Rules Are for Schmucks: Why Is the Jewish National Fund Tax-Exempt?

Imagine an organization called the “Mississippi White Christian Fund.” (I hate to pick on Mississippi, but with the laws they’ve been passing there, they deserve it.)

The purpose of this imaginary organization is to make Mississippi a haven for white Christians who feel persecuted elsewhere. To that end, it solicits and collects money—hundreds of millions of dollars—from sympathetic white Christians around the world. This money is used to buy up land, construct housing, and then lease the housing out. To white Christians, only. Blacks, Asians, and humanists need not apply. The organization buys and sells land periodically, but its bylaws strictly forbid sale to anyone other than a white Christian—ever.

The organization grows so wealthy that it comes to own 13 percent of the entire state of Mississippi, which is meticulously cleansed of everyone other than white Christians. It concentrates its focus on land acquisition in parts of Mississippi where white Christians are relatively few and far between—a kind of blockbusting in reverse, to encourage the undesirables to leave.

Sometimes, when mere money won’t do the trick, it connives with the Mississippi government to use violence to confiscate land from the “wrong” kind of people, so the “right” kind of people can move in. Generally, though, it operates in secret, lest bad press should leak out and damage its image and fundraising appeal.

Should this imaginary organization be tax exempt? In thinking about that question, be aware that the most valuable part of tax exempt status is not the actual exemption from tax payment itself. Most tax-exempt nonprofits are exactly that—nonprofit, or close to it—because they devote most of their revenue to their social purpose, in this imaginary case the exaltation of the white race, leaving little or no “profit.” No, the real benefit of nonprofit status is that it makes donations to the organization tax deductible for the donors, a factor making a huge difference in how much revenue it’s able to generate from those donors.

According to the Supreme Court in the Bob Jones University case, an organization like this should not be tax exempt. The court ruled 8-1 that tax exemption should only be available to entities that do not act against “public policy.” Bob Jones University lost its exemption because “its racial policies violated the clearly defined public policy, rooted in our Constitution, condemning racial discrimination.” It would be hard to find many people who think that the imaginary organization described here should be any more tax exempt than Bob Jones was. Even the lone dissenter in the Bob Jones University case simply made the point that it should be Congress, not the court, that denies tax exemption to blatantly discriminatory organizations.

So what are the differences between this imaginary “Mississippi White Christian Fund” and the real-world Jewish National Fund? Basically two: (1) the Jewish National Fund promotes Jewish population in Israel rather than white Christian population in Mississippi; and (2) the Jewish National Fund is definitely tax exempt, while the imaginary Mississippi White Christian Fund would not be.

The Jewish National Fund has been in existence since 1901, a time when Jews were a tiny minority in what was then called Palestine. Its stated purpose since day one has been to acquire and improve land for the sole benefit of Jews there. According to Human Rights Watch, “The JNF has a specific mandate to develop land for and lease land only to Jews. Thus the 13 percent of land in Israel owned by the JNF is by definition off-limits to Palestinian Arab citizens.” JNF itself boasts that its purpose is not to act for the good of all residents of Israel, but for the good of Jews only.

The tax-exempt status of the Jewish National Fund was challenged unsuccessfully five years ago, and is being challenged again now, in a complaint filed by the National Lawyers Guild. Tax law experts say these challenges have little hope of succeeding, because no precedent supports the “public policy” theory on which they are based being extended to public policies outside the borders of the United States. This reasoning makes no sense at all. If Americans can get huge tax deductions for making contributions to organizations that perform their missions outside the United States, then why shouldn’t the “public policy” constraint apply with equal force outside the United States as well?

In fact, JNF is acting contrary to America’s long-stated foreign policy, as well as to our principles of domestic policy. For decades, administrations of both parties have officially insisted that Israel cannot simply annex the territories it conquered in 1967, but must negotiate with the victims of that conquest toward a final settlement that involves giving most if not all of them back. Now we have an Israeli government boldly announcing that it has no intention of doing that, ever, with respect to the territory it conquered from Syria. This move brought quick condemnation from both the unanimous United Nations Security Council and the United States. There can be no doubt that permanent Israeli confiscation of the Golan Heights is contrary to United States public policy. And who do we see boasting about its role in developing the stolen territory of the Golan Heights for the benefit of Jews only? The Jewish National Fund, of course.

It has also been the policy of the United States, for decades, to oppose continued Israeli settlement activity in the occupied West Bank, which makes the possibility of ever negotiating a peace with the Palestinians vastly more difficult. As long ago as 1980, our Secretary of State determined that “US policy toward the establishment of Israeli settlements in the occupied territories is unequivocal and has long been a matter of public record. We consider it to be contrary to international law and an impediment to the successful conclusion of the Middle East peace process.” Israel regards this opposition as a joke – they go out of their way to rub our noses in their defiance. What a chuckle they must get when they stop to think how they are using American tax deductions to defeat American policy by financing the displacement of thousands of West Bank Arabs for the benefit of Jewish settlers.

Human Rights Watch carefully documents cases in which land is simply confiscated from Arab residents, then given over to Jewish owners. According to an article in the Israeli publication Haaretz, some 247,000 acres of JNF land was confiscated from previous Arab owners. Of course, even stealing can’t be done for free. It takes an administrative apparatus to carry it out efficiently. That apparatus is paid for by tax deductible dollars flowing from America into the Jewish National Fund. These tax deductions help balloon our federal deficit, which amounted to $439 billion last year. Your grandchildren will be the ones who foot the bill for today’s Israeli race-cleansing.