The famously left-wing San Francisco community is embroiled in a dispute over how much criticism of Israel it should support.

In February, the city's Jewish Community Federation, which is the community's main funding body and umbrella group, announced new funding guidelines regarding Israel.

The policy states, in part, that the federation will not fund organisations that "advocate for, or endorse, undermining the legitimacy of Israel… including through participation in the Boycott, Divestment and Sanctions (BDS) movement". Nor will it support events or projects that are co-sponsored or co-presented by such organisations.

This makes San Francisco the first federation to codify on a local level anti-BDS funding guidelines proposed nationally by the General Assembly of the Jewish Federations of North America last November.

Local Jews are split over whether the guidelines are long overdue or will stifle the pluralism that gives the San Francisco community its strength.

Having lived through McCarthyism, this is very disturbing

Doug Kahn, executive director of the San Francisco Jewish Community Relations Council, says the city is a notorious hotbed of anti-Israel protests, and the community needs to draw the line.

"This makes clear the distinction between criticism of Israeli government policy, clearly within the bounds of the policy, and advocating for undermining Israel's legitimacy as a nation."

Others disagree. In May, 73 San Francisco-area rabbis, intellectuals and artists signed an open letter in the Forward newspaper protesting against the "dangerous precedent" being set in the city.

Noting that those who signed hold a wide range of views on the conflict, the letter complained that the new guidelines are harmful because they "limit debate, threaten dissent, and establish… a litmus test for loyalty to Israel as a condition for funding".

Critics say that while they accept the federation's right to set certain boundaries - the new policy also stipulates that Holocaust deniers and Christian proselytisers will not be funded - they do not want the federation to decide the limits of discussion about Israel.

"Who's to say what's in Israel's best interest?" asks Steven Zipperstein, professor of Jewish culture and history at Stanford University and a co-signatory to the letter. "Once such guidelines are imposed, we're playing with fire that is potentially uncontainable."

The new policy came in direct response to last summer's San Francisco Jewish Film Festival, which twice screened Rachel Corrie, an Israeli film about the young American activist's death during a Gaza protest, and invited Ms Corrie's mother to speak.

Angry letters poured into the local Jewish newspaper, demanding to know why communal funds were used to sponsor the elder Corrie's anti-Israel speech. Five members of the film festival board resigned in protest.

But critics of the new funding policy say the federation should not have given in to those critics.

"Having lived through McCarthyism, this is very disturbing to me," says Naomi Newman, co-founder of The Jewish Theatre, who signed the Forward letter as an individual. "As Jews, we even have the right to argue with God."

The community can argue about whatever it wants, counter federation officials. But the federation does not have to fund all of it. "Our mission is to fund programmes in Israel that help improve the lives of Israelis, and to educate and build identification with Israel among American Jews," explained Jennifer Gorovitz, CEO of the San Francisco Jewish federation, which last year gave away $150 million.

"We seek to advance that mission through grant-making. That's why we're in business."