required to list its donors and other financial information on its website and to report annually to the government, specifying whether foreign governments have donated money.”
Response: This issue is addressed clearly in the explanatory notes to the bill, but ignored in the NGO letter. As explained in the notes, “today, a duty to report the receipt of funds is obligatory for non-profit organizations (amutot) only, despite the fact that many bodies undertaking political activity are not registered as non-profit organizations; even this limited duty can be overridden by the transfer of funds through a third-party, or by delaying the report to the point where it is no longer relevant.” Some NGOs, including Breaking the Silence and H. L. Education (the so-called Geneva Initiative), register as companies to avoid the full reporting requirements.
In addition, under current requirements, the public may only be informed of funding developments years after the fact. The new law is aimed at providing this information in a timely manner.
Claim: The law is unrealistic and unnecessary - “To give an example: an executive director of an organization is invited to be interviewed on the radio to share her views on a new measure which negatively impacts a sector of society. In the 30 seconds allotted for her comments, she would also need to announce that foreign government donors support the work of her organization.”
Response: The bill would require that an organization supported by a foreign governmental entity note its status “within the framework of a discussion or meeting involving political activity.” The NGO signatories to the letter frequently engage in large and expensive advertising campaigns, distribute elaborate publications, and take part in debates in political forums and the press. The hypothetical case discussed in the letter is an example of reductio ad absurdum, and distorts the important democratic issues involved.
Claim: The definition of “political activity” in the bill is too vague.
Response: The definition of political activity mirrors the standard adopted by the United States, as formulated in the Foreign Agents Registration Act (22 U.S.C. 611 (o))
Claim: “Members’ organizations will suffer further damage from the law, as members and volunteers will be deterred from joining or even cancel their membership. This is because the law applies to “principle activists of the recipient of support” - a definition that includes members in members’ organizations.”
Response: Here too the NGOs misrepresent the proposed law. The law defines a principal activist as a “decision maker or member of the body that determines the nature of the activity of the recipient of support, including the director, member of the managing board, partner with the exception of a limited partner, managing director and authorized signatory.” The claim that rank-and-file members will be affected is inaccurate.
Claim: The penalties provided by the bill are draconian and illogical.
Response: As the bill makes clear (see art. 13), the penalties are based on those already extant in well-established Israeli law regarding similar infractions.
Claim: The focus on funding only from foreign governments is unbalanced and unjustified. The law should apply to funding from all non-Israeli sources, whether individuals or governments.
Response: While transparency regarding all funding for NGO activity is important in democratic societies, direct or indirect funding from foreign governments for highly controversial political causes constitutes a particular form of interference. Foreign governments have their own policy agendas and interests, and this is often reflected in funding decisions. It is for this reason that many countries, including the US (through FARA), closely regulate foreign government involvement in domestic political activity.
This foreign government intervention in Israeli external and domestic policy, often hidden from the public eye, has a significant impact on Israeli democracy. Inter alia it serves to greatly amplify the voices and action potential of groups on certain [European-favored] sides of policy debates, beyond what their actual base of support within Israeli society would allow.
Through their highly exaggerated claims, these NGOs acknowledge that there is something improper about the lack of transparency in the foreign governmental funding that they receive. In their letter to the MEPs they state, “public appearances will entail disclosure of foreign (largely European) governmental funding in a manner that ‘marks’ organizations as political and may delegitimize them in the public.” If there was nothing problematic about such foreign governmental funding, then the NGOs would have no reason to fear its publication.
In a democracy, rights such as freedom of expression and debate must be preserved. At the same time, informed public debate requires a high degree of transparency regarding sources of funding, particularly concerning the intervention by one democratic state to change the policies of another. It is for this reason that the transparency surrounding foreign government funding for political NGOs needs to be ensured.
 The letter was signed by Adalah, Association for Civil Rights in Israel, Bimkom, B'Tselem, Gisha, HaMoked, Ir Amim, Physicians for Human Rights- Israel, Public Committee Against Torture in Israel, Rabbis for Human Rights and Yesh Din.
] The law passed its initial reading on February 17, 2010 by a vote of 58 to 11, and was sent to the Knesset's Constitution, Law and Justice Committee for discussion.
] The full listing can be found at http://www.delisr.ec.europa.eu/english/content/cooperation_and_funding/4.asp
. For an extensive analysis of the phenomenon of European funding for political activity in Israel, see NGO Monitor, “Trojan Horse: The Impact of European Government Funding for Israeli NGOs,” available at http://www.ngomonitor.org/article/trojan_horse_the_impact_of_european_government_funding_for_israeli_ngos