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Participants hold a giant pride flag as they take part in the Gay Pride Parade in Toronto, July, 3, 2011.Mark Blinch/Reuters

Toronto's Pride Week is at risk of losing its city funding now that Queers Against Israeli Apartheid has confirmed its intention to return to the parade this year.

Council is slated to vote next month on providing a $123,807 grant to Pride Toronto, a decision that would have been routine if not for QuAIA's plan to apply for a spot in the parade before the June 1 deadline.

"They certainly were given the message last time that funding would be withheld [if QuAIA marched.]If they want to go down that route, I dare say [Pride's]funding would be in jeopardy," said Budget Chief Mike Del Grande.

After igniting a firestorm of controversy during the election summer of 2010, QuAIA, which strongly disapproves of Israel's treatment of Palestinians, volunteered to skip the parade in 2011 because it didn't want to give Mayor Rob Ford a pretext to cancel funding to the 10-day Pride celebration.

On top of the grant, the city provides about $300,000 worth of police, clean-up and other services for Pride Week, which runs from June 22 to July 1 and has a budget of about $1.5-million.

"This year, especially since the theme is celebrate and demonstrate, we thought we should be back," said Tony Souza, a QuAIA member. "We're a legitimate group just like anybody else and the city manager's report says we're not a hate group, we don't speak ill of anybody else."

The fight between QuAIA and its opponents – who argue the term "Israeli Apartheid" is an unfair comparison to apartheid-era South Africa – prompted Pride Toronto and the city to change how they deal with controversial marchers.

Pride Toronto established an arm's-length dispute resolution panel that will have the final say on who can march.

The panel steps in only if a formal complaint is filed against an organization that has applied for a spot in the parade, an untested scenario that's almost certain to unfold in the QuAIA case.

The city, meanwhile, changed its practice for 2011 to cutting Pride Toronto a cheque after the 10-day celebration on the condition the festival doesn't violate the city's anti-discrimination policy.

But what counts as a violation of that policy is a tricky issue. Last year, the city manager determined the use of the words "Israeli Apartheid" in and of themselves didn't break the rules, prompting city council to ask for a review of the anti-discrimination policy, which is expected to go to the mayor's executive committee in June.

Either way, "it would have an impact," if the city denied Pride funding, said Kevin Beaulieu, the executive director of Pride Toronto.

"It would be a significant issue for Pride Toronto in the production of the festival as a whole," he said. "The funding that Pride receives from the city is for the cultural activities really related to the festival, and not so much the parade."

Councillor Gord Perks said council shouldn't hesitate to approve the grant.

"I believe that the city of Toronto should be proud to fund Pride," he said. "City council has already sorted out its problems with Pride. We have no reason in the world to withhold funding."

Mr. Beaulieu said he still hasn't heard from Mr. Ford or his office about whether the mayor will attend any Pride-related events.

The mayor has already confirmed he'll skip the parade to keep his family's tradition of going to the cottage on the Canada Day long weekend.

The mayor's office declined to comment on QuAIA's possible participation in the parade.

But Deputy Mayor Doug Holyday questioned whether the city should fund a Pride Week that includes QuAIA.

"If they're going to do things with our money that we don't want, I don't think that's proper," he said. "I don't think taxpayers want their money used for political protests."