Israel closed yet another Palestinian institution in Jerusalem, the Alquds Fund and Endowment, on April 28, 2025.1 Israeli police raided the organization’s premises and delivered an official notice of closure for six months, subject to extension. The justification given was that the fund operates on behalf of the Palestinian Authority (PA).

The Alquds Fund and Endowment is a major organization established in 2013 by private Palestinian individuals with a multimillion-dollar endowment from sources in the Arab world, in partnership with the Islamic Bank for Development. Its board of trustees is chaired by Sheikh Abdelaziz Bin Abdulrahman Al-Thani. The organization, which describes itself as “an independent, non-profit institution founded to strengthen the resilience of the Palestinian people in occupied Jerusalem and to promote development in the city,"2 has supported a wide array of initiatives for Palestinians in the city, focusing on education, health, entrepreneurship, infrastructure, humanitarian aid, arts and culture, and social development.3 Its closure is a serious blow.

Regarding closure, the Jerusalem Governorate said in a statement:

In any other country, an organization such as this that is meeting community needs that the government is unable or unwilling to meet would have been warmly welcomed. To Israel, they are an intolerable threat to the overrarching goal of Judaizing the city and reducing Palestinian presence there.

As such, the Alquds Fund and Endowment is only the latest in a decades-long history of Palestinian institutions in the city closed by Israel.

Palestinian civil society in East Jerusalem is facing mounting challenges from Israeli authorities and donors. These range from financial pressures and political restrictions to closures and harassment. Leaders of nongovernmental organizations (NGOs) told Jerusalem Story that the operating environment is becoming increasingly hostile, threatening their ability to serve the city’s residents and damaging the very fabric of Palestinian presence in the city.

The challenges facing civil society in Jerusalem directly contradict assurances made by Israel during the era of the Oslo Accords. In early October 1993, about a month after Israel and the Palestine Liberation Organization (PLO) signed the Oslo I Agreement, then Israeli foreign minister Shimon Peres pledged in a letter to his Norwegian counterpart that Israel would protect Palestinian institutions in East Jerusalem, recognizing their importance and status.5

This promise clashed head-on with Israel’s long-term objective of consolidating sole control over Jerusalem and eliminating any Arab institutional presence in the city, and many Palestinian experts believe the pledge was never sincere. Indeed, after the letter’s existence became known, Prime Minister Yitzhak Rabin said that the commitment applied only to existing institutions, undermining its purpose.6 Palestinian President Yasser Arafat had requested the letter in exchange for the major Palestinian concession of agreeing to delay negotiations on the status of Jerusalem to a final status round of negotiations, which ostensibly were supposed to occur five years hence but in fact never took place.

Israel’s strategy of degrading Palestinian institutions in Jerusalem has remained consistent. After occupying the eastern part of the city in 1967, Israel dissolved the elected Arab Jerusalem Municipality. The aim was clear—to erase the city’s Arab identity and independent political leadership. This effort gradually expanded from political suppression into health, education, and eventually culture.

Despite Peres’s promises, after the Oslo Accords were fully signed in the mid-1990s, Israel began shuttering Palestinian civil society organizations. Many of these institutions had functioned as a Palestinian shadow government during the 1970s and 1980s, providing vital political, social, economic, and health services, and bolstering Palestinian resilience.

Lily Habash, an expert in international politics, international relations theory, and peace and conflict studies—and an active participant in Palestinian civil society—says that many of the challenges facing civil society organizations in Jerusalem stem from Israel’s illegal annexation of the city in 1980 and severing of the city from the rest of the occupied Palestinian Territories (oPT) that followed the Oslo Accords.7

“The issue of Jerusalem was postponed beyond the transitional period, which then became permanent,” she explains. “The Separation Wall and the continued policy of Israelization have severely constrained the PA’s capacity to support institutions in Jerusalem.”

Closures of Palestinian organizations began in earnest in 1999 with a series of actions against organizations associated with the Orient House and have continued ever since. Dozens of Palestinian organizations have since been closed, including the Alquds Fund and Endowment.

Majdi Zughayer, a member of the Alquds Fund and Endowment as well as the Jerusalem Arab Chamber of Commerce and Industry, told Jerusalem Story that the fund had no political or partisan ties and was created by Palestinian business leaders such as Munib al-Masri and Michel al-Sayegh. “Its mission was to support Jerusalemites in education, youth development, women’s empowerment, entrepreneurship, and humanitarian needs, particularly in the Old City,” he said. “We have no affiliation with the PA, contrary to what Israel claims. Our funding comes from private donors, some from the Gulf.”8

Zughayer said the Israeli government’s claims were an excuse to clamp down on independent Palestinian activity in the city and force the Palestinians into dependence on Israeli institutions.

Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, warns that the situation for Palestinian NGOs in East Jerusalem is rapidly deteriorating. “We are facing an increasingly difficult future. Under this extremist, right-wing Israeli government, funding for civil society will be harder to secure. The pressure and restrictions on institutions are increasing, and many are expected to close.”9

Closing down institutions is part of a broader strategy of suppressing Palestinian presence and resilience in the city, Odeh said. “These organizations provide essential services that help residents remain in Jerusalem. Closing them fits into the larger displacement policy pursued by Israeli authorities.”

Walid Salem, a longtime observer of Jerusalem civil society, says that two new developments since the current Israeli government came to power in late 2022 are especially worrying.10 First is an increase in closures based on vague or unproven allegations of coordination with Palestinian political institutions—as seen with the latest shutdown of the Alquds Fund and Endowment.

Second, a new bill is advancing through the legislative process that would impose excessive taxes—up to 80 percent—on any foreign grant money received by NGOs in Israel,11 including of course Palestinian NGOs. “This would essentially render them incapable of fulfilling their mandates,” Salem said. Meanwhile, extreme right-wing Jewish organizations with international funding operate freely, without similar scrutiny or taxes.

Salem said these developments are part of a “decisive plan” aimed at forcing Palestinians to choose between “loyalty [to Israel], death, or displacement.” The ultimate objective, he explained, is to Judaize Jerusalem completely, eliminating Palestinian institutions, space, and identity.

Maha Khatib, director of the Jerusalem Young Men’s Christian Association, said that simply serving the community has become fraught with obstacles.12 “It is a challenge to have access to staff and to operate across the city due to political restrictions and movement difficulties between Jerusalem and the rest of the West Bank,” she told Jerusalem Story. “The constant political tensions make it difficult to work freely. Funding has also declined due to reductions in available resources and conditions imposed by Israel on nonprofit organizations.”

Architect and NGO board member Simon Kouba echoed such concerns about funding. He told Jerusalem Story that financial difficulties are currently the greatest challenge. “Aid is increasingly scarce, partly due to the global economic downturn and partly because donors are shifting attention to other priorities,” he said. “Moreover, many donors—especially European—now require grantees to sign declarations rejecting terrorism. While we don’t oppose this principle, the way some donors interpret it contradicts our core values.”13

In 2020, the European Union canceled a €1.7 million (about NIS 6.5 million) grant to the Badil Resource Center for Palestinian Residency and Refugee Rights for a three-year “justice in Jerusalem” project to track and report on human rights violations in the city. Badil and other humanitarian organizations objected to stipulations that they ensure that they were not providing funds to banned groups, including Hamas, the Popular Front for the Liberation of Palestine, and other groups, by vetting their staff and vendors. The clause was inserted into EU donor contracts in 2019 in response to pressure from Israel and pro-Israel groups.14

Badil said in a press release that the clause “criminalizes the Palestinian struggle against oppression and requires the recipient organization to perform ‘screening’ procedures which amounts to policing its own people.”15 While many organizations stopped applying for such funding in January 2020,16 the dearth of available monies has forced some to change their position.

Kouba says that some NGOs are now signing such declarations, simply to survive. “Either sign or shut down,” he said bluntly.

Additional challenges arise from Israeli restrictions on financial transfers between the PA and Jerusalem, cutting off even limited PA support. “We are also unable to hire skilled staff from the West Bank, which impacts activities,” Kouba says, “especially cultural programming. When was the last time an art troupe from Ramallah performed in Jerusalem?”

Kouba added that Israeli authorities often close institutions if their programming or affiliations don’t align with their expectations. “And now, new institutions linked to the municipality are being established to operate in parallel—sports centers, cultural centers—which threatens to displace and dilute the goals of existing Palestinian institutions,” he warned.

Israel has tried to create parallel “alternative” institutions to take over the functions of Palestinian NGOs. But Jerusalem Story’s sources report that these entities have failed to gain traction because they are seen as tools of Israeli control. And even these alternatives are being defunded. The far-right government and its allies in the Jerusalem Municipality have concluded that there’s no need for even a symbolic Arab representation—better to simply expel Palestinians altogether.

Ziad Hammouri, director of the Jerusalem Center for Economic and Social Rights, emphasized the damaging effects of these closures on daily life.17 “Closing any institution has major repercussions,” he said. “It forces residents to rely on Israeli institutions, just like when the Palestinian Chamber of Commerce was shut down—merchants were then pressured to join the Israeli chamber.”

He said that some donor countries and Arab funds are adding to the civil society crisis. “Due to Israeli pressure, some Arab donors now refuse to fund any activities within the Separation Wall, effectively forcing many Palestinian organizations to relocate to Ramallah or Bethlehem.”

When asked whether his own organization might be next, Hammouri hesitated. “No civil society organization in Jerusalem is immune,” he said. “It’s a very difficult time for all of us. God help us.”

Habash notes that Israeli authorities have escalated restrictions using legal and administrative tools, accompanied by continuous security and financial censorship. “Even the possibility of a stable and thriving civil society is being systematically suppressed,” she said. Funding has become erratic and politicized. “While the [United Nations] and EU are major donors, their support barely meets immediate needs and often fluctuates. Arab trust funds and private philanthropy cannot fill the gap. Israeli funding via the Jerusalem Municipality is aimed primarily at reinforcing Israelization.”

As a result, she said, it’s increasingly difficult to develop or implement a cohesive strategy for supporting civil society in Jerusalem. “Short-term resilience is possible, but without a comprehensive approach, we cannot expect incremental gains to lead to a healthy, nationally rooted society.”