Israeli public interest group accused of improper political activity

    A large nonprofit donor to progressive causes in Israel is facing what will likely be a costly litigation disputing its financial activities in Israel. The New Israel Fund is being sued by the Zionist Advocacy Center, a fellow Israel public interest group that alleges the NIF engaged in political activities by funneling money to organizations opposed to Israeli prime minister Benjamin Natanyahu. Per the strictures of 501(c)(3) the NIF, as a nonprofit organization, is prohibited from lending its support to political candidates. At the current phase of the lawsuit, the NIF is appealing District Court Judge Woods’ decision to not dismiss the case against them: Judge Woods ruled that the plaintiff has argued sufficiently that the NIF may have taken the actions alleged in the lawsuit to allow the action to proceed. It remains to be seen if the NIF will have better luck arguing in their Second Circuit appeal that allowing discovery to proceed would constitute a pointless expenditure.

For more information, see the Law360 article on the subject by David Hansen: https://www.law360.com/tax/articles/1360859/ny-israeli-group-seeks-appeal-of-challenge-to-tax-exemption

By David Brennen, Professor of Law at the University of Kentucky