Palestinians have frequently called on Israeli Arabs to abduct Israeli soldiers, but this is the first time that money has been offered.
The Waad group from Gaza offered the bounty for Israeli soldiers in an e-mail sent to Palestinian media. The organization, which supports Palestinian prisoners held by Israel, is headed by Hamas' Interior Minister Fathi Hamad. The minister did not return messages seeking comment.
The charity could presumably raise the cash through its connections with Hamas. The militant group is thought to have millions of dollars at its disposal, both through its tight control of Gaza and support from Iran and other allies.
Waad's director, Usama Kahlout, said the bounty was in response to an Israeli group's offer to pay Gaza residents for information on the whereabouts of Sgt. Gilad Schalit, an Israeli soldier captured more than three years ago by Hamas-allied militants.
The Born to Freedom Foundation offered $10 million for information pertaining to Israeli soldiers missing in action or held captive. Activists routinely call phone numbers in Gaza as well as in Lebanon looking for leads on missing Israeli soldiers. Israeli intelligence is also believed to call Gazans in search of information.
German mediators are currently overseeing negotiations between bitter rivals Israel and Hamas to exchange Schalit for hundreds of Palestinian prisoners in Israeli jails.
Israel is holding some 7,500 Palestinian prisoners. Schalit is the only Israeli held by Hamas, while four Israelis who disappeared in Lebanon in the 1980s remain unaccounted for.
On Wednesday, visiting French foreign minister, Bernard Kouchner, met with Schalit's parents in Jerusalem.
The Schalits have French citizenship, and French President Nicolas Sarkozy has offered his support to the family.