How a little-known investment vehicle became a major source of financing for Israel—and a flash point in New York State politics.
Protesters demonstrate against Israel Bonds in Dublin on June 11, 2025.
(Brian Lawless / PA Images via Getty Images)
For decades, Israel Bonds served as a critical source of capital and foreign currency for a country unable to court traditional investors. In its early days, Israel Bonds were purchased almost exclusively by Jews in the diaspora, but today the money comes not just from private citizens but also from taxpayer dollars, directed there by comptrollers and other financial officials charged with investing public worker pension funds.
After October 7, sales in Israel Bonds spiked, and as the genocide deepened, pro-Palestine human rights advocates launched campaigns to cease taxpayer support for the war. Unlike bonds sold by the Israeli Finance Ministry, Israel Bonds are sold on a retail basis by a third party in the United States, and are not traded on the public market. For that reason, it is difficult for financial officials to divest portfolios from Israel Bonds, but they can opt not to reinvest the money once a bond matures. After sustained pressure campaigns from pro-Palestine activists, several jurisdictions across the United States have opted to do just that, including Louisiana and more than a dozen counties in Ohio, according to Jewish Voice for Peace. (Campaigners have also secured important divestment wins from Israel sovereign bonds).
It’s now become an election issue. In New York, the state’s comptroller, Thomas DiNapoli, who’s already been elected four times, is now facing the only primary race of his career. One of the flash points of this election has been Israel Bonds. DiNapoli has invested hundreds of millions of taxpayer dollars in Israel Bonds during his time in office and nurtured a close relationship with the US company that sells the bonds. Both of DiNapoli’s challengers, Raj Goyle and Drew Warshaw, have criticized DiNapoli for pursuing unethical investments and promised to cease reinvestment in Israel Bonds if they are elected.
As voters in New York go to the polls, The Nation is publishing this primer on Israel Bonds, tracing how and why they were created, their relationship to the mob, and how the financial instrument became a means for right-wing comptrollers to furnish their pro-Israel credentials.
Who created Israel Bonds and why?
The story of Israel Bonds begins after the creation of the state of Israel, when the newly formed government was desperate for cash. Prior to 1948, the Zionist leadership in Palestine had largely relied on donations from Jewish American communities. As University of Southern California professor Dan Lainer-Vos charts in his book, Sinews of a Nation, after the founding of Israel, these donations started to dwindle, partly because the Jewish American nonprofits that collected the funds began to take a larger cut for themselves. Meanwhile, the economic situation in Israel—including an overvalued currency and state control of key sectors—made it nearly impossible for the country’s leadership to attract conventional foreign investors.
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In 1948, UJA chair and former secretary of the Treasury Henry Morgenthau, who had raised almost $200 billion to finance World War II by selling US “war bonds,” approached Prime Minister David Ben-Gurion and proposed creating a similar program. Instead of just soliciting donations, his idea was to sell bonds to the Jewish diaspora, enabling Israel to access new pools of capital and foreign currency while reducing their dependence on philanthropy.
Ben-Gurion was initially skeptical of the plan, but by 1950, the economic situation in Israel was dire enough that the prime minister decided to try it. He advocated the creation of a new organization to issue the bonds, the American Financial Development Corporation for Israel (the AFDCI, later reconstituted as the DCI). Wary that initial fluctuations in bond value might impact the Israeli economy and long-term survival of the bond program, AFDCI’s US leadership decided to make the bonds nontransferrable; in other words, they could not be traded on a public bond market but were instead (with a few exceptions) paid out by the AFDCI when they reached maturity. The bonds sold by the AFDCI/DCI have always been distinct from sovereign bonds, which are sold by the Israeli Finance Ministry and can be resold after purchase, subject to shifting valuation on the public market.
Bonds are a form of debt; the seller of the bond agrees to pay back the principal to the investor, along with regular interest payments. The bond terms set by Israel Bonds—such as the bonds being nontransferrable—meant that traditional investors wouldn’t consider them. Yet the investors that the AFDCI were targeting were driven in large part by their emotional ties to Israel and were therefore willing to accept lesser terms and a lower rate of return. Mitu Gulati, a professor of law at the University of Virginia who studies sovereign debt, calls this aspect of diaspora bonds the “patriotic discount.” “If there is a subset of people who are willing to lend to you at lower rates in bad times,” he said, “then that’s a way that you could have a form of insurance. Israel has it, and other countries would desperately like it.”
In 1951, the first set of bonds were issued. Since its founding, Israel Bonds has brought in $57 billion to Israel, constituting about 25 percent of its foreign debt.
What role did Israel Bonds play in shaping US diasporic identity and diasporic understandings of Israeli history?
In 1951, Meyer Steinglass, a journalist and editor living in New York, was hired to serve as Israel Bonds’ national publicity director. He was charged with developing the marketing and messaging plan that would make Israel Bonds a success. Steinglass’s grandson Torrey Townsend is a playwright living in Brooklyn. To write his recent theatrical production Jewish Plot, Townsend spent years engaging in archival and historical research to better understand his grandfather’s work.
“So much of Israel Bonds is a play on language—Israel Bonds. The bond, the form of kinship, it’s not a rational relationship. It’s an emotional relationship,” said Townsend. Under Steinglass’s leadership, Israel Bonds marketed itself by urging American Jews to remember their obligations. A 1951 ad in Life magazine that declared, “Men died so that these bonds could be born.”
The DCI also sought to tie sales to Jewish ritual life. Bonds were marketed on important dates in the Jewish calendar and promoted as a gift to mark Jewish life-cycle events, including B’nei Mitzvot and weddings. As part of the marketing plan, Steinglass also produced an annual Israel Bonds Hanukkah festival at Madison Square Garden, at which famous choreographers and dancers, as well as other celebrities, performed to a sold-out crowd.
Townsend has seen written materials from the first few annual meetings for Israel Bonds, including pamphlets with statistics detailing how many people were living in Palestine before the creation of Israel. Senior staff were aware of the Nakba, yet still peddled the idea of a land for a people for a people without a land.
“This is my grandfather, my direct ancestor,” he said. “They knew that the Palestinians were there. They knew that the land was theirs, but they made a choice.”
Israel Bonds took money from anyone, including the mob.
As the decades passed, the DCI also sought investment from pensions, credit unions, and trade unions. In the 1970s, the Teamsters bought at least $27 million in Israel Bonds as a means to rehabilitate their image; the DCI courted these funds and held dinners in honor of Teamsters with known connections to organized crime. At a June 1975 dinner, the Israeli ambassador to the US inducted future general president Jackie Presser into the exclusive Prime Minister’s Club, reserved for those who had secured significant investments on behalf of Israel Bonds. When it came to selling bonds, violence was a means to an end. “In this union the guys at the top can make the locals buy the bonds,” Steinglass is quoted as saying in Steve Brill’s The Teamsters. “I mean, you know what they say, ‘You can find yourself under a truck if you don’t obey.’”
Why did Israel Bonds become a prominent political issue after October 7?
As Israel began its military assault on Gaza, the country’s spending ballooned, jumping almost 30 percent in November 2023 as compared to the same month of the previous year. These spending increases would continue. According to data published by the Stockholm International Peace Research Institute, Israeli military expenditure rose by 65 percent in 2024, which it characterized as the “steepest annual increase since the Six-Day War.” Not only were expenses rapidly increasing, but Israel was losing tax revenue, in part due to tax deferments implemented after the start of the war, which allowed some Israelis to delay filing and paying taxes.
Israel needed fast cash, especially as interest rates on Israel’s sovereign debt spiked, from a yield to maturity of 3.871 percent in 2022 to 5.77 percent in 2023.
And so the DCI exploited its “patriotic discount.” The fact that there were more people purchasing Israel Bonds and making a lower rate of return than those buying bonds on the sovereign market gave the Israeli government access to cheap money just as its expenses and deficit were rapidly growing. One month after the attacks, Israel Bonds announced it had reached a new fundraising record, securing over $1 billion in sales. By May 2026, Israel Bonds had sold $7.7 billion.
The economic circumstances of the war reaffirmed Israel’s belief in the importance of Israel Bonds, but it also brought renewed interest from Palestine advocates and activists, who saw how a little-understood financial instrument could sustain Israel’s violence by assisting the country weather unfavorable economic times. In a 2025 report by the United Nations Special Rapporteur on the Situation of Human Rights in the Palestinian Territories, Francesca Albanese listed Israel Bonds as an “enabler” of the country’s settler-colonialism and an entity “directly involved in Israeli occupation and genocide.”
What about the economic argument against Israel Bonds?
For activists in New York and elsewhere, the moral case for not reinvesting in Israel Bonds is clear, but it’s not the only rationale. They also argue that there’s an economic case and that financial officials are violating their fiduciary obligation to taxpayers and pensionholders by buying Israel Bonds as a means of signalling political support for the country. In 2024, Israel’s credit rating was downgraded by all three major credit rating agencies, yet financial officials across the United States continued to invest hundreds of millions of public dollars in Israel Bonds.
Are comptrollers or other public officials who advocate for the purchase of Israel Bonds violating the law or their fiduciary responsibilities?
Richard Painter, a professor of law at the University of Minnesota and a former White House ethics lawyer for George W. Bush, said that to meet their fiduciary obligation, comptrollers and other financial officials first need to make decisions in the best interest of the beneficiary. He also said it was critical for these officials “to be very wary of those who will wine and dine you in order to sell you bonds because that creates conflicts of interest,” adding that such incentives are “quite common” in the bond industry.
For a 2024 investigation, reporters at the International Consortium of Investigative Journalists obtained more than 2,000 pages of public records to explore the relationship between Israel Bonds and public officials charged with managing taxpayer dollars. They found that Israel Bonds staff went to great efforts to court these public officials and in return those who purchased the bonds gained access to a glitzy world of gala dinners and private meetings with senior military officials.
Human rights advocates are attempting to hold accountable financial officials who invest heavily in Israel Bonds. In 2024, the Internationalist Law Center filed a lawsuit against Palm Beach County County Comptroller Joseph Abruzzo, alleging that he violated his fiduciary duty by investing 15 percent of the county’s total overseas funds in Israel Bonds.
What about the argument that the DCI has violated US law?
From the beginning, Israel Bonds leadership understood that their work on behalf of Israel Bonds likely triggered registration requirements under the Foreign Agent Registration Act, which mandates that individuals or entities conducting domestic lobbying on the part of foreign governments register with the Department of Justice. The AFDCI/DCI secured a FARA exemption by claiming it was a for-profit corporation acting in its own interest and with no immediate relationship to Israel, even though Israel Bonds have always had close ties to the Israeli government. (With some actors in the federal government skeptical that the DCI could sell their bonds without interjecting political propaganda on behalf of Israel, the FBI did order that confidential informants be developed in the Israel Bonds sales network, but nothing ever came of the investigation). The current president and CEO of Israel Bonds is Dani Naveh, a former Israeli cabinet member.
The DCI has gone to great lengths to enable public investment in Israel Bonds, including on the state level. In 2003 and 2004, the DCI successfully lobbied state legislatures in at least four states to allow public pensions to invest in foreign bonds. In 2008, Florida followed suit.
In 2023 and 2024, the human rights organization DAWN wrote to the DOJ asking for its FARA unit to investigate the DCI for failing to comply with the law.
How did Israel Bonds get wrapped up in the right-wing, anti-woke agenda?
Following October 7, Republican-led jurisdictions represented the greatest state and municipal investors in Israel Bonds. Of those Republican states that opted to invest, most have financial officials active in the State Financial Officers Foundation, a right-wing organization that seeks to end the publicly funded use of socially and environmentally responsible investing. Among other initiatives, the SFOF has drafted a model bill called the Energy Discrimination Elimination Act, which was based on anti–Boycott, Divestment, and Sanctions bills and was designed to protect the fossil fuel industry from boycotts.
New York is the one significant exception. In April 2024, DiNapoli spoke on an exclusive Zoom meeting, hosted by Israel Bonds for the SFOF. On the call were two conservative players in SFOF, including Ohio Treasurer Robert Sprague and Texas Comptroller Glenn Hegar. In speaking directing the purchase of Israel Bonds and speaking at SFOF-linked events, DiNapoli has aligned himself with Republicans who demonize diversity, equity, and inclusion initiatives and socially responsible investing, said David Armiak, a research director and an investigative journalist with the Center for Media and Democracy who has followed the SFOF for years.
The DCI has been quick to take advantage of the absorption of Israel Bonds into the anti-woke agenda. The organization has been a corporate sponsor of the SFOF since as early as 2021, although the precise amount of money given to the SFOF is unknown. Israel Bonds have also sought other ways to court these officials, including by creating a Government, Industry, and Financial Services Leadership Group, featuring many of the same officials.
By nurturing a relationship with the SFOF, the DCI and other organizations gain access to public officials charged with managing taxpayer dollars, said Armiak. “Sponsoring SFOF for years and then hosting an event for SFOF members is an obvious example of pay to play.”
As of 2024, the last year for which data is available, theNew York State Common Retirement Fund (NYSCRF), the pension fund for state workers, was known to hold at least $300 million Israel Bonds, making it the state with the second largest holdings in the country, a fact that has outraged local activists. The vast majority of these bonds were purchased under DiNapoli’s tenure. (Although New York does hold Israeli sovereign bonds, Israel Bonds constitute about 90 percent of its holdings of Israeli debt. According to JVP and DSA chapters leading the Break the Bonds New York State campaign, at the end of fiscal year 2024–25, the NYSCRF held about $332.5 million in Israel Bonds as well as $35 million in Israeli sovereign bonds.) DiNapoli has long had a close relationship with the DCI and regularly appears at the organization’s fundraisers including DCI brunches in the Hamptons and at glitzy NYC real estate luncheons, where he’s praised Israel Bonds as a “mainstay of our investment portfolio” and expressed his desire to invest in what he calls the only democracy in the Middle East.
This advocacy work only accelerated after October 7. At a November 2023 fundraiser where DiNapoli was a featured guest, DiNapoli received a standing ovation and was effusively thanked by Israel Bonds President Dani Naveh. In 2024, he made his sixth trip to Israel since becoming comptroller.
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Asked to comment on DiNapoli’s relationship with the DCI, Professor Painter said that it would be inappropriate for financial officials to engage in any conduct that would make it seem they are closely allied with bond sellers, including by appearing in promotional materials. In February 2024, the New York State Commission on Ethics and Lobbying in Government wrote a letter to DiNapoli, raising concerns that a sponsored trip to Israel—in which the comptroller was scheduled to meet with Israel Bonds staffers—could give the appearance of improper political influence, according to a recent story published by The Intercept.
Where have divestment campaigns seen success?
JVP and other groups have launched campaigns across the country calling for an end to public investment in all Israeli government debt, including Israel Bonds and sovereign bonds. Campaign wins have already been announced in states across the country, including North Carolina and Maryland. A number of US counties and cities have also opted to divest or not renew their Israel Bonds holdings, including over a dozen counties in Ohio, according to Jewish Voice for Peace Cleveland.
Significant wins have also been secured abroad. In November 2024, the Norway Sovereign Fund announced that it was divesting its entire $500 million holding in Israel Bonds. The next fall, after mounting internal pressure, the Central Bank of Ireland ceased approving the sale of Israel Bonds to states within the European Union, forcing Israel Bonds to ask Luxembourg to do so instead.
Activists in New York and beyond continue to press for an end to investment in Israel Bonds. “This unethical material support for Israeli apartheid, occupation, and genocide has to end,” said Dani Noble, the senior campaigns organizer for Jewish Voice for Peace. “It’s harmful for Palestinians. It’s harmful for Israelis. And it’s harmful to our communities.”
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