The war in Gaza has provided a significant boost to drone startup XTEND, as the Israeli military has turned to the company for affordable and nimble robot aircraft. This increased demand has helped XTEND secure $40 million in new venture capital funding, bringing its total raised to $60 million. The company plans to use this funding to refine its software and better serve Israel’s Ministry of Defense.
However, despite its success in securing venture capital and military contracts, XTEND has also been soliciting charitable donations. The company’s website, which has since been taken down, asked visitors to “Join Us in Supporting Israel’s Defense” and featured a large “DONATE” button. The donations were intended for the immediate production and deployment of life-saving systems for Israeli Defense Forces (IDF) troops on the frontlines.
While U.S. law allows nonprofits operating overseas to receive charitable contributions, questions have been raised about directing such donations to fund combat. XTEND did not respond to inquiries about its fundraising campaign, but the Israeli nonprofit AlmaLinks, listed as a participant in the fundraiser, asked XTEND to take down the campaign upon learning about it. The PayPal page for the fundraiser directed American donors to send tax-free contributions through the U.S.-based donor-advised fund FJC: A Foundation of Philanthropic Funds. However, FJC disavowed the campaign and instructed XTEND to cease and desist using its name.
XTEND’s drones are known for their flexibility, affordability, and powerful cameras, making them excellent surveillance tools. They can also drop items, including weapons, from high altitudes. These capabilities have proven transformative in conflicts such as the fighting between Russia and Ukraine. XTEND argues that its drones are life-saving reconnaissance technology that allows soldiers to stay out of harm’s way while robots lead the charge. However, the company has also acknowledged its involvement in offensive operations, such as dropping grenades in Gaza.
The fundraising campaign for XTEND’s drones listed AlmaLinks as the organization processing donations. However, AlmaLinks stated that it had no knowledge of the campaign and asked XTEND to take it down. The fiscal sponsor for AlmaLinks is FJC, a nonprofit donor-advised fund based in New York. FJC disavowed the campaign and stated that XTEND was not authorized to use its tax-exempt status for fundraising. The PayPal page for the campaign was subsequently taken down.
Legal experts have raised concerns about using charitable contributions to support combat, particularly in conflicts that have resulted in civilian casualties. Charitable donations cannot be used to support warfighting or killing people, even if it is targeting “bad guys.” The U.S. tax code provides significant latitude to efforts like XTEND’s, and the lack of oversight by the Internal Revenue Service further complicates the issue.
Lawmakers and nonprofit experts have criticized the network of U.S. nonprofits that funnel tax-deductible dollars to illegal Israeli settlements. Pending legislation in New York aims to make it easier to sue nonprofits facilitating such donations. The role of any nonprofit involved in XTEND’s fundraising campaign aligns with the activities targeted by the legislation. XTEND’s campaign is just one of many ongoing drone crowdfunding efforts related to the war in Gaza.
In conclusion, XTEND’s success in providing drone aircraft to the Israeli military during the war in Gaza has led to significant venture capital funding. However, the company’s solicitation of charitable donations has raised questions about the appropriateness of using such funds to support combat. Legal experts have highlighted concerns about complicity in war crimes and the need for stricter oversight of charitable contributions.