Principal among these bodies were the World Zionist Organization (WZO--see Glossary) and the Jewish Agency. The Jewish Agency for Palestine was established in 1929 under the terms of the League of Nations Mandate for Palestine as the operative arm of the WZO in building a Jewish national homeland. In 1952 the Knesset enacted the World Zionist Organization-The Jewish Agency (Status) Law, defining the WZO as "also the Jewish Agency." The 1952 law expressly designated the WZO as "the authorized agency which will continue to operate in the State of Israel for the development and settlement of the country, the absorption of immigrants from the Diaspora and the coordination of activities in Israel of Jewish institutions and organizations active in those fields." The same statute granted tax-exempt status to the Jewish Agency and the authority to represent the WZO as its action arm for fund raising and, in close cooperation with the government, for the promotion of Jewish immigration. The specifics of cooperation were spelled out in a covenant entered into with the government in 1954. The 1954 pact also recognized the WZO and the Jewish Agency as official representatives of world Jewry.

These two bodies played a significant role in consolidating the new State of Israel, absorbing and resettling immigrants, and enlisting support from, and fostering the unity of, the Diaspora. Their activities included organizing immigration, resettling immigrants, assisting their employment in agriculture and industry, education, raising funds abroad, and purchasing land in Israel for settlers through the Jewish National Fund (Keren Kayemet). In principle, the WZO was responsible mainly for political and organizational matters important to Zionists--Jewish education in the Diaspora and supervision of the Jewish National Fund--whereas the Jewish Agency's main concern was for financial and economic activities. In practice, the division of functions was more often obscured, resulting in a duplication of efforts and a bureaucratic morass.

In 1971 the relationship between the WZO and the Jewish Agency was reconstituted as part of a continuing effort to improve the operations of these bodies and to harmonize and strengthen ties between the state and the Diaspora. The need for this step was thought to be particularly acute after the June 1967 War, when contributions to Israel from previously uncommitted sections of the Diaspora reached unprecedented proportions. Impressed by the show of support, the congress of the WZO, which is usually convened every four years, directed the Jewish Agency to initiate discussions with all fund-raising institutions working for Israel. The purpose of these negotiations was to establish a central framework for cooperation and coordination between the Jewish Agency and other fund-raising groups. These discussions led to an agreement in 1971 whereby the governing bodies of the Jewish Agency were enlarged not only to provide equal representation for Israeli and Diaspora Jews but also to ensure a baland39 ance in geographical representation. The reconstitution helped to address the long-standing grievance of non-Zionist and non-Israeli supporters of Israel that the Jewish Agency was dominated by Israel-based Zionists.

Under the 1971 rearrangement, the WZO was separated in terms of its functions, but not its leadership, from the Jewish Agency. This was necessary because of the restrictive provision of the United States tax code pertaining to contributions and gifts. Those of its activities that were "political" or otherwise questionable from a tax-exemption standpoint had to be grouped separately and placed under the WZO. The organization was directed to "continue as the organ of the Zionist movement for the fulfillment of Zionist programs and ideals," but its operations were to be confined mainly to the Diaspora. Among the main functions of the WZO after 1971 were Jewish education, Zionist organizational work, information and cultural programs, youth work, external relations, rural development, and the activities of the Jewish National Fund. For the most part, these functions were financed by funds funneled through the Jewish Agency, which continued to serve as the main financial arm of the WZO. However, because of United States tax law stipulations, funds allocated for the WZO by the Jewish Agency were required to come from those collected by Keren HaYesod (Israel Foundation Fund--see Glossary), the agency's financial arm in countries other than the United States.

The Jewish Agency's task was not only to coordinate various fund-raising institutions but also to finance such programs as immigration and land settlement and to assist immigrants in matters of housing, social welfare, education, and youth care. The United Jewish Appeal (UJA, sometimes designated the United Israel Appeal) raised the agency's funds in the United States. In the 1980s, contributions and gifts from the United States usually accounted for more than two-thirds of the total revenue of the Jewish Agency. In 1988 American Jews donated US$357 million to Israel through the UJA.

The Jewish National Fund was the land-purchasing arm of the WZO. It dealt mainly with land development issues such as reclamation, afforestation, and road construction in frontier regions. Keren HaYesod provided partial funding for programs, which were implemented in close cooperation with the Jewish Agency and various government ministries.

Data as of December 1988