They really run off the rails right at the very beginning, claiming that the "litmus test for Jewish identity" in the Bay Area is now "do you UNCONDITIONALLY love Israel"? The Federation policy doesn't deal with questions such as "who is a Jew?" or whether someone can join a synagogue. It is a policy regarding what programs the Jewish Community Federation (a private charitable nonprofit with its own board of directors) will fund. The Federation is under no obligation to fund a group just because they happen to put the word "Jewish" in their name-- whether that's the San Francisco Jewish Film Festival, Jewish Voice for Peace, or a "Messianic Jewish" congregation.
Organizations stand for a set of principles. The Federation's mission statement declares:
"The Federation gives continuity to Jewish values: [including]The supporting of Israel, the democratic homeland for the Jewish people". Why, then, should it support, even indirectly, organizations or programs whose mission or content runs counter to that? Doing so would actually violate the fiduciary responsibility that its board has to its donors. Since the founding principles of BDS include the fictitious "right" of return for descendants of refugees from the Arab war against the Jews in 1947-8, the BDS movement has clearly stated that its goal is not merely the end of Israel's occupation of the West Bank, nor the establishment of a Palestinian state living in peace next to a Jewish state of Israel; its goal is a Palestinian state in place of Israel.
The Muzzlewatch post then goes on to incorrectly charge that the "McCarthyite policy guidelines" would "seek to sever public ties that Jewish organizations, including progressive synagogues and arts and educational organizations, have with groups" that support BDS. Actually, the policy specifically refrains from that-- it only addresses funding of organizations that through their mission, activities or partnerships, support BDS. It explicitly points out that "Artistic presentations that may include critical perspectives of Jewish life or Israel and that, on balance, are consistent with JCF's core values" are considered to be in accord with the new policy. As far as any other activities, the policy only affects Israel-related programming. So if you are running an art exhibition or film festival that presents programming on Israel in partnership with those groups that support BDS, then you still have the freedom to present them; however, you should be seeking your financial support elsewhere than the Jewish Community Federation. Exactly as it should be, and no logical reason that Jewish Voice for BDS can provide to suggest otherwise.
Jewish Voice for BDS also charges that this will "impact the ability of Jewish organizations to partner with Christian, Quaker or Muslim groups, many of which support BDS." It certainly won't, for example, impact the ability to partner in activities such as feeding the hungry, or providing shelter to the homeless, which have nothing to do with Israel-related programming. Just another example of throwing as much mud against the wall as possible just to see what might stick. (It's another, and much more complicated, discussion as to whether Jewish community organizations should draw a line against working together with representatives of other religious groups that are actively supporting the elimination of Israel, if the project in question has nothing to do with Israel.)
This policy statement is a turning point-- not in its restatement of the existing values of the Federation, but in standing up against the creeping subversion of our community institutions by those who do not share and support those values. Jewish Voice for BDS is right about one thing, though--these guidelines are indeed aimed at them. After all, though they are a small fringe group, they have been vocally spitting in the face of this Jewish community's institutions for years. And the community, as embodied in its Federation, has finally said "Enough. We will not fund this agenda." No excommunication, no auto-da-fe, no fatwa, just a statement that those who wish to attack one of our central values shouldn't expect us to pay for it.
(And yes, I DO unconditionally love Israel, just like I unconditionally love my children. That won't stop me from criticizing their mistakes, or providing appropriate consequences for serious misbehavior. But it means that I won't beat them up physically, I won't starve them, and I won't stand by when someone else physically assaults them-- or threatens, quite publicly, to kill them.)