"Israeli officials have told us that the Finance Ministry is budgeting basic social services at a percentage of their known costs, telling local authorities to raise the money from overseas donors," an American Jewish official told The Jerusalem Post on Tuesday.

"In a country with a budget surplus of billions of shekels, this is very hard to understand, especially since the American Jewish community desperately needs to subsidize Jewish education in the US," the official, from an influential New York-based Jewish organization, said angrily. "We need this money, and if Israel doesn't, where do they come off?"

Avraham Infeld, a veteran Jewish educator who heads a major American Jewish philanthropic foundation, has "heard the rumor" of the alleged Finance Ministry policy.

If true, he said, "the government is making a terrible mistake and driving away donors. I don't believe it's the role of philanthropists to fund any area that's under governmental responsibility. The involvement of Jews from the Diaspora must go to things that are beyond what [the Israeli government is] mandated [to provide] by law. We're very careful to invest in places where the government is fulfilling its responsibility."

The Finance Ministry could not be reached for comment or clarification.

While American donors sometimes know funds are requested for projects where the government didn't fulfill its obligations, said Jennifer Meyerhoff of Baltimore, whose family are prominent philanthropists, "who will be brave enough to say 'no' first?

"If there's a plea from Israel for funds to upgrade the bomb shelters of Sderot, and the philanthropist says no, how does that look?" she asked, saying her words did not represent the views of the rest of the Meyerhoff family.

In the first months of 2007, the Treasury reported a budget surplus of almost NIS 8 billion.