The word fashla is Hebrew colloquial for “screw-up”. And yes, even your accountant, an Israeli charity’s best friend, can make a few.
As a banker I see this particular slip-up more often than you think. Here are two ways to avoid your accountant inadvertently putting your organization in the red.
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.
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Unfortunately, vague unwritten guidelines have now been replaced by confusing and unrealistic written rules.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.
Once again, the Israeli nonprofit organization Magan David Adom (MDA) and it’s American supporting charity, American Friends of Magen David Adom (AFMDA), are in the news after all five members of AFMDA’s executive board resigned, stating that they “refuse to abdicate or compromise in any way our fiduciary duty to AFMDA and its donors.”
First, allow me to say that writing this piece is painful; it is disturbing (to put it mildly) that an organization that has such a positive impact on Israel’s daily life is getting such negative press.
Two, which side is right or wrong is of secondary importance. Regardless how the situation plays out in the near or distant future, organizations can learn RIGHT NOW from the very public debates raging between the American and Israeli arms.
Specifically, the core issues — defining roles, trust, independence, and personnel — are the same faced by all international organizations, and, as such, can provide a constructive case-study for nonprofits, their board members, and their donors.
…Those Israeli nonprofits that choose the second option of a Conduit (also referred to as an Intermediary or Fiscal Agent) are in luck, as recent years have seen an quasi-explosion in the number of American charities that offer Conduit services. This being the case, foreign organizations have luxury and liberty — and some might argue the responsibility and obligation — to investigate the various Intermediaries so as to choose the best fit for the nonprofit. And, yes, all Conduits are by no means the same.
My six criteria for judging a potential Fiscal Agent: Cost, Currency, Time, Payment Method, Communication and Association.
Recent years have seen an explosion of these types of charities. With so many to choose from, Israeli charities have the luxury of choosing their partner – and they should because all Conduits are not the same. But, of course, the only way to finding the right fit is to ask the important questions, namely: Cost, Currency, Time, Payment Method, Communication and Association.
When grants or gifts cannot be made directly to a recipient (individual or organization) many times Fiscal Agents are used. These Intermediate charities are commonly referred to as Conduit Organizations because they are not the intended final recipient, rather just a pass-through.
With the right due diligence, control, and by-laws, this type of seemingly-indirect charity can be perfectly legal and advisable. (Please consult your lawyer to see if this solution is right for you or your organization.)
One such group that uses Conduits is such a way, is a charity located outside of the United States (and, thus, not considered tax-exempt in the eyes of the IRS) that is looking to collect donations from American citizens.
The Hebrew word amutah, referring to a charity in Israel, is used both correctly and incorrectly to describe just about any nonprofit organization registered in the country. But wait, it get’s more confusing. Not all charities are charities, sometimes they’re companies. And sometimes a charity isn’t tax-exempt while a company might be.
Confused? Don’t worry. In this post I’ll cover the various terms and statuses available to Israeli charities — along with links to government websites — that will help you find the answer to the bottom-line question burning in your mind: Is this organization worthy of my donation?
In Israel, more than in most countries, foreign currency is an integral part of every facet of the country’s daily economic enterprises – private, business, and public sectors, alike.
A recent released study showed that 53% of financial support to Israeli charities came from abroad. Thus, making foreign exchange exchange fees, rates, and processing times of the utmost importance to Israeli charities.
“What do you mean that Israeli charities can be registered as companies?”
That was the question someone asked me last year that that had me thinking to myself, yet again, that charity legal/tax structure is a language onto itself and should require its own Ulpan.
And so, I shall now endeavor to explain the somewhat contradictory concept of a Chevrah LeTo’elet Hatzibur [Public Benefit Company].