Nonprofit organizations have yet another hurdle to cross when applying for tax-exempt status. The Department of Homeland Security — the U.S. Government Department that oversees counter-terrorism, border security, disaster response, and immigration — is also an integral part of the tax-exempt approval process.
International organizations have been highly successful in raising funds from the United States through U.S. based charities commonly referred to as “Friends of” organizations. These charities are registered in the States and have 501(c)3 tax-exempt status and, thus, allowing these donations to these essentially foreign organizations to be tax-deductible.
As you can imagine, many international causes consider a “Friends of” organization as a crucial step in their fundraising strategy.
Hence, recent conversations I have had are causing me to worry.
The arrests of 44 individuals 3 mayors, 5 respected community rabbis, a score of government officials, and others on Thursday of last week (July 23) should highlight the dangers of organizations donating to international causes; and I guarantee you, the I.R.S. is having similar thoughts.
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.