Aug 25 (Reuters) - Despite its stated policy against settlement growth, the United States grants tax-exempt status to organisations that openly raise money to aid Jewish settlers in the occupied West Bank.

The groups say the tax-exemptions are based on humanitarian work they perform in the settlements. Critics counter that the programmes are political in nature and undercut U.S. foreign policy interests and international law.

Below are some of the organisations involved:

HEBRON FUND

Based in New York, the tax-exempt Hebron Fund has raised an average of $1.5 million a year to assist the hundreds of Jews who live in the city surrounded by 180,000 Palestinians.

The Hebron Fund, created in 1979, "operates in concert with the community there to assess their needs and respond in kind" with the goal of improving the "daily life for the residents of Hebron, Israel", the organisation's website says.

After settlers took over a new but unfinished building in Hebron in March 2007, the fund solicited donations to finance renovations like installing doors, windows and heating systems.

"Dozens of new families can now come live in Hebron -- only if we renovate this building quickly!" the Hebron Fund said in its appeal.

To critics who argue that the projects promote settlement expansion and run counter to U.S. foreign policy, Hebron Fund Director Yossi Baumol responds: "That's true. But the U.S. government has no right to use political considerations when judging humanitarian and non-profit needs. The right of Jews to live in Hebron, or New York, should be protected."

"Tomorrow, the president may be in favour of it (settlements) and that would put all the non-profits at the mercy of politics," he added.

CHRISTIAN FRIENDS OF ISRAELI COMMUNITIES

Christian Friends of Israeli Communities is a tax-exempt organisation whose stated goal is to link settlements in Israel with Christian churches in the United States and elsewhere.

Fundraising among U.S. evangelicals has grown steadily in recent years.

The organisation's U.S. branch has told prospective donors it aims to raise $650,000 in 2008 to "help the Jewish people living in Judea and Samaria", compared to less than $140,000 raised in 2002, tax records show.

"We are not a political organisation. We are doing humanitarian work and we're doing humanitarian work in Judea and Samaria," Sondra Oster Baras, president of Christian Friends, said, referring to the settlements in the West Bank.

Baras, who is Jewish and lives in a West Bank settlement, said denying tax breaks to organisations like hers would be the equivalent of cracking down on food kitchens in the United States because they provide services to some illegal immigrants.

"Injecting extraneous political issues into what should be a purely humanitarian issue will open a Pandora's box for every charitable organisation in the United States," Baras said.

AMERICAN FRIENDS OF ARIEL

The tax-exempt American Friends of Ariel has raised more than $5.5 million to help residents of the settlement over the last five years, tax records show.

Money went to the Ariel Development Fund, which, in turn, finances "humanitarian" projects, including "immigrant absorption".

The fund was created because the leaders of Ariel believed "government budgets would not suffice to create all the services and facilities that the pioneering residents of Ariel would need," the city's Web site says.

"We don't deal with politics. We deal only with the welfare of the people. That is what the IRS demands," said Ariel Mayor Ron Nachman, who is listed as president of the Coconut Creek, Florida-based American Friends of Ariel.

"The IRS is not involved in politics. Let the State Department deal with politics," he said. (For main story, doubleclick on [nLK275621] (Reporting by Adam Entous; Editing by Sami Aboudi)

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