MK Gafni Blocks Tax Benefits for Hundreds of NGOs Over Yeshiva Funding Dispute

Moshe Gafni, chairman of the Degel HaTorah party, is preventing the approval of Section 46 of the Income Tax Ordinance, which allows donors to receive tax credits for contributions to registered nonprofits. This move threatens to reduce donations to hundreds of organizations across various fields. Section 46 enables nonprofits to submit requests to the Knesset so donors can claim tax deductions based on their donations, a government tool to encourage philanthropy.

Gafni's objection stems from the exclusion of ultra-Orthodox yeshivas, where students are draft-eligible, from the list of organizations eligible for these tax benefits. Consequently, his party refuses to support the Finance Committee's approval of the updated list of nonprofits entitled to this tax arrangement. Due to this opposition, the committee decided not to hold a vote on the matter.

The issue originated from a directive by the State Attorney's Office, which led the Tax Authority to require yeshivas to declare that their students are not draft-eligible or lack formal draft status. Yeshivas failing to comply risk losing their approval, prompting ongoing legal and public disputes expected to reach the Supreme Court. Until now, the approval process was routine, but recent months have seen delays in voting on nonprofit lists because of the directive to exclude these yeshivas.

Last week, an updated list excluding these yeshivas was submitted to the Finance Committee, prompting Gafni to sharply criticize Finance Minister Bezalel Smotrich and the Treasury comptroller for removing the yeshivas. The ultra-Orthodox factions are now seeking negotiations with coalition leaders, but until a resolution is reached, many nonprofit donations remain at risk.