Regulations

Future Trends in Israel’s Nonprofit Sector: A Review of the Top Headlines in 2012

Newspapers by Shuey Fogel

The headlines in 2012 were all about looking to the future.

While there were some stories with immediate consequences, the effects of most of the headlines will only rear their heads in 2013 (at the earliest). Change in the wind? Yes. On the ground, not so much.

So what’s in store for Israel’s global nonprofit sector? The following are nine of the top news stories of 2012 and their significance:

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USA State Solicitation Regulations Are Fierce & Far Reaching

"Paperwork" by Curtis Gregory Perry

With such as significant portion of donations to Israel’s charities coming from the United States, changes in American legislation can have a profound impact on Israeli nonprofit organizations.

For this reason, I happily agreed to co-host (along with Charlie Kalech of J-Town Productions) Laura Solomon, an attorney based in Philadelphia who specializes in nonprofits. Laura was a powerhouse, leaving me and the other attendees racing to take notes fast enough.

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Israel’s ONLINE Overhaul of its Nonprofit Sector (Guidestar Conference, Part 2)

GuidestarLogoAltered

As was mentioned in my previous post, Israel’s OFFLINE Overhaul of its Nonprofit Sector (Guidestar Conference, Part 1), the June 26th Conference Organized by Guidestar Israel tantalized the attendants with many planned improvements within the government offices tasked with overseeing Isael’s nonprofit sector.

Even more monumental, though, are the changes that are taking place online. Here we are seeing not just an upgrade in software, but in approach and analysis whose rippling effect will be felt far beyond Israel’s shores.

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Israel’s OFFLINE Overhaul of its Nonprofit Sector (Guidestar Conference, Part 1)

GuidestarLogoAltered

The June 26th Conference Organized by Guidestar Israel — a collaborative project of the Justice Department, Registrar of Corporations, Guidestar International, NP Tech, Joint Distribution Committee (JDC), and Yad Hanadiv (a.k.a. The Rothchild Foundation) — was June’s best prediction for “The Tomorrow of Jewish Philanthropy.”

In the global nonprofit sector there is much talk of cooperation and the need to combine forces to increase efficiency and cut costs, yet this synergy is hard to find. Guidestar Israel, in contrast, is actually doing it. Local charities, international organizations, private funds and government resources have all cooperated to bring the Guidestar Israel project into fruition. (And yes, it took over six years for the parties agree and get things off the ground, but we’ll choose not to focus on that for right now.)

Like many conferences, there was the good and the less good, but for those paid attention, there was also the surprising — announcements foretelling actual progress.

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Guest Post: IRS Renews Focus on International Activities by US Charities

"New York City, New Jersey (NASA, International Space Station Science, 03/14/10)" by NASA's Marshall Space Flight Center

This renewed focus may make Israeli charities that get funding from the US a little jittery – particularly following the IRS’s release of two private letter rulings (2010 and 2012) that denied exemption to new organizations seeking exemption for American charities that planned to do fundraising for Israeli charities. In any case, it should serve as a wakeup call to all American charities that conduct activities internationally that they need to strictly comply with the law and must avoid serving as a mere “conduit” to their foreign grantees.

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Why International Nonprofits Should Consider Incorporation

"Registration Desk Sign" by NHS Confederation

“Why or why not should one be incorporated?” is the question American lawyer Don Kramer asked in his Weekly E-Newsletter back in 2010.

For Mr. Kramer, the question is a legal one. The pros and cons that he outlines deal with personal liability and procedural/substantive questions. His fantastically succinct answer refers to state statute and case law.

For some, incorporation is relevant not because of legal concerns but rather taxation benefits. Others might contemplate incorporation through the lense of fundraising and its effects on donors. And yet to others, the act of incorporation or registration is simply a question of time and money — lacking either of the two might automatically render incorporation as an unwarranted expense.

As a banker, and more specifically, as a banker that deals with international nonprofits, I’m interested in easing a charity’s ability to open and manage a bank account.

So like any good Jew, I’ll answer a question with a question. When seeking to solve the riddle of “Should I incorporate?” I ask the following: Will your charity operate internationally?

If the answer is yes, then incorporate. It will make banking a whole lot easier.

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Israeli Charities Can (Begrudgingly) Now Use Credit Cards

"Credit Card Debt" by DebtCovered

After years of rumors, here-say, and unwritten code that outlawed the use of credit cards by Israeli nonprofit organizations, the newest version of the Nihul Takin [Certificate of Proper Management] from Israel’s Rasham Ha’amutot [Registrar of Charities] clearly permits the use of credit cards by Israeli charities…kind of.

Unfortunately, vague unwritten guidelines have now been replaced by confusing and unrealistic written rules. Progress?

So should your amutah [Israeli Charity] use a credit card? As no two charities are the same, that answer is best left to your organization’s board, accountant, and/or lawyer.

What I can do, however, is share the research I have done and practices I have witnessed from countless nonprofits, which will hopefully save your organization precious time.

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Increasing Demands on Israeli Charities, but is it Fair?

"Money and Magnifying Glass" by Images_of_Money

I was dismayed when I heard that some American (and European) Foundations are requiring amutot [Israeli nonprofit organizations] to have the Se’if [Paragraph] 46a status, which declares donations to a charity to be tax-deductible.

This latest phenomenon demonstrates a lack of understanding of the intricacies of international nonprofit regulations and makes it harder for worthy Israeli charities to raise money abroad.

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