TRADITION Questions: Tax Battles and Defending Zionism

Click here to read about this series.

What is it?

On August 10, Canada’s tax authority (CRA) revoked Jewish National Fund (JNF) Canada’s charitable status, removing its ability to issue tax receipts for donations. Established in 1967 and one of Canada’s oldest Jewish charities, JNF is known for its tree-planting and environmental work in Israel, along with building playgrounds for children. Its annual Negev Dinner has long been a highlight of Canadian Jewry’s social calendar. CRA’s published notice in the government-issued Canada Gazette claimed that JNF’s tax law violations included “providing funds to non-qualified donees.” Pro-Palestinian activists credit themselves for influencing the government auditors to crack down, after a multi-year campaign called #StopJNFCanada. JNF Canada is appealing this decision.

The Canadian Jewish News, reviewing 358 pages of correspondence between CRA and JNF, summarized the reasons for the revocations as:

• The auditors doubting that JNF Canada carries out its founding charitable purpose.
• The charity not being able to prove it maintained proper control and direction over where or how its on-the-ground agents in Israel, mainly the Jerusalem-based Keren Kayemeth LeIsrael/Jewish National Fund, were using the Canadian money.
• Concerns over missing records, superficial paperwork and travel expenses for Canadian office staff.
• Why financial records were only kept in Israel, which is illegal.
• Why documents were provided to auditors only in Hebrew.
• Accusations that JNF Canada was deliberately stalling on addressing the agency’s concerns dating back to the most recent audit, begun in 2014.

Tax battles over support for Israel extend beyond Canada. In February 2018, the Internal Revenue Service (IRS) apologized to a Jewish organization (Z Street) for the delayed processing of the group’s application for tax-exempt status. This was part of a settlement after the non-profit corporation (dedicated to educating the public about various issues related to Israel and the Middle East) alleged that the IRS applied heightened scrutiny to applications for tax-exempt status received from organizations connected in any way to Israel, and applied this policy to Z Street’s application, resulting in delay.

Why does it matter?

Tax policy is only one battlefield of modern lawfare. Jewish organizations are not just on the defensive when it comes to such scrutiny and tactics. They take legal action against individuals and organizations that provide material support to terrorist networks. Among these organizations are Shurat Hadin, The Lawfare Project, and the Middle East Forum’s Islamist Watch. They seek to expose and disrupt funding and recruitment for terrorist groups within Western Democracies. While much attention has been given to legally undermining terrorist groups, less consideration has been given to defending Jewish groups from these discriminatory attacks. These battles often take place in IRS and CRA audit rooms. Technical and procedural violations can be the pretexts that destroy years of investment and supportive relationships. What can be done to better safeguard our institutional infrastructure from such subversion?

Governments support charities through their tax policies. They do so to encourage the social good that these non-profit organizations produce. The deductibility of contributions is usually justified as a subsidy for charitable activity, an appropriate adjustment to the tax base, or both. Donors may choose which charitable activities to support. Thus, because part of the cost of donations is borne by the government through reduced revenue, donors effectively have some say in which activities the government supports. The notion of charity as a social “good” within society is the basis for this support. Debates over charitable status thus become questions about what constitutes “the good” in society. CRA’s decision to revoke JNF’s status and the American government’s heightened scrutiny for Israel-related charities suggests that opponents of the Jewish State are succeeding in challenging Israel as a “good.” What lessons can be learned from JNF Canada to better understand the role of Jewish charities in helping to define the good within society?

What questions remain?

Beyond the charitable work of organizations like JNF, what other communal activities and infrastructure are vulnerable to legal attack? What can be done to protect them before they come under assault? How can our understanding of communal security expand beyond physical and cyber security to more fully incorporate legal protections? How must the operations of Jewish organizations change to avoid vulnerability to adversarial investigation?

The JNF Canada’s 1967 founding filings with Canadian tax authorities indicate that it was an organization meant to alleviate poverty and not to plant trees. A JNF Canada founder (whose name was not listed in the documents) states:

I have put the word “planted” in quotation marks. You will recall that on the phone I referred to the practice of “planting” trees as a “gimmick”. Actually, all monies raised by the Jewish National Fund of Canada are used to pay daily stipends to indigent workers. So we “plant” the trees to the extent that we give a tree certificate to the donor and use the money to give employment to the man who is doing the planting.

The reason for using this “gimmick” was explained in a 2018 JNF Canada letter to the CRA Charities Director: “Experience has shown the Charity that donors are more likely to provide donations for charitable projects than simply relieving poverty through the employment of Indigent Workers.”

What similar “gimmicks” exist in other corners of the Jewish philanthropic world? What advantages and disadvantages emerge from such concealment of an organization’s true purpose?

Chaim Strauchler, rabbi of Rinat Yisrael in Teaneck, is an Associate Editor of TRADITION. He has contributed to JNF Canada and was honored along with other Canadian rabbis by JNF at its 2021 Negev Dinner in support of Home for Life, an organization that builds homes for people with physical disabilities and reduced cognitive abilities.