A disturbing picture emerges from the findings of an investigation conducted by the U.S. House Committees on the Judiciary and Foreign Affairs, published on July 17. The investigation revealed, among other things, that the Biden-Harris administration (2021–2025) funneled approximately $900 million of American taxpayers’ money—through USAID, the State Department, and other federal bodies—to NGOs in the U.S. and Israel, including Blue and White Future and the Movement for Quality Government.
“In 2023, Israel experienced a wave of mass protests following Prime Minister Benjamin Netanyahu’s plan to reform the judicial system,” the report’s authors noted. “The administration also publicly opposed the proposed reform, with former President Joe Biden stating that Israel ‘cannot continue down this road.’”
The report further states that media coverage later revealed that part of the taxpayer funds, transferred in the form of grants, had flowed through U.S. and Israeli organizations to help finance the protests—at least in part. “Such use of federal funds could damage U.S. relations with one of its closest allies, and even undermine basic civil liberties both in America and Israel,” the report warned. “In addition, improper use of federal grant money may—in some cases—constitute a criminal offense under U.S. law.”
The organizations under investigation—Blue and White Future (led by Orni Petruschka, Ami Ayalon, and Gilad Sher), the Movement for Quality Government in Israel (headed by attorney Eliad Shraga), the PEF Israel Endowment Funds (serving as a third-party vehicle for private donors), the Jewish Communal Fund (JCF), the Middle East Peace Dialogue Network (MEPDN), and the Rockefeller Foundation—could face severe penalties. In the U.S., violations of a federal tax code provision that prohibits tax-exempt nonprofits from engaging in political activity or lobbying in foreign states could result in revocation of tax-exempt status, heavy fines, and even criminal investigations. In Israel, protest organizations risk violating the terms of their NGO registration, which could lead to license revocation, penalties, or restrictions on their activity.
The publication of the memorandum is historically unprecedented: it is the first time that a congressional investigation has directly targeted Israeli civil society organizations, alleging they received U.S. government funding to undermine a democratically elected government. The report also discloses that the Biden administration transferred millions of dollars to entities linked to Palestinian terrorist organizations. The findings raise serious questions about foreign interference in Israeli sovereignty, transparency in government funding, and failures of oversight. Next steps include expanding the investigation to additional organizations, demanding full cooperation from the NGOs, and calling for tighter oversight of government grants.
The congressional report was published against the backdrop of Likud MK Ariel Kallner’s proposed NGO Law, which seeks to impose an 80 percent tax on NGOs receiving funding from foreign entities, including the U.S. “Seeing is not believing—this is massive foreign intervention in an attempt to replace a right-wing government in Israel,” the Likud Party stated in an unusual announcement following the report. “An official document released by the U.S. Congress reveals astonishing information confirming what many had long suspected: the previous administration transferred nearly a billion dollars to left-wing NGOs in Israel, to destabilize the rule of a democratically elected right-wing government.”
Likud further claimed: “As part of the attempt to topple the government, external pressures were applied that led to a deep social rift, encouragement of military refusal, and a dangerous split within Israeli society. Worse still, the document reveals that the same hand that financed political left-wing NGOs in Israel also financed, through the same intermediaries, organizations associated with Hamas and international campaigns against the State of Israel. What we have been saying for years is now revealed for all to see. This is not a theory, not a conspiracy—it is a proven fact, backed by official documents.”
Senator Ted Cruz tweeted upon publication of the findings: “The report exposes how the Biden administration used taxpayer dollars to undermine an ally and support terrorism. This demands a thorough investigation.” Senator Lindsey Graham added, “The report shows how American funds were used against a close ally. Netanyahu should be focused on Iran, not court trials.”
Conversely, Blue and White Future denied having received any money from the U.S., stating: “No state body or government entity, American or otherwise, has contributed to the organization, directly or indirectly. All donations to the organization—as well as all its activities—are supervised, reported, and audited by the law.”
The organization further argued that the congressional report is based on false publications: “The letters of inquiry by U.S. members of Congress relied on biased and fabricated publications that bear no relation to the facts… Anyone who continues to publish or share falsehoods about the organization or its people, including under the guise of ‘interpretation,’ may be sued and held accountable for the consequences of their actions and the costs involved.”
Netanyahu and Trump: Mutual Support and a Shared Sense of Persecution
The investigation unfolds against the backdrop of strengthening U.S.-Israel relations during President Trump’s second term. In recent weeks, Trump has stepped up his support for Netanyahu, publicly criticizing twice the trial that has been ongoing since April 2021 on charges of bribery, fraud, and breach of trust. The president describes Netanyahu’s cases as a “political witch hunt” and compares the prime minister’s situation to the “legal persecution” he has faced at the hands of U.S. law enforcement.
In June, in a post on Truth Social, Trump wrote: “Netanyahu is a brave leader advancing the interests of Israel and the U.S., but the ‘deep state’ in Israel is distracting him from fighting common enemies.”
Trump’s support also took symbolic form: in mid-July, U.S. Ambassador to Israel Mike Huckabee attended Netanyahu’s trial in Tel Aviv holding a Bugs Bunny doll, in response to the prosecution’s reference to alleged gifts in Case 1000. The gesture was widely seen as a clear statement of support for the prime minister, sparking mixed reactions. Netanyahu himself thanked Trump for his “warm support,” while opposition leader Yair Lapid told Haaretz: “Trump’s support for Netanyahu is legitimate, but interfering in the judicial system crosses a red line and hints at compliments to Netanyahu as preparation for American pressure for a ceasefire in Gaza.”
In the U.S., Trump argues that the trial distracts Netanyahu from geostrategic challenges such as negotiating the release of hostages held by Hamas, expanding the Abraham Accords, and confronting Iran—all interests that also serve the U.S. The president further claimed that Israel’s “deep state” undermines American interests by forcing Netanyahu to waste time on “legal trivialities.”
Trump thus sees Netanyahu as a fellow victim of a politicized judicial system. Two days after the congressional report was published, Director of National Intelligence Tulsi Gabbard revealed classified documents that she claimed prove a coordinated effort by senior Obama administration officials to sabotage Trump’s 2016 presidential campaign and his presidency through a fabricated narrative of collusion with Russia. Gabbard, appointed by Trump to head the U.S. intelligence community, argues that these documents expose a deliberate manipulation of intelligence to promote a false story of Russian election interference, which she calls a “treasonous conspiracy.”
According to Gabbard, the released documents show that before and after Trump’s 2016 victory, U.S. intelligence agencies—including the CIA, FBI, NSA, and DHS—concluded that Russian cyberattacks had not influenced the election outcome. A draft presidential daily briefing dated December 8, 2016, explicitly stated that Russian and criminal actors “did not affect the outcome of the recent U.S. elections” through malicious cyber activities. Her claim, now backed by raw documents from that period, is that this exculpatory assessment for Russia was deliberately suppressed following a December 9 White House meeting attended by President Obama, Director of National Intelligence James Clapper, CIA Director John Brennan, and FBI Director James Comey. After that meeting, a new narrative emerged—that Russia had intervened in the election to benefit Trump—directly contradicting the intelligence agencies’ findings. This false narrative, of course, leaked to the press, primarily The Washington Post, to advance what Gabbard calls the “Russia hoax.”
A central element of her allegations is the role of the Steele Dossier, a controversial report against Trump funded by Hillary Clinton’s campaign. The dossier, filled with unverified and unfounded claims about Trump’s ties to Russia, served, she argues, as the basis for the revised intelligence narrative. Gabbard maintains that this dossier—widely criticized—was instrumental in justifying the conspiracy story that led to the Mueller investigation. That probe, which lasted nearly two years, found no evidence of deliberate collusion between the Trump campaign and Russia. Yet, its very existence for such an extended period cast a heavy shadow over Trump’s legitimacy as president, portraying him as a Kremlin “puppet,” even a traitor to America and a Russian agent.
Gabbard’s revelations focus on the claim that the original intelligence assessment—finding no Russian influence on the 2016 election—was deliberately concealed to advance a politically motivated narrative against Trump. This concealment, she argues, constitutes a significant abuse of power within the intelligence community and the Obama administration.
This dramatic episode reinforces Trump’s sense of being persecuted by the “deep state”—a constellation of lawyers, bureaucrats, academics, journalists, generals, and intelligence officials working from within to undermine a government not to their liking—and leads him to identify Netanyahu as a twin target of corrupt judicial systems. Against this backdrop, the congressional report authored by two Republican representatives and Trump-Israel supporters—Brian Mast and Jim Jordan—underscores, in the president’s and his supporters’ view, the alliance between the American and Israeli “deep states” in a joint effort to unseat both leaders.
Sharp Criticism of the Israeli Court
As part of the investigation, Mast and Jordan demanded documents from the six NGOs under review to track the flow of funds. The documents revealed that Blue and White Future financed protest groups such as the “Kaplan Protest,” which labeled the government a “dictatorship.” The organization received $4 million from MEPDN and $18 million from PEF in 2023, including funds from government sources. “Under this leadership, Blue and White Future quickly became a radical organization opposing Prime Minister Netanyahu,” the report stated. In July 2023, Petruschka, Ayalon, and Sher published a joint article calling on the Biden-Harris administration to avoid meeting with Netanyahu so that he would “learn the consequences” of continuing to advance the judicial reform.
According to public reports, the congressional document stated, Blue and White Future “financed and managed the coalition headquarters of groups opposing the judicial reform.” The report includes a diagram allegedly showing the money trail from American entities to Blue and White Future. “Under Israeli law,” the report notes, “such direct involvement by Blue and White Future in protests and in planning actions against the Netanyahu government may constitute a violation of the law and of the organization’s registration as a nonprofit, since it operates contrary to its declared objectives.”
The Movement for Quality Government, according to the report, led legal campaigns against the government and received $42,000 from the U.S. State Department for a high school activism program. “One of the central bodies organizing protests against the judicial reform is the Movement for Quality Government in Israel—a radical left-wing organization acting against the Netanyahu government,” the congressional report stated, adding that attorney Shraga’s organization “led legal campaigns against the government, and at its public events, calls for ‘rebellion, civil war, and violence’ were heard.” The report also noted that the movement describes itself as “the leading public petitioner to the Israeli Supreme Court, with unprecedented legal success.”
The congressional memorandum includes harsh criticism of rulings by the Israeli Supreme Court, particularly regarding petitions filed by the Movement for Quality Government, such as the petition to disqualify Aryeh Deri from serving as a minister. The report argued that the Supreme Court’s 2023 ruling preventing the Shas chairman’s appointment as minister was made without a clear legal basis, and that a conflict of interest tainted it, as Deri supported reforms that would have curtailed the Court’s power.
The memorandum also pointed out that the petition by the Movement for Quality Government was filed the day after Netanyahu’s government was sworn in, despite 400,000 Israelis voting for Shas in the 2022 elections, describing the ruling as “undermining the will of the Israeli voter.” Likewise, the movement’s attempt to petition for Netanyahu’s removal drew criticism from Justice Minister Yariv Levin, who called it “an illegal attempt to trample the democratic decision.”
The memorandum further suggested that the Supreme Court’s intervention in political matters, by supporting petitions from organizations such as the Movement for Quality Government, contributed to an atmosphere of instability and damaged the democratic legitimacy of the government.
The report noted that alongside its legal actions, “the Movement for Quality Government also sought to influence Israeli youth—and the U.S. administration funded it.” The Biden-Harris administration transferred about $42,000 to the movement for a “civic activism training program” for 11th- and 12th-grade students in three Jerusalem high schools. According to the movement’s American legal counsel, the program’s purpose was “to create order in the flood of information reaching Israeli teenagers.”
The course in question focused on three main topics: presenting the Movement for Quality Government and its activities; encouraging students to join protests; and promoting policies that protect whistleblowers while portraying them as central figures in exposing corruption.
“The program sparked fierce controversy in Israel,” the report stated, citing Israeli sources who described it as “a covert effort to undermine Israeli democracy” and as an attempt to replace Judaism with post-Zionist content. Caroline Glick, a senior foreign policy adviser to Prime Minister Netanyahu, is quoted in the report as comparing the program to Critical Race Theory in the U.S.: “Just as these theories teach American students that their country was born in the sin of racism, so the Movement for Quality Government promotes ‘democracy’ as a way to hollow out Israel’s Jewish character and instill in students a sense of shame about Jewish nationalism. Although the sum involved is relatively small, the importance lies not in the amount of funding but in the message it conveys.”
About the American PEF Israel Endowment Funds, the report stated that it transferred an astonishing sum of nearly $900 million “to organizations involved in anti-democratic protests in Israel.” According to the congressional memorandum, between 2021 and 2024, PEF—a U.S. tax-exempt body—transferred this sum to more than a thousand organizations in Israel, including those directly involved in protests against the judicial reform, such as Blue and White Future, the Movement for Quality Government, Physicians for Human Rights, Darkenu, and others. According to media reports, in 2023 alone, the fund transferred about $18 million to Blue and White Future. “Since money is a ‘fungible asset’—that is, easily transferable from one purpose to another—there is concern that PEF’s donations included funds originating from the U.S. government,” the report warned. “In general, when an organization receives government funding for a specific project, it can reallocate its internal funds originally designated for that project and use them for purposes it otherwise could not have financed.”
The memorandum concluded that “such direct involvement by PEF in protests against the Netanyahu government may constitute a violation of U.S. tax law.” Under American law, nonprofits are prohibited from “participating or intervening in any political campaign on behalf of or in opposition to any candidate for public office.” The IRS has clarified that the prohibition on political activity by tax-exempt organizations applies internationally as well. They are also prohibited from promoting legislation in foreign states.
The Jewish Communal Fund (JCF) transferred, according to the report, more than $42.8 million to the headquarters of the protests against Netanyahu and to the two leading organizations that funded the demonstrations. The fund is a U.S.-based nonprofit that donates over $520 million annually to Jewish organizations and finances leading progressive groups in the United States, including the Barack Obama Foundation. In response to the committee’s claims, JCF stated that it “does not believe” it has received direct funding from USAID, the U.S. State Department, or any other federal source. However, the committee found that between 2021 and 2024, the fund received two donations totaling $743,000 from donor-advised funds (DAFs) held at PEF—including funds earmarked for the Movement for Quality Government. The committee also discovered that JCF transferred more than $43 million to entities that financed Blue White Future, one of the driving forces behind the protests against the reform.
Another American organization mentioned in the report is the “Middle East Peace Dialogue Network” (MEPDN), a nonprofit whose declared mission is to promote the “two-state solution,” namely the establishment of a Palestinian state. At the same time, according to the congressional report, MEPDN was among the largest donors to Blue White Future. MEPDN also funded at least one additional protest group focused on highlighting alleged discrimination against the Arab community in Israel. “The association produced propaganda materials in support of the protests and operated social media groups that provided updates on protest activity against the so-called ‘judicial coup,’ relevant legislation, and political appointments,” the report stated. “The direct involvement of MEPDN—both in activities and in financing protests against Netanyahu’s government—may constitute a violation of its tax-exempt status.”
Rockefeller Philanthropy Advisors (RPA) redirected, according to the report, part of the federal grants it received from the U.S. government, totaling $20 million, to organizations that financed protests in Israel. RPA donated about $557,000 to its affiliate and trustee, the Rockefeller Brothers Fund (RBF). In 2023, RBF transferred more than $370,000 to organizations directly involved in the protests against Netanyahu’s government and the judicial reform, including the New Israel Fund and Brothers in Arms. In addition, under the Biden-Harris administration, RPA transferred about $187,000 to PEF—one of the prominent donors to Blue White Future.
The memorandum also exposes funding for organizations such as Biader ($900,000 and links to Hamas), ANERA (support for Islamic Jihad), and UFA (support for “martyrs”).
An Opportunity to Change Reality
The memorandum highlights possible violations of American and Israeli laws, including IRS regulations and Israel’s nonprofit legislation. In the U.S., organizations like JCF and RPA risk losing their tax-exempt status, while in Israel, Blue White Future and the Movement for Quality Government could lose their licenses.
The findings have sparked outrage among Republicans, who argue that the Biden-Harris administration endangered a key ally. In Israel, the report has deepened the debate over foreign influence, with Netanyahu’s supporters pointing to it as proof of a “deep state.”
The committees plan to expand the investigation, demand additional documents, request full cooperation, and propose legislation that would strengthen oversight of federal grants. The report, which for the first time targets Israeli left-wing organizations, signals a shift in U.S. policy under Trump, prioritizing support for the Israeli government. As the investigation progresses, it may reshape U.S. foreign aid policy and strain relations with nonprofits accused of undermining democratic allies. For Israel, this is a test of sovereignty.
The assistance Israelis receive from abroad is invaluable. The question is whether we will seize the opportunity to change the picture emerging from the report, or whether we will wait for a new administration to activate the NGO machinery once again to undermine a legitimate, elected government in Israel.
