Writer and philanthropist Ruth Ritchie has resigned from the fundraising foundation following the company's handling of the protests.
Three actors donned the Palestinian keffiyeh scarf during the curtain call for the opening night of Chekhov's The Seagull in late November.
The move sparked criticism from the Jewish community and has led to the resignation of three foundation directors including Judi Hausmann and Alex Schuman, the chief executive of fashion house Carla Zampatti.
A third director of the STC Foundation has quit in the wake of a pro-Palestine protest. (Steven Saphore/AAP PHOTOS)
The Sydney Theatre Company (STC) has been contacted for a response.
In a statement issued after Hausmann's resignation, the company apologised for its initial handling of the situation.
"We understand the actions at the curtain call and our immediate response has hurt many in our community," the statement said.
"We believe that it was not the intent of the actors involved to cause any harm or offence."
Artists' responses to the conflict have also led to other divisions in Australia's arts community, with the Anna Schwartz Gallery ending its representation of prominent artist Mike Parr.
Parr took part in a performance work at the gallery earlier this month in which he painted text on a wall referencing the conflict in Gaza.
But the "co-appearance" of the words Israel and Nazi, which Parr painted blindfolded on the wall along with other phrases referencing the conflict, prompted the gallery owner to end their 36-year relationship.
"Mike Parr is the greatest artist this country has ever and perhaps will ever produce," Schwartz, who is Jewish, told ABC Radio on Monday.
"I can't work with an artist who is prepared to hurt me to that degree and to insult my culture and my lived experience, the generations that have come before me that have suffered and have been annihilated," she said.
Parr's artwork - which has attracted the most visitors the Flinders Lane gallery has ever seen - will remain on display until Saturday.
Schwartz maintained dropping Parr was not an act of censorship.
"I'm not censoring anybody," she said.
7°C