The Trump administration is considering a major policy shift that could have serious repercussions for Israeli yeshivos and kollelim that rely heavily on donations from abroad.
According to reports previously disclosed here on Matzav.com, President Donald Trump is reviewing a proposed executive order that would prohibit American nonprofit organizations from transferring charitable funds to causes outside of the United States. If enacted, this measure would eliminate tax deductions for donations directed to foreign-based activities — a move expected to dramatically affect financial support for Torah institutions in Israel.
Similar to Section 46 of Israel’s Income Tax Ordinance, which provides a 35% tax credit for contributions to local nonprofits, the United States currently offers tax incentives for charitable giving, even when the funds are ultimately used abroad. Under the Trump administration’s new proposal, donors would only be able to claim deductions if their contributions stayed within U.S. borders.
Yeshivos and kollelim in Eretz Yisroel have long depended on overseas donations, particularly from the United States. Since April 2024, when Israel’s Supreme Court ruled that students subject to military draft obligations could no longer be included in government yeshiva funding, the chareidi community has worked to raise an estimated $100 million from American donors to offset the resulting shortfall.
Should the Trump administration move forward with this executive order, a sharp decline in American donations to Israeli Torah institutions is anticipated. Foreign donations — especially from the U.S. — have been a lifeline for yeshivos, kollelim, orphanages, hospitals, and needy families throughout Israel, particularly after state funding was curtailed for draft-age bochurim and yungeleit.
The potential impact could be far-reaching. Thousands of American nonprofit organizations, including many chareidi-run entities, provide critical support for religious and humanitarian causes in Israel. A change in tax policy would effectively sever this crucial lifeline, unless alternative funding channels can be established.
While the Trump administration is framing the proposed change as part of a broader effort to “prioritize American interests,” sources close to the White House told the New York Post that an additional motivation is to curb the flow of funds to high-profile liberal organizations that have poured billions into progressive causes worldwide.
“There is definitely an effort to restrict and review the use of federal tax benefits for funds sent abroad, and to intensify scrutiny over foreign investments. We are seeing this approach across various departments,” a source familiar with the internal discussions told the newspaper.
Such a policy shift could deal a heavy blow to Israeli nonprofits, particularly smaller organizations that do not receive direct government support.
Although the plan is still under internal review, Israeli nonprofit leaders are already bracing for the possibility of steep declines in foreign funding. According to estimates, approximately 7% of nonprofit income in Israel comes from donations abroad — a figure that is significantly higher among smaller organizations.
{Matzav.com Israel}