Sydney festival board member Benjamin Law has resigned following the festival’s refusal to terminate a $20,000 sponsorship deal with the Israeli embassy.

In a statement issued by Law on Saturday, the author and screenwriter said his resignation was an act of allegiance with fellow artists, who had been put in a situation not of their making.

“While I can’t speak for the board or the festival, I am personally sorry to Sydney festival artists and arts workers that you were put in a position where you may have had to choose between your work and values, or thrust into conversations for which you may have felt unprepared,” Law said in a detailed and carefully worded statement.

“Many of you were confronted with a lose-lose proposition. On one hand: perform and be criticised for apparently standing alongside a foreign government whose money you never touched. On the other: withdraw and lose vital work in a period that has been shattering for you and the entire arts community.

“It has been humbling and moving to see some of you withdraw in solidarity with Palestinians. It has been inspiring to see some of you persevere with performances in diabolically difficult circumstances. It has been sad to see some of you feel you had no choice but to withdraw from fear or frustration – often, understandably, directed at Sydney festival.”

Law said he had helped broker meetings between the festival and those protesting the funding in December last year, and that he hoped those meetings would continue. “In all of this, I’ve done my best to serve the festival, advocate for artists and help facilitate difficult but necessary conversations,” he said. “However, this has come at a personal cost. I acknowledge I’m one of many. Artists involved in Sydney festival – all of whom have seen Covid-19 obliterate work and income – have understandably felt frustration over why they were put in a situation not of their making. As an artist who has made work for Sydney festival myself, I feel that frustration.”

He said the decision to leave the board was his alone and he was comfortable departing because he had confidence the remaining board directors would “put things right” through an independent review.

Dozens of artists have pulled out of the 2022 Sydney festival over the $20,000 Israeli embassy sponsorship of the Sydney Dance Company production of Decadance, a work devised by Tel Aviv choreographer Ohad Naharin.

On Friday, a statement by the board’s chairperson, David Kirk, acknowledged that the festival had “faced unprecedented challenges this year”, specifically from Covid-19 and the Palestinian Boycott, Divestment, Sanctions (BDS) movement.

“This has put significantly increased pressure on all members of the board, the staff, and most importantly artists,” Kirk’s statement said.

In an earlier interview with the Guardian on Thursday, Kirk admitted that the board had been unaware of the sponsorship deal, brokered by festival management in July last year, until the festival program was published in late November with the Israeli embassy logo.

“It was just a miss,” he told the Guardian, adding he regretted the distress to artists that the sponsorship decision had caused.

The chair ruled out the suggestion either himself or festival director Olivia Ansell should resign over the issue, which subjected many artists to pressure on social media either because they had decided to join the boycott, or because they had decided to continue with their scheduled performances.

Kirk said normal processes had been followed, but those processes would be reviewed independently in the wake of the controversy.

On Friday Kirk thanked Law for his service, describing him as “an insightful and much valued member” of the board since joining in 2020.

“As we’ve worked through the complexities of this year’s festival, he’s been a considered and constant voice as we collectively arrived at our position,” Kirk said.