Israel’s NGO Proposal: New Rules on Foreign Funding and Legal Access

In May 2025, Israel’s Constitution, Law, and Justice Committee began debating a highly controversial bill that seeks to restrict foreign governmental influence on Israeli society. Introduced by Likud MK Ariel Kellner and backed by Committee Chair Simcha Rothman, the proposal would impose an 80% tax on donations from foreign political entities to Israeli non-profit organizations that do not receive state funding. This means that for every $100,000 donated by a foreign government, only $20,000 could be used by the organization. The only exception would be if the donation is approved for a special exemption by the Finance Minister and the Knesset Finance Committee. Additionally, the bill would strip these organizations of legal standing in Israeli courts, most notably the High Court of Justice (Bagatz), which hears constitutional and human rights cases, thereby preventing them from challenging government actions if most of their funding comes from foreign governments.

Supporters view the bill as a way to reduce foreign political influence and ensure that public advocacy and legal action come from within Israeli society. Opponents counter that it would weaken civil society by restricting NGOs that depend on international support for human rights and legal advocacy.

Introduced during a politically volatile time marked by judicial reform efforts and widespread unrest, the bill has quickly become a focal point of debate in Israeli politics. At its core is a fundamental question: how should a democratic society balance concerns about foreign influence with the need to protect civil liberties and civic participation?

Supporters of the bill argue that it is a necessary step to protect Israel’s sovereignty, particularly in times of war or national crisis. They claim that foreign governments are using non-profit organizations as proxies to interfere in Israeli politics, influence public opinion, and shape national security policy. These governments are not neutral philanthropists but political actors with their own agendas.

They point to examples of foreign-funded NGOs filing lawsuits that allegedly challenge IDF operations, protect convicted terrorists, or oppose other Israeli policies, and suggest that such legal actions are funded not by concerned citizens but by outside governments hoping to pressure Israel into changing its behavior. According to data presented in the committee, nearly 1,000 petitions have been filed in recent years by NGOs funded by foreign entities, roughly one every three days. Supporters argue this volume of litigation, backed by outside funding, clogs the court system, diverts military and legal resources, and ultimately undermines Israel’s ability to make sovereign decisions in moments of crisis.

Supporters argue the bill isn’t about silencing dissent but about protecting Israeli democracy. By drawing a clear boundary between internal advocacy and external political influence and limiting legal standing and financial dependence on foreign funding, they believe the law ensures national policy is shaped by Israelis.

Opponents of the bill view it as a dangerous overreach that threatens Israeli society and undermines democratic norms. They argue the law targets NGOs that advocate for human rights, minority rights, legal transparency, and social justice, as these groups often rely on foreign funding due to limited domestic support.

For critics, the issue isn’t foreign interference, but freedom of expression. They point out that these groups play a vital role in Israeli democracy by holding institutions accountable, advocating for marginalized groups, and offering legal assistance where the government falls short. While the law does not ban these groups outright, critics warn it would cripple the groups by making it nearly impossible for many to operate.

Some warn that the bill is part of a broader pattern of restricting dissent and consolidating power, alongside efforts to reshape the judiciary, weaken public broadcasting, and regulate protest. Others note the bill targets only foreign government funding, allowing foreign private donors with political agendas to continue supporting groups aligned with the government, thereby raising concerns about selective enforcement.

Ultimately, critics believe the bill would weaken civil society, reduce legal oversight, and discourage open public debate by limiting the ability of key organizations to operate and be heard.

Around the world, democracies approach foreign funding of NGOs in different ways. Some countries, such as Russia and Hungary, have imposed tight restrictions by labeling foreign-funded NGOs as “foreign agents” and limiting their activities. These policies have drawn criticism from international watchdogs who warn they can suppress civil society and restrict freedoms.

In contrast, many Western democracies, including the US and EU member states, actively support civil society initiatives abroad, including within Israel. Grants from foreign governments are frequently utilized to support programs centered on human rights, democracy, and development. In these contexts, such support is generally framed as global philanthropy rather than interference.

Much of the debate comes down to perspective: for some, foreign support is solidarity; for others, it’s a means of political influence. While some see foreign funding as a means of advancing shared democratic values, others view it as a tool for influencing domestic politics. Israel’s proposed law enters this global conversation, raising complex questions about how open democracies should be to outside involvement in their internal affairs.

The bill has passed its initial committee hearing and now begins the standard legislative process in the Knesset, which requires three readings and additional committee reviews before becoming law. As it moves forward, it is expected to face legal scrutiny, particularly regarding constitutional concerns of access to the courts and freedom of association.

Public debate is likely to intensify, with both supporters and opponents mobilizing. Beyond this specific proposal, many observers worry that it may set a precedent: restricting the legal standing of NGOs, tightening control over civil society, and shifting the balance between democratic participation and national governance.

At its core, the bill sits at the intersection of two competing ideals: safeguarding national sovereignty and upholding civil liberties. As lawmakers debate and the public responds, Israel faces a defining conversation about who gets to shape its democracy, and under what terms.

Article Co-written by: Maytal Chelst .