The Crowdfunding Campaign for Deadly Israeli Military Drones
The war in Gaza has been good for the drone startup XTEND. Since October 7, the Tel Aviv company has pivoted to providing the Israeli military with cheap, nimble robot aircraft. This demand helped the company secure $40 million in new venture capital funding, bringing its total raised to $60 million. That money will go toward software refinements to better serve Israel's Ministry of Defense, its co-founder and CEO Aviv Shapira touted in a press release.
Yet despite its venture capital bounty and recent military contracts, XTEND has also been asking for charity.
Join Us in Supporting Israel's Defense," read the text on the Xtend-Support-Israel.com website, directly above a large DONATE" button. All donations would be used for the immediate production & deployment of life saving systems for our IDF troops on the frontlines." The site included a dazzling marketing montage of XTEND robots zooming across buildings, smashing through windows, and dropping what appears to be an explosive device from the air, enabling soldiers to perform accurate maneuvers in complex combat scenarios."
XTEND's fundraising page - taken offline shortly after The Intercept raised questions about it - is one of several similar efforts soliciting charitable, tax-deductible donations to bolster Israeli national security.
U.S. law governing charitable contributions gives wide leeway to nonprofits operating overseas, though questions linger about directing such donations to fund combat.
XTEND did not respond to a request for comment and questions about its Israel Defense Forces fundraising campaign. The Israeli nonprofit AlmaLinks, which was listed on the site as participating in the fundraiser, told The Intercept that upon learning of the campaign it asked XTEND to take it down. A PayPal page for the fundraiser told American donors that tax-free contributions could be sent through the U.S.-based donor-advised fund FJC: A Foundation of Philanthropic Funds. FJC disavowed the campaign and said the drone startup was being instructed to cease and desist use of its name.
A drone flies overhead as Israeli forces operate in the Balata refugee camp, in the West Bank city of Nablus, on June 1, 2024. Photo: Majdi Mohammed/AP XTEND's drones are flexible, affordable, and outfitted with powerful cameras, making them excellent surveillance tools that can stand in for human soldiers in dangerous situations. Certain models come with a claw, allowing them to drop any manner of item - or weapon - from high above. This functionality has proven transformative in the fighting between Russia and Ukraine. Even for Israel's armed forces, among the best-equipped in the world, drones like XTEND's offer the powerful advantage of an off-the-shelf, somewhat disposable miniature air force.
Boots on the ground testimonials" included on the site leave little ambiguity about their use. The best thing to have is drones," says one uniformed Israeli soldier, his face blurred, in a video set before a house he states was recently cleared of terrorists. Drones can go inside, do the search, clear the house, put even an explosive, instead of us going in."
We have killed dozens of vile terrorists, but we continue to constantly discover more terrorists who are hiding in buildings," say soldiers in another testimonial video, who explain XTEND's products are preferable because their radio uplink is not as easily jammed.
In interviews and marketing materials, XTEND tends to argue its drones are a life-saving reconnaissance technology that permit soldiers to hang back from danger while robots lead the charge. But the company is very much in the business of offense too. In December, XTEND told the Wall Street Journal that the IDF is using its robots to drop grenades" in Gaza. We were the first drones to enter Be'erik, Faraza, and deal directly (indoors, outdoors, and face to face) with these terrorists," Shapira explained to the Israeli business publication Calcalist last year. We learned so much from that."
Israel's War on Gaza Israel's war on Gaza has been integral to XTEND's current success and its future, according to local business press reporting. Since the conflict erupted, the company has deepened its ties with the Israeli military. An article in Calcalist announcing the $40 million deal noted that, since the war's start, the company has shifted its entire focus in developing systems for the IDF. This new focus has led the company to a decision to upgrade its activity in the military sector." In the May 10 press release announcing its latest venture capital round, Shapira - depicted in an attached photo dressed as a character from The Matrix" - explained how the company's new funds would help refine its drones' software in part to better serve Israel's Ministry of Defense tier-1 units."
So-called quadcopter drones similar to those manufactured by XTEND have been implicated in a litany of gruesome civilian deaths and injuries. A June 4 report by Euro-Med Human Rights Monitor described how the IDF has ramped up" its use of small quadcopters to drop explosives and fire mounted rifles at Palestinians in Gaza.
One Palestinian who spoke to the organization recounted the killing of his cousin: We were approached by a quadcopter as we went by a side street. I warned him to run and hide as soon as I saw it, but it is likely that his poor hearing prevented him from hearing my call. I told him to hide, as I was doing, when all of a sudden I heard an explosion. When I heard Ibrahim calling, I told him to stay [put] to the right until assistance arrived. I saw him being targeted by a quadcopter bomb."
An Israeli drone drops tear gas canisters during clashes following a demonstration near the border in Malaka, east of Gaza City, on March 30, 2023. Photo: Majdi Fathi/NurPhoto via AP On the webpage soliciting donations for its drones, XTEND listed AlmaLinks, a nonprofit network headquartered in Tel Aviv that connects business leaders with a focus on Jewish and Israeli communities, as the organization that would process donations.
All donations will be used for the immediate production and deployment of life saving systems for our IDF troops on the frontlines," the site read. All donations are kindly processed through the ALMA LINKS non-profit organization. www.almalinks.org We kindly request that you fill out the information here and at the dedicated donation page for tracking purposes."
Shapira, XTEND's CEO, is listed on AlmaLink's website as a member of its board of trustees. AlmaLinks told The Intercept it had no knowledge of XTEND's fundraiser and that Shapira does not serve in a decision-making role.
We were not aware of the XTEND website asking for funds in our name, and as soon as we became aware of it we asked them to take it down," a spokesperson for AlmaLinks said.
Shapira is on a purely advisory board of trustees that includes many people and does not have authority to make decisions," the spokesperson said.
The fiscal sponsor for AlmaLinks is FJC: A Foundation of Philanthropic Funds, a nonprofit donor-advised fund based in New York. Founded in 1995, FJC manages over $300 million in assets and has provided over $400 million in philanthropic grants around the world, according to its website. FJC accepts tax-deductible donations on behalf of AlmaLinks, which then passes the money onward to recipients such as XTEND. Because contributions to foreign nonprofits like AlmaLinks are not tax-deductible, a donation to the American fiscal sponsor FJC would allow donors to benefit from U.S. tax laws.
Potential American donors who came across the online fundraiser were directed to a PayPal page bearing a checkmark icon confirming FJC is the recipient of the funds, and noting any contributions would be earmarked for XTEND.
In response to an inquiry from The Intercept about its role in the fundraiser, FJC CEO Sam Marks disavowed the campaign. FJC has no relationship with XTEND, and that company is not authorized to use FJC's 501(c)(3) tax exempt status to fundraise for any campaign," Marks explained in an emailed statement. They are being instructed to cease and desist any fundraising campaign using FJC's name."
Soon after this exchange, the PayPal page was taken down. Marks did not respond when asked if the PayPal page had been set up without FJC's knowledge, when FJC became aware of the fundraising campaign, or how much money had been raised to date.
XTEND did not respond to questions about whether it organized the fundraiser without the advance knowledge of AlmaLinks and FJC, and about Shapira's role on AlmaLinks' board of trustees.
Diala Shamas, senior staff attorney at the Center for Constitutional Rights, questioned whether it was appropriate for a nonprofit to use charitable donations to support a war effort, particularly one that has killed tens of thousands of civilians.
Related Tax-Exempt U.S. Nonprofits Fuel Israeli Settler Push to Evict Palestinians I'm aware of reports of quadcopters being involved in crimes in Gaza. There is nothing charitable about that," said Shamas, whose nonprofit legal advocacy group is working on a New York bill to restrict tax-deductible donations to illegal Israeli settlements. I can't see this fitting in the New York law definition of charitable purpose, not the IRS definition of charitable purpose."
Another issue is whether those efforts are supplying equipment being used in violation of international law, Shamas added. Setting aside the question of charitability all together, there are serious questions of complicity in war crimes here. Even if it weren't a nonprofit, even if it were just a traditional company, there would be serious legal risks here."
Legal experts have long warned that charitable contributions cannot be used to support combat, an issue that came up at the height of the war in Ukraine. Charities funding combat against Russia's invasion faced less scrutiny because of widespread political support for Ukraine, attorney Daniel Kurtz told the Associated Press last year. You can't support war fighting, can't support killing people, even if it's killing the bad guys," he said at the time. It's not consistent with the law of charity."
Henry Dale, director of New York University law school's National Center on Philanthropy and the Law, said that U.S. tax code - and an extreme lack of oversight by the Internal Revenue Service - affords a great deal of latitude to efforts like those of XTEND. Even though XTEND's fundraising page made clear that the money was for drones, specifically its Human Extension Platforms" that aid soldiers in combat, the fact that donated funds were advertised as being directed to FJC, whose PayPal site did not mention drones, likely legally insulates the campaign overall, Dale said.
Though the IRS has the ability to strip organizations of their tax-exempt status for engaging in efforts contrary to public policy, the edges of that doctrine are completely unclear," Dale said.
Related Apple Matches Worker Donations to IDF and Illegal Settlements, Employees Allege Lawmakers and nonprofits experts have long criticized the network of U.S. nonprofits that funnel millions of tax-deductible dollars to settlements in the West Bank that the international community recognizes as illegal. Those concerns have come back with new urgency amid the surge of U.S. fundraising for the Israel Defense Forces during Israel's war on Gaza.
Pending legislation in New York targets nonprofits that facilitate such donations by making it easier to sue the groups for civil penalties. Lawmakers expanded and reintroduced the Not on Our Dime" bill in May to include charities in New York fundraising for the Israel Defense Forces amid Israel's destruction in Gaza. The role of any nonprofit taking part in the XTEND fundraising operation is the kind of activity the legislation seeks to target, said Shamas of the Center for Constitutional Rights, which is part of the campaign backing the bill. FJC's work includes fundraising for a number of groups that responded to aid Israel after the October 7 attacks, including Friends of the Israel Defense Forces. As recently as 2021, the group has also directed contributions to the Jewish National Fund, which has long financed activity in Israeli settlements.
New York Assemblymember Zohran Mamdani, who introduced the bill, said the measure would allow the state attorney general to fine groups funding the genocide, including FJC.
The purpose of tax breaks is to encourage charitable activity: feeding the poor, clothing the needy, and funding the arts - not to support war crimes and genocide," said Mamdani. Funding Israeli war crimes is inconsistent with a charitable purpose."
XTEND's fundraiser is just one of many ongoing drone crowdfunding efforts pegged to the war, a review by The Intercept found.
The Israeli Resilience Association, which describes itself as a group of experienced professionals, and officers from the IDF Special Forces, Secret Service (Shin Bet), and the special forces of the Israeli Police," has to date raised over $287,000 to send small hobbyist drones into Gaza. Noting that the current crisis in Israel has put every community throughout Judea and Samaria on high alert," the One Israel Fund, meanwhile, has raised over $160,000 to furnish illegal settlements in the West Bank with surveillance drones in cooperation with the regional and local security personnel."
Even without the legislation, genocide is illegal under international law, Mamdani added. Fundraising for IDF units carrying out what has been called a plausible genocide in federal and international courts should merit inquiry. Advocating to end tax deductions for these crimes is to call for the bare minimum."
The post The Crowdfunding Campaign for Deadly Israeli Military Drones appeared first on The Intercept.