The organization's past activity is politically-inclined, including a campaign against the New Israel Fund in the claim that the organizations supported by the fund played a part in the Goldstone Report, which accused Israel of committing war crimes in Gaza.
"We meant well, but instead found ourselves at the heart of public criticism which harmed the other organizations. A number of participating organizations imparted to the Bank that the campaign's atmosphere had been marred and had even become harmful to them", Leumi said in a statement.
"As a corporation which is open to dialogue with the public we concluded that for now this model of charity has not achieved its goal. As a result, we have decided that it would be best to stop the project at this point and find the best course of action to achieve the goals."
The campaign calls on the public to cast their votes on how the bank should distribute a NIS 2 million ($540,000) donation among 60 organizations from the 139 participating foundations.
On top of criticism from the public against the bank for allegedly exploiting the organizations for its own publicity, the inclusion of the Im Tirtzu organization raised a maelstrom of criticism and many of the Bank's customers threatened to take their business elsewhere.
Bank Leumi stressed that the 139 participating organizations would not incur damages.
"The bank will pay NIS 10,000 ($2,675) to each organization to cover its expenses for the project. Another NIS 600,000 ($160,600) will be transferred to projects in which the bank has an ongoing sponsorship for the promotion of education, community and welfare in Israel," the bank assured.
'Peace Now's silencing campaign worked'
The Im Tirtzu organization said in response, "the Peace Now silencing camping achieved its goal. It has been proven once again that the radical Left is skilled at shutting the mouths of those who are not aligned with its delirious views.
"We are sorry that bank gave in to the threats and blackmailing of the Peace Now movement – actions which have harmed dozens of the campaign's organizations that are doing such invaluable work.
"We would like to thank the thousands of people who supported us and placed us in the second place in this campaign."
Shelly Pritzker contributed to this report
Click here to read this report in Hebrew