Client Updates Related To NPO

Second Phase of Financial Assistance Grants for Third Sector Kicks Off

November 24, 2020 / Sagi Gross, Daniel Kleinman

Several days ago, the second phase of financial assistance grants for third-sector companies kicked off. Compared to the first phase, the size of a company's revenue for grant eligibility was expanded, as were the period of harm and the maximum assistance threshold.

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Categories: NPO | Tax Incentives and Grants

Israel: Aid Measures for Third-Sector Organizations and Civil Society

May 10, 2020 / Sagi Gross, Daniel Kleinman

As part of its effort to deal with the coronavirus crisis, the Social Services Division of the Accountant General’s Department at the Israeli Ministry of Finance recently released an aid package for the benefit of third-sector organizations.

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Categories: NPO

Israeli Registrar of Amutot Eases Reporting Obligations for Amutot and Public Benefit Companies (PBCs)

May 14, 2020 / Sagi Gross

In light of the coronavirus outbreak in Israel, and the restrictive measures taken by the government, the Israeli Corporations Authority has issued updated guidelines to ease the obligations of Amutot and PBCs.

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Categories: NPO

Israeli Registrar of Amutot Presents a New Policy – Certificate of Proper Management Valid for Two Years

May 27, 2019 / Sagi Gross, Daniel Kleinman

The Israeli Registrar of Amutot and Dedications has changed its policy on the granting of certificates of proper management to Amutot and public benefit companies (PBC). From now on, any Amutot and PBC that meets particular criteria will be entitled to receive a certificate of proper management valid for two years, instead of for one year, as was the case until now.

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Categories: NPO

Significant News for Third-Sector Organizations (NPOs) - Direct Saving of Millions Following a Dramatic Reduction in the Regulatory and Bureaucratic Burden

July 5, 2018 / Barnea, Daniel Kleinman

Recently, after a considerable number of meetings and discussions were held between representatives of third-sector organizations and representatives of a number of authorities, led by the Prime Minister’s Office, the inter-ministerial committee tasked with easing the regulatory burden on Amutot and PBCs published a report of its conclusions.

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Categories: NPO

Law Reducing the Use of Cash

April 8, 2018 / Anat Even-Chen

The Knesset recently approved the Law for the Reduction in the Use of Cash. This law imposes bans and restrictions on the making and receiving of payments using cash and checks at the sums therein prescribed.

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Categories: Corporate | NPO | Private Clients

Loans Guaranteed by the State for Social NPO’s (With No Personal Guarantee)

January 31, 2017 / Barnea

For the first time, social NPO’s can enjoy attractive, convenient loan terms guaranteed by the State for funding an investment or working capital in the NPO, and without providing a personal guarantee.

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Categories: NPO

2016 Overview of Israel's Third Sector Regulation and 2017 Trends

December 27, 2016 / Barnea

2016 was characterized mainly by the completion of a number of processes and initiatives promoted in recent years, mainly relating to tax issues and the recognition of non-profit organizations as public institutions entitled to tax benefits for donations received.

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Categories: NPO

For the First Time, Tax Relief Has Been Approved for Contributions to an Israeli NPO Operating Abroad

September 5, 2016 / Barnea

In an unprecedented action, the Knesset Finance Committee has recently recognized an Israeli organization operating abroad as a ‘public institution’ pursuant to section 46 of the Israeli Income Tax Ordinance. Such recognition affords the non-profit organization, a tax benefit, by way of a tax credit to donors for their donations granted to that organization.

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Categories: NPO | Tax

Update of the “Proper Management Rules” of Israeli Charitable Organization (‘amutah’)

January 25, 2016 / Barnea

Approximately two weeks ago, the Israeli Ministry of Justice issued a new revised edition of the booklet “Guidelines for Amutot conduct”, as well as a new and revised edition of the supplementary guidelines booklet regarding the “Registration of Amutot, Name, Objectives and Regulations”. These booklets include a number of revisions and clarifications to the previous drafting.

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Categories: NPO

Release from liability, indemnity, and officers’ insurance in an Israeli charitable organization – is it possible?

December 29, 2015 / Barnea

Arrangements providing release from liability, indemnity and insurance to officers in an Israeli charitable organization ’amutah’ (or ‘amutot’ in plural; the Hebrew words referring to charitable organizations) (and in Israeli Public Benefit Companies) have been gaining momentum recently, both on the part of officers of such NPO’s who are seeking shelter under arrangements similar to those customary in business companies, and on the part of insurance companies, which consider third-sector organizations as being a market offering considerable untapped business potential.

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Categories: NPO

Draft Bill – New Transparency Obligations on Israeli NGOs with Foreign Funding

November 12, 2015 / Barnea

A new Israeli government draft bill was published last week for public comments – “Disclosure Obligations of Recipients of Support from Foreign Political Entities Law (Increased Transparency by Recipients of Support, when the Majority of their Funding is from Donations from Foreign Political Entities).” The objective of this draft bill is to impose increased transparency on NGOs (associations/NPOs and public-benefit companies) regarding their activities, when the majority of their funding is from donations from ‘Foreign Political Entities’, beyond the transparency that is imposed on all recipients of such donations.

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Categories: NPO

New ITA circular, Aug 2015

August 30, 2015 / Barnea

On August 16, 2015, the Israel Tax Authority published a new circular (number 8/2015), which is effective immediately. The circular presents the new material requisite tests and criteria for recognizing an organization as a ‘public institution’ pursuant to section 46 of the Israeli Income Tax Ordinance. Certification issued to an organization pursuant to section 46 of the Income Tax Ordinance confers a tax benefit, by way of tax credits to donors in respect of donations they grant to that organization, at a rate of 35% for an individual donor and 26.5% for a corporate donor (according to the corporate tax rate).

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Categories: NPO | Tax

Amendment no. 14 to the Non-Profit Organizations Law

March 1, 2015 / Barnea

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Categories: NPO

Court ruling with a deterrent effect – imposing personal liability on directors of an Israeli non-profit organization (NPO)

July 5, 2015 / Barnea

In May 2015, the Jerusalem District Court issued a judgment imposing personal liability in light of lawful conduct of the affairs of an NPO, on the general manager and authorized signatory of the NPO, as well as on the estate of the general manager’s father, OBM (who had been the chairman of the NPO’s executive board). The Court adjudged them personally to pay the inclusive sum of approximately NIS 13 million.At issue is an NPO which, according to its formal-registered objectives, was established for the purposes of assisting victims of drug-related crimes, of increasing the public’s awareness of the pervasiveness of drug abuse, of providing information on drug-related issues and of increasing the public’s awareness of drug-induced violence. Already in 2011, the court had issued a liquidation order against this NPO, after the Registrar of Amutot (NPOs) had appointed an investigator to investigate the NPO and his report of severe findings had prompted the Registrar to file a motion with the court to liquidate the NPO. At that time, based on the investigator’s report, the court had ruled that it was clearly the court’s duty to liquidate the NPO for the good of the public and appointed a liquidator for the NPO’s assets pursuant to the liquidation order. The investigator’s report on the NPO indeed contained severe findings: that the NPO’s institutions were dysfunctional and failed to supervise the activities of the NPO’s general manager, whose actions were contrary to the interests of the NPO and had nothing to do with fulfillment and promotion of the NPO’s objectives, while misleading the NPO’s donors and exploiting their goodwill and ingenuousness. Thus, the report found, inter alia, that the NPO had raised a substantial amount of donations from the public, but took no action to promote NPO’s objectives; in fact, the gist of the NPO’s activities amounted to recruiting donations for the purpose of paying salaries to the NPO’s employees (which itself constitutes a prohibited distribution). The report also found that, in addition to the routine fund-raising setup, the NPO also kept a separate extensive fund-raising setup that was off the NPO’s books; that the funds collected through charity boxes (approximately 1,500 charity boxes dispersed at different places of business) and payment vouchers never reached the NPO, but rather, were unlawfully misappropriated by functionaries at the NPO and used to pay salaries. The report also found that cash payments were being made to employees without duly reporting them to the tax authorities.In light of all of the above, and as a result of the liquidator’s motion, the court ruled that the NPO’s general manager and the estate of the NPO’s executive board chairman (the general manager’s father) shall each be adjudged to return approximately NIS 6.5 million to the NPO, and collectively, approximately NIS 13 million. The judgment also appointed the liquidator (who was appointed pursuant to the aforesaid liquidation order), as the receiver of the real-estate assets and land rights of that general manager and on all assets of the chairman’s estate for the purpose of realization of the judgment and at the sum of the adjudged debt. Pursuant to the provisions of the Israeli (Non-Profit Organization) (‘amutot’) Law, the proceeds to be received in the NPO’s liquidation account as a result of the realization of the aforesaid assets shall be transferred to other NPOs having similar objectives for use towards fulfilling the objectives for which the public’s donations had originally been raised.This judgment constitutes an example of the imposition of personal liability on directors and officers of an NPO without requiring any lifting of the corporate veil. Pursuant to the provisions of the law, a person may be held personally liable and adjudged to pay obligations and debts of an NPO if the NPO was being fraudulently operated or if inappropriate use was being made of funds by those in charge, while breaching the duties of fiduciary and care that are imposed on them (pursuant to sections 373 and 374 of the Companies Ordinance, which apply to an NPO under liquidation by virtue of section 54 of the NPO (‘amutot’) Law). Furthermore, this judgment shines a spotlight on the importance of an NPO to act in accordance with its registered objectives and fulfillment of those. According to the provisions of the law, an NPO must act in accordance with its formal-registered objectives and prohibited from performing actions that do not fall within the scope of its objectives. Moreover, an NPO must utilize its resources (funds, assets, goodwill, equipment etc.) solely for the purpose of promoting its objectives. If an NPO has received funds, whether as donations or as support for the purpose of promoting a particular objective, it must use those funds for the objective for which they were provided and not for any other objective (even if such other objective does fall within the scope of the NPO’s objectives). Furthermore, if the representation given to donors is that a particular use shall be made of funds raised for the NPO, those funds must be expended for that purpose and may not be accumulated or allocated for other uses (even if they do fall within the scope of the NPO’s objectives). Activities by an NPO that are not in conformity with its stated objectives may lead to its liquidation, to the imposition of personal liability on directors, officers and functionaries of the NPO, and even, in particular instances, to the imposition of criminal sanctions.

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Categories: NPO

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