One of the most remarkable ways that Uncle Sam subsidizes Israel is through the tax-exempt organization. The IRS looks the other way while Americans contribute to the Israeli settlements and take a tax deduction on it.
Most blatant of these is "American Friends of Ariel, Inc." that raises money to support the illegal settlement of Ariel in the West Bank. The frosting on the cake is that the president of the organization is none other than Ron Nachman, Mayor of Ariel! You can get a good impression of Mr. Nachman by watching a short NY Times video on Ariel. Pay particular attention to his laugh at the end, and well should he laugh because he is taking Americans for a ride.
Sad to say but many residents of the settlements are Americans, through the dual-citizenship deal that allows people to be both citizens of the United States and Israel at once - enabling fanatics to retain all the rights and freedoms they enjoy as Americans while at the same time taking away land from Palestinians who have no rights even to hold onto their own land.
Check out this informative article on the "charitable" scam.