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Story Publication logo December 7, 2015

An Inside Look at How Haaretz Tracked the Flow of U.S. Donations to Israeli Settlements

Silwan neighborhood..

U.S. administration defines Jewish settlements as an obstacle to peace, yet allows millions in...

Media file: 959650_an_israeli_flag_hangs_on_the_wall_of_a_building_that_was_taken_over_by_israeli_settlers_after_palestinian_families_were_evicted_in_silwan_ap.jpg
An Israeli flag hangs on the wall of a building that was taken over by Israeli settlers after Palestinian families were evicted in Silwan. Image / AP.

At the center of the Haaretz investigation into private U.S. funding of settlements stands a network of tax-exempt charities that has funneled hundreds of millions of dollars to Jewish communities in the West Bank.

These findings add a new element to the broader debate in the United States on the regulation of charitable organizations - a system that has sparked political storms, been abused by funders of terrorism, and even ended up in the sights of comedian John Oliver.

The hundreds of millions of dollars transferred from New York, Miami, Texas, ending up in Hebron or the Old City of Jerusalem all come from organizations for which donations are tax deductible in the United States.

Hamas, UFOs and John Oliver

Incentivizing support for non-governmental organizations that operate on a not-for-profit basis is common in many countries.

Under U.S. law a private citizen cannot claim tax benefits for donations made to organizations outside the United States. However, U.S.-based charitable groups, known as 501(c) (3) organizations after the section of the Internal Revenue Code that regulates them, are exempt from paying taxes and can transfer funds for religious, educational and similar purposes, both within and outside the country. Donors who declare such donations to U.S. tax authorities can reduce the amount of income tax they pay, proportionately to their contribution.

While 501(c) (3) charities do not pay tax on their income, they must file a report to the IRS detailing their finances and activities. Much of the findings in the Haaretz investigation come from analyzing these documents, as well as reports filed with Israeli authorities by local non-profits that support the settlements and received funds from their U.S. counterparts.

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