Links to the articles I’ve reviewed and posted to Twitter between May 2 – May 8, 2011.  This week’s topics include:  U.S. Regulations  •  Israel & Jewish Nonprofits  •  Governance & Strategy  •  Fundraising  •  Social Media  •  Resources

You can stay up-to-date with these articles and more by following me on Twitter or subscribing to receive The Nonprofit Banker by email.

Tizku Lemitzvot,

Shuey
@nonprofitbanker

U.S. REGULATIONS

Think like the IRS >> The Profitable Side of nonprofit – Pt I: Earned Income http://ow.ly/4PRf2 by Nonprofitlawyer

DonKramer: Nonprofit Bylaw changes, can they be made without notice to the members? http://ow.ly/1sMECl

ISRAEL & JEWISH NONPROFITS

Food for thought: What Makes a Jewish Non-Profit Jewish? By Stephen Donshik http://ow.ly/1sOVpa on eJPhil

NonProfitBanker: English-Speaking nonprofit execs in Israel rejoice! Nihul Takin manual is also now in English! http://ow.ly/4NORf

GOVERNANCE & STRATEGY

LawForChange: 4 things nonprofit boards should understand re: operating reserves http://ow.ly/1sMYnIvia GTak

Gaylegifford: Why nonprofit board chairs shouldn’t boss the CEO http://ow.ly/1sNDcB via GTak // great discussion in the comments

TrustEnabler: Attending Your 1st Nonprofit Board Meeting? 9 Tips from Fastcompany http://ow.ly/1sNDu6 via GTak

4 Ways Nonprofits Can Increase Their Impact with Data, by NTENorg http://ow.ly/1sOW9k

Good points: “For Nonprofit Managers, Trust is key” on NPTimes http://ow.ly/1sRoIu

FUNDRAISING

Don’t settle for impersonal campaigns: The Importance of Face-2-Face Meetings with Donors http://ow.ly/1sRtel in eJPhil

SOCIAL MEDIA

3 ways to convince management to get on board with social media http://ow.ly/4PQTr via KatyaN4G

Interesting use of Facebook by volunteer-led org >> March Madness Fundraiser, Powered by Like, by Askdebra http://ow.ly/1sMEnR

NONPROFIT RESOURCES

GTak: Looking for a job w. a nonprofit? Job sites reviewed & rated on Blue Avocado (Janmasaoka) http://ow.ly/1sOtTn

Nonprofit Management 101: A new book offering practical & implementable tips from 50 leading experts http://ow.ly/1sOvQd via Kanter

As we start the Jewish New Year, I found it quite fortuitous that I ran across the following article and its implied message in the September 15th Haaretz paper.  The title read “Biker combines altruism, cross-country challenge.” In short, an extreme sports enthusiast named Ronen Medina is traveling cross-country, from Metula (Northern Israel) to Eilat (Southern Israel), on his electric scooter, visiting hospitals and distributing packages of candy to patients.

One, lets assume the patients aren’t diabetics. Two, lets ignore the alarming reports that note the increase in Israeli children requiring dental work on their baby teeth. And three, go Ronen! His goal: to make them happy. And his inspiration: I thought, if I am already doing it [crossing Israel on a scooter], why not make patients in the hospital happy. Shouldnt volunteering for and donating to our favorite causes be this easy?

After converting his dirt bike into a motorized scooter, to which he hitched a carriage containing a tent and four batteries plus bags of treats for the patients…Sponsored by the companies that contributed the candy and with the support of scooter and battery companies whose contributions were also solicited for the expedition.

Truly, one person really can make a difference. Or as J.R.R. Tolkien said: “Even the smallest person in the world can change the course of the universe.” (Lord of the Rings)

Because people are naturally skeptical, I’ll provide some additional proof of the power of the individual (and there are a lot more great examples out there):

Eric Halivni (Toldot Yisrael) — Eric (Aryeh) realized that Israel lacked any archive of video testimonies of the people at any and every level involved in creating the State of Israel. Modeled after Steven Spielberg’s Shoah Foundation, Eric has single-handedly spearheaded the only mission of its kind is Israel: preserving these important stories for future generations. Congratulations to Eric upon recently completing his 100th interview.

Rabbi Y.D. Grossman (Migdal Ohr) — At the age of 21, Rabbi Grossman left Jerusalem for the development town of Migdal Ha’emek in the hopes of lending a hand. He soon realized that the residents’ social and economic problems could be traced back to childhoods lacking a warm and loving environment. Over 35 years later, Migdal Ohr services about 6,000 children in a wide array of formal and informal educational programs, schools, and foster homes.

If you think that poor, little you doesn’t have what it takes to spread your important message then listen to this story:

Eli Winkelman (Challah For Hunger) The founder met Bill Clinton on her college campus and told him of her project. Approximately, six months to a year later, Bill Clinton was on television show as part of a panel with other celebrities to promote the ideas of volunteerism and social initiative. While answering the question as to how one can take the first steps in starting his or her own initiative, Clinton answered that one should always “plays to their strengths.” He elaborated by telling the story of Eli Winkelman and Challah for Hunger to an audience in the millions, accompanied by orchestral music and video footage. He capped it off with his own tag-line for the organization, “Jewish girls, baking Jewish bread for Muslim children,” to thunderous applause from the other panel members and live audience. Click here to watch President Clinton.

It can happen. All you need to do is take that first step…

May we all take advantage of the personal strength that lies inside all of us. Shanah tovah and best wishes for a happy and healthy New Year.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

After months of ridiculing twitter about its uselessness, I realize it may be the perfect solution for when I want to share an observation or piece of news but can’t write a blog post right away.   Twitter, also known as microblogging, only allows for posts up to 140 characters.  It’s possible that I’ll follow up with an expanded blog post, but just as likely that the Twitter update will speak for itself. 

Click here to link to my Twitter page.

I have reorganized my site slightly — “links” now have their own dedicated page — to better incorporate my “tweets” into my site.  I hope that these microblogs are helpful.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

An article was recently posted on Midot’s website highlighting a joint study done by Midot and Sheatufim.   The study was presented at a Sheatufim conference on June 23, 2009.  The many findings of the study include:

• Israeli philanthropic foundations are investing great resources in the grant process and in grant selection before the transferring of funds to nonprofits; however, most foundations lack clear criteria that accompany the process and rely only on the reports from the recipients themselves.
• Even though the processes of the different foundations are similar, there exists little cooperation between the various foundations.
• Most foundations do not rely on external professionals to help check the recipients’ usage of the grants.
• Most foundations do not implement a suitable analysis before the donation is given.
• Foundations reported a lack of evaluation and measurement tools to check recipient organizations.  Foundations also noted a lack of tools to help analyze the financial statements of the organizations.

In response to the report, the article quoted Shlomo Dushi, Sheatufim’s CEO:

“During a period of a world financial crisis, the purpose of philanthropic foundations  is critical as they can provide much needed oxygen to organizations.  There is a need to formulate a shared tool that will provide an answer to the needs of  the foundation so that it can invest its grants in an effective manner.”

Recommendations of the Study:

1. To create a shared tool that foundations can use to evaluate nonprofit organizations.
2. To request help and advice from external professionals in the field when reviewing charities.
3. To define clear criteria to analyze nonprofits.
4. To work in cooperation [shituf pe’ulah] between the various foundations.

Personally, I wonder if item #4 will actually help foundations analyze their recipients better or if it will just lead to a Big Brother syndrome, with all foundations sharing information to the detriment of the nonprofit organizations.  Jury is still out with this question.  Any thoughts?

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey

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Some Background Information:

• Midot is an Israeli version of Charity Navigator.  The biggest glaring difference is that while Charity Navigator grades charities based only on their financials, Midot analyzes many different aspects, such as board participation and target audience.  Midot was founded by Meitav Investment House and the JDC.
• Sheatufim is an organization whose goals boil down to making nonprofits function better.  Contact Sheatufim to see if your charity can qualify for their programs.  The organization was founded by Zionism 2000,  the Rashi Foundation, the JDC, and the Gandyr Foundation.   For a full list of their partners and cooperating organizations, click here for Hebrew and here for English.

For those individuals or corporations familiar with nonprofit organizations in the United States, any analysis of the status of an Israeli charity should begin with a comparison.  This contrast will shed light on the many differences that exist in the two countries’ legislation and definition of a nonprofit organization.

American Nonprofit Organizations

In the United States, all for-profit and nonprofit organizations are companies.  Each company is registered in the state where it is headquartered; the definition and governance of these companies differs slightly from state to state.  In the United States the title of nonprofit is a federal one, referring to any organization that is exempt from some federal income taxes (although many states use the federal guidelines to exempt similar organization from state taxes, as well).  All organizations that fall into this category are labeled as 501(c).  While there exist 28 categories, only those organizations belonging to the 501(c)3 category will allow an individual’s donation to be tax-exempt.  This group is divided into public charities and private foundations.  For the purpose of this article, the definitions of the two groups are not relevant.  In short, it is these 501(c)3 organizations that have been colloquially dubbed “nonprofits” in the United States.

Israeli Nonprofit Organizations

In Israel, traditional nonprofits are called amutot (or amutah in singular) and have their own governmental oversight body, called the Rasham Ha’amutot (Registrar of Nonprofit Organizations).  Companies have a separate federal group tasked with overseeing them called the Rasham Hata’agidim (Registrar of Companies).   Both registrars can contain organizations that would be considered non-profit and for-profit under American standards.

Further investigation reveals that within each registrar are subcategories that will be referred to as licenses or statuses for the purpose of this article.  As most nonprofits are registered with the Rasham Ha’amutot (Registrar of Nonprofit Organizations), it is logical to start the analysis from here.

1. Mispar Ha’amutah [Nonprofit Organization Number] – This is simply a number that the charity receives letting the public know that this organizations is registered with the government under the Registrar of Charities; as such, this charity is subject to government scrutiny under the Amutah (Nonprofit) Law.  This number will function like an I.D. number (for Israelis) or like a social security number (for Americans).  This number is for identification purposes only and does not label donations the charity receives as tax-exempt.  The process for receiving a nonprofit ID number takes approximately a month, according to the staff at the Registrar of Charities.   
2. Nihul Takin [Sound Management] – This is a certificate awarded to organizations that follow an additional set of management guidelines as decreed by the Registrar of Nonprofits.  This status is assigned to organizations that have been in activity for no less than two years.  For the first two years, there is an interim document that can be obtained called “Certification of Validity of Presentation of Documents.”  An organization will not be able to obtain grants or contracts from the government without the nihul takin status.  For better of for worse, many institutions outside Israel are using the nihul takin as their benchmark, as well. 
3. Mosad Tziburi [Public Institution] – This status is given by the Ministry of Finance and declares the organization’s funds are to be tax exempt; for example, profit earned from investments made with a bank or financial institution would be tax exempt for this kind of organization.  This status does not brand the donations that the charity receives as tax deductable.  A nihul takin license is required when applying to be a “public institution.” 
4. Se’if 46 [Paragraph 46] – This status is granted by the Finance Committee of the Knesset on the recommendation of the Finance Committee to organizations that have obtained status as a public institution.  It is the “Paragraph 46” status that is comparable to the nonprofit 501(c)3 status in the United States.  Individuals that donate to charities that have Paragraph 46 status can get up to a 35% refund on their taxes.  An expert accountant in the field estimated the minimum time required to receive Paragraph 46 status as six months.  Practically speaking, this means that two and a half years of existence is the absolute earliest an Israeli nonprofit can expect money donated to them to be tax-exempt.  It is important to note that only approximately a third of the charities operating in Israel have this status. 
5. Malkar [Institute Not-Intended for Profit] – This license is granted from the Ministry of Finance and can be interpreted as “additional level of fiscal approval.”[1]  Organizations with this status can sell goods and services without charging VAT [Value Added Tax], or sales tax.  Purchases made by the charity, however, are still subject to VAT. 

A small fraction of nonprofit organizations exist as Chevrot Leto’elet Hatzibor [Companies for the Benefit of the Public].  These organizations are governed by company laws and are registered with the Rasham Hata’agidim [Registrar of Companies].  These institutions can also apply for all of the above licenses, if they are founded “for the promotion of commerce, arts, science, religion, charity, or any other social function with the aim of benefiting the public.”[2]

While the Amutah (Nonprofit) Law established by the Knesset is quite clear and concise, the guidelines managing nonprofits in Israel are murky, cumbersome, and confusing; this is due to the Israeli Government having created additional licenses and leaving them in the control of different branches of the government.  Those individuals or institutions looking to make a comparison between organizations registered in the United States and Israel will, thus, find their compass missing its needle.  The simple charity ID number does not tell a donor or oversight committee anything about the organization.  The additional steps of obtaining public charity, tax-exempt, or malkar status are less an evaluation of the management of the amutah and more of an internal argument to the Israeli Government that the organization has earned to right to be tax-exempt.  This leaves the general public with only the nihul takin (albeit its own deficiencies and stringencies) as the only fair judge of an organization’s true nonprofit status.

 ________________________________________________________________________________________________________________

Works Cited 

[1]  Eliezer David Jaffe “The State, Volunteers and Nonprofit Organizations in Israel: the Nature of the Relationship” (Giving Wisely, The Internet Directory of Israeli Nonprofit
and Philanthropic Organizations), http://givingwisely.org/State.htm

[2]  Ibid

Bibliography

To supplement my own knowledge and experience, I drew upon the following resources:

“501(c)” (Wikipedia, The Free Encyclopedia), http://en.wikipedia.org/wiki/501(c)

“Application to be Recognized as a Public Institution” (Israeli Tax Authority), http://www.finance.gov.il/taxes/docs/malkar_2006-09-20.pdf

“Presentation of Documents to Obtain Certification of Sound Management for 2010” (Israeli Ministry of Justice) http://www.justice.gov.il/NR/rdonlyres/AA0674DA-C669-4242-B2A2-448BAE3257B2/14849/2012.pdf

“The State, Volunteers and Nonprofit Organizations in Israel: the Nature of the Relationship” Eliezer David Jaffe, (Giving Wisely, The Internet Directory of Israeli Nonprofit and Philanthropic Organizations), http://givingwisely.org/State.htm

Translations of Hebrew words to English were done through Morfix @ http://milon.morfix.col.il