The Inter Faith Network (IFN) has rejected criticism in The Telegraph about its alleged silence on Hamas' October 7 terror attack on Israel and links to the Muslim Council of Britain (MCB).
The newspaper reports that Communities Secretary Michael Gove wrote to the charity saying he was "minded" to end funding because the MCB is one of its members.
The government had until last year banned official contact with the organisation after a deputy secretary general signed the Istanbul Declaration calling for violence against Israel.
The IFN has since taken an "in-principle decision to move towards closure of the organisation", with a final decision to be confirmed on 22 February, unless it receives £155,000 in government funding.
In a statement the IFN defended its continued work with the MCB, saying that it "represents a significant number of Muslims in the UK, with whom IFN aims to promote good inter faith relations".
"It is not a proscribed body and IFN is not aware of any policy or activities of MCB supporting terrorism," it said.
On its alleged "failure to condemn Hamas", the IFN said that Charity Commission guidelines and its role as an inter-faith organisation meant that it "cannot make a simple statement of that kind".
"IFN has a longstanding policy on the making of statements which precludes direct comment on overseas events. Recent legal advice has confirmed the appropriateness of the policy," it said.
Madeleine Pennington, head of research at the Theos think tank, has been critical of the government's decision and said that the "misguided" decision to withdraw funding to the IFN "couldn't come at a worse time".
"The horrific violence in Israel and Gaza has created a particularly difficult period for community relations in the UK. There was a rise in both Islamophobia and antisemitism across the country in the closing months of 2023.
"Against this backdrop, opportunities to unite different faith communities in moments of shared anger and grief have provided beacons of solidarity and hope," she said.
