The decision was met with praise by the CEO of Fidel, which works to help integrate Ethiopian immigrants into Israeli society on an educational and social level.
All the organizations involved with Eurovision would continue to discuss planning Eurovision 2021, the statement said.
The event is due to be held from May 12-16 in Rotterdam. On Friday, Health authorities said a man infected with the coronavirus died in Rotterdam, the Netherlands' first known fatality.
The song, to be sung by Israel's 2020 Eurovision contestant Eden Alene, has lyrics in Amharic, Arabic, English and Hebrew.
"We have decided together to cancel one performance so as not to put ourselves and our loved ones in danger."
KAN won the award for the "Best of Technology and Innovation" for the Eurovision 2019 Song Contest that was held in Tel Aviv earlier this year.
Netta Barzilai was the international song contest’s winner in 2018, allowing Israel to host the event this year.
Duncan Laurence of the Netherlands accepts the trophy from Israel’s Netta Barzilai after winning the 2019 Eurovision Song Contest in Tel Aviv on May 19.
2019's contest was held in Tel Aviv and drew in an audience across 40 markets.