The perfect storm of funding cuts crippling Arab society

Arab local government, Arab civil society organizations, and joint society groups were informed last week that Minister of Social Equality May Golan has cut tens of millions of shekels from the five-year development plan for Arab society, redirecting the funds elsewhere. This massive budget cut is expected to broadly damage educational and vocational programs aimed at narrowing severe societal gaps, further weaken the fight against crime and violence, and deepen the crisis of trust between Arab society and the State of Israel. 

These extreme cuts take place in a time when poverty in Arab society has reached unprecedented levels. According to official Israeli statistics, in 2023, 42.4% of the Arab population lived below the poverty line – more than double their proportion in Israel’s general population.

This latest cut should not be seen as an isolated event within the Israeli government or as a policy affecting only Arab citizens. It is part of a broader, calculated erosion of civil infrastructure that has been intensifying in recent weeks, culminating in what may soon become a perfect storm with major economic consequences for the country. 

This erosion primarily targets Arab civil society and joint Jewish-Arab organizations. The process is so deliberate and coordinated that it stands in stark contrast to the global instability we’re seeing elsewhere – a reminder that in Israel, the dismantling of civil society isn’t accidental. It’s intentional. 

Read: Jewish and Israeli aid groups are hit by Trump’s suspension of USAID, refugee program

From the United States comes a severe blow: the freezing of funding by USAID, the American government’s international development agency, and its impending dismantling. In simple terms, Trump seeks to end USAID’s independence and shift its funds directly under the State Department, where he can exert exclusive control. This move halts direct funding to Israel-based recipients, amounting to tens of millions of dollars. 

As a result, dozens of civil society organizations working in shared spaces are freezing programs, laying off staff, and placing entire departments on unpaid leave. These are primarily organizations promoting Arab-Jewish and Israeli-Palestinian cooperation in areas such as high-tech, healthcare, and environmental sustainability, platforms that enable broad, non-political partnerships and foster economic development and equity. 

Unemployment rates in Arab society are nearly double those in Jewish society – 16% compared to 9% – with significant job loss in sectors such as tourism and blue-collar industries as a direct result of October 7th. In this already harsh reality, the cuts to USAID funding are a serious blow to communities that are struggling to recover and stabilize. 

Read: Ministers advance bill levying 80% tax on foreign state funding of Israeli NGOs

Meanwhile, back in Israel, legislation proposed by Likud MK Ariel Kallner that would place an 80% tax on foreign government funding has passed a preliminary vote. Credit must be given where it’s due: Kallner has crafted the bill cleverly. European governments are the target (not, say, Qatar), and entities receiving parallel Israeli government support, such as universities, are excluded, reducing opposition. The law is also strategically designed to avoid High Court petitions, effectively neutralizing one of the last tools civil society organizations could use to resist it. 

The goal is clear: to paralyze Arab civil society and joint Jewish-Arab organizations. The exclusion of Israeli universities from the bill is problematic in one more way: many of the organizations facing funding cuts are focused on narrowing gaps in higher education. In many ways, it is thanks to the work of Arab and Arab-Jewish civil society organizations that Israeli universities see growing numbers of Arab students. Gap year programs run by these organizations have been tested and proven effective in increasing access to higher education. The expected cuts in European funding will not only weaken Arab civil society but will also make our universities less diverse and inclusive. 

Back to the US – within days of the October 7th onslaught, the American Jewish philanthropic community mobilized to donate hundreds of millions of dollars for war recovery and to strengthen Israel’s socioeconomic resilience. Many of these philanthropic bodies lean liberal-progressive and have also supported Arab civil society in Israel. But Trump’s return to the political forefront is expected to dramatically shift their funding priorities. In the US, immigrant communities are under attack, LGBTQ+ rights are eroding, antisemitism is rising, and there are plans to resume coal mining and fossil fuel use, all issues requiring urgent attention and financial resources. Naturally, American donors are beginning to redirect funds to support these battles at home. Arab civil society organizations and those working in joint spaces are already seeing early signs of this philanthropic reorientation. These cuts are also expected to affect programs that prioritize diversity and Arab-Jewish partnership.

Let’s return to Israel once more. Arab civil society, along with the shared society movement, is the second largest operational force after Arab local authorities. In fact, many argue it is the primary force, as many Arab municipalities struggle financially. Over the past two years, the Israeli government has been placing obstacles in the path of mechanisms responsible for funding civil society and joint initiatives. These challenges are particularly troubling given that the country’s largest socio-economic gaps lie between Arab and Jewish populations. A series of government decisions have slowed, halted, or undermined civil society support: the government’s ongoing failure to convene the permanent funding committee, a 15% cut to the five-year development plan budget – triple the across-the-board cut – the dismantling of implementation mechanisms, and now Minister Golan’s additional cut worth tens of millions more.

The convergence of USAID’s funding freeze, the Kallner Law, redirected philanthropic attention, and the Israeli government’s budget cuts form a perfect storm. This creates a reality in which the organizations dedicated to reducing gaps in Arab society and nurturing joint partnership spaces may vanish entirely. We are talking about hundreds of NGOs, initiatives, and programs operating throughout Israel in education, employment, tech, and health and involving tens of thousands of Arab and Jewish citizens. Anyone who thinks this is just a handful of Tel Aviv leftists sipping coffee has no idea what’s really happening. This is an employment engine pulling an entire economic train.

Contrary to populist rhetoric, Arab civil society and the joint Jewish-Arab space are moderating and constructive forces within Israeli society. They promote economic, business, and educational cooperation. They help reduce violence and lead thousands of Arab youth each year away from crime and into quality employment and academic tracks. Eliminating these organizations and shrinking civil activity in Arab society isn’t just an attack on the left, it’s a loss of tens of millions of shekels in national income annually and the destruction of hundreds, if not thousands, of jobs annually.

Minister Golan’s budget cut must not go unchallenged. It must be resisted, not only as a dangerous precedent for diverting funds from Arab society but also as part of a broader fight to protect Israeli civil society from both domestic and international rollbacks. Now is the time to stand firm and defend the partnerships, progress, and shared future we’ve worked so hard to build.