Israel’s government is trying to limit international funding of human rights organisations

With the understandable focus on security, it's easy to forget the internal challenges that Israel faces in the hands of a government ready to undermine democratic structures to pursue its own ideological agenda.

One of the most concerning developments proposed by this government is back: a proposed bill that would impose an 80% tax on foreign government funding for civil society organisations

These organisations provide legal aid, foster dialogue between Jews and Arabs in Israel and the occupied Palestinian territories and fight for human rights – work that is integral in ensuring peace, stability and a strong liberal democracy.

Most rely heavily on foreign funding and do not receive funding from the Israeli government.

The new bill would impose punitive taxation on civil society organisations, unless they also receive state funding. It also bars organisations that receive the majority of their funds through foreign state entities from petitioning Israeli courts.

The bill’s explanatory notes claim that non-government organisations (NGOs) benefiting from foreign state donations act as "agents" for foreign interests, justifying these sweeping limitations.

For progressive Israeli civil society organisations, such as the Association for Civil Rights in Israel (ACRI), the Bereaved Families Forum (which the Israeli government has already attempted to ban from the education system), and numerous other groups supported by the New Israel Fund, the implications are dire.

Should this bill pass, their ability to operate would be crippled. Their funding streams would be drastically reduced, their legal standing in the courts nullified, and their very existence threatened. In effect, the Israeli government is attempting to silence its critics by cutting off the resources that enable them to function.

The proposed 80% tax rate on foreign state donations to NGOs would be an unsustainable financial burden, forcing many to scale back or shut down. While exemptions may be granted by the Finance Minister with Knesset approval, this introduces a dangerous element of political discretion, enabling the government to favor certain NGOs while incapacitating others. Such a mechanism risks politicising the non-profit sector and will allow the Israeli government to use funding to suppress dissent.

The justification for the bill, as put forward by its proponents, is to curb foreign interference in Israeli affairs. For a government whose advisors have been helping support the branding of the Qatari government during this period, such a justification is, at best, highly selective.

Critics point out that the bill selectively applies these restrictions to groups that challenge the government while exempting those aligned with official state policies. Notably, private foreign funding—such as donations from individuals, corporations, and Jewish diaspora foundations—remains untouched, highlighting the bill’s political motivations.

The government’s effort to legislate the bill fits into a wider trend of curbing democratic oversight – what former Deputy Speaker of the Knesset, Naomi Chazan termed “the salami method” of death to democracy by a thousand cuts.

At the same time, the government is attempting to make the Judicial Ombudsman a political appointment, a move that would weaken the independence of the judiciary by placing it under government control. The judiciary serves as a critical check on executive power, one whose independence was only preserved thanks to the challenge of ACRI and other NIF grantees, the very organisations this new bill would existentially attack.

The combination of these measures reflects a systematic effort to weaken institutional checks on government power. By restricting civil society organisations, curtailing judicial independence, and prioritising political survival over national cohesion, Israel’s leadership is steering the country away from its democratic principles.

If these trends continue unchecked, they risk fundamentally reshaping the nature of Israeli governance, moving it toward a system where dissent is stifled and state power is consolidated in the hands of a few.

Understanding these developments is crucial for those concerned about Israel’s democratic future. While security concerns and geopolitical challenges dominate headlines, the erosion of democratic safeguards within Israel itself demands equal attention.

Civil society organisations, independent courts, and public accountability mechanisms are essential for preserving the rule of law and protecting the rights of all citizens. The passage of these bills would mark a significant turning point in Israeli politics. It is imperative that the international community, including Australia, takes a firm stance against these anti-democratic measures.

Australia and Israel share a commitment to liberal democracy, human rights, and the rule of law that dates back to Australia’s inaugural vote for Israel’s establishment in 1947. The Australian government must hold Israel to these shared values as it has throughout the course of this war in calling for the observation of international law of all parties. It must go further now and unequivocally condemn these legislative efforts as undermining our shared values.

This bill has been defeated in the past thanks to the pressure of the international community. Without international pressure, Israel risks further entrenching authoritarian policies that erode the foundations of its democracy. It risks losing the principles that bind it to those of us who care about peace, justice and equality across the world.