While there are some exceptions, many banks in Israel give nonprofit organizations the run around when they try to open a bank account. The reason the banks do this, to put it bluntly, is because they don’t want you as a customer. Sorry, nothing personal, but they don’t. Nonprofits are viewed as vague entities with no clear ownership and accountability. Part of this is due to the inherent ambiguity from the Israeli nonprofit laws themselves and part of it isn’t. Right now, the “why” isn’t as important as the simple fact on the ground: they are trying in an oh-so-subtle way to tell you to get lost. Scram. Skedaddle. Vamoose. You get the idea.

But bad news for them, according to Israeli law, banks cannot refuse anyone from opening an account. Even nonprofits. They can, however, make life a living heck to convince the nonprofit to do its banking elsewhere. Clever.

If the bank is giving you a hard time now, it is only a symbol of things to come. How easy it is to open an account will tell you straight away if the bank “gets” nonprofit banking or not. Remember that you will be dealing with this bank for the foreseeable forever.

The bank should provide you with a list of what is needed. If they don’t have a ready-made list, ask them for one. Nothing is more annoying than running to and from the bank trying to track down items on their checklist that they “forgot” to mention.

This is a general overview of what is needed. Each bank might be slightly different. Specifically, some banks like adding certain quirks to these generic requirements, forcing you to have some of the forms on special logo paper or the like. Make sure you find out all the little details because the banks will send you back to square one if you don’t follow their instructions exactly.

Table of Contents:

• Organization’s Protocol or Minutes
• Bank Protocol
• Authorized Signatories
• Valid Forms of ID
• Lawyer’s Confirmation
• Incorporating Documents
• Controlling Parties

Organization’s Protocol or Minutes

• Because an organization, charity, school, institute, etc. isn’t a physical person, but rather an intangible and amorphous entity, the bank must be sure that opening an account reflects the wishes of the board members (i.e. those elected to represent and vote on behalf of the organization).
• The protocol or minutes will serve this function and should clearly state that the organization chooses to open a bank account at bank X and appoint the following people as authorized signatories (I will discuss this below).
• The protocol should be signed by a lawyer (I will discuss this below).

Bank Protocol

• While it is critical to have the organization’s protocol, the bank’s lawyers will require the organization to fill in the bank’s protocol, as well.
• These fill-in-the-blank forms serve the same purpose as the organization’s protocol but contains legal wording to safeguard the bank and specify the purposes of the account.
• Banks have, primarliy, four basic protocols: opening an account, internet access, credit cards, and leins placed on the account.
• These protocols will also have to be signed by a lawyer.

Authorized Signatories

• The organization gets to choose whom it wants to sign instructions and in what combination.
• The signatories do not have to be board members but should have some connection to the organization. This last part is not a requirement of the bank but a suggestion of theRasham Ha’Amutot (Register of Charities in Israel).
• The organization should also decide if it will require a stamp, in addition, to the signatures. Some protocols will require a stamp or printed name (organization stationary or printer name on the bottom of a check).
• The combination of the signatories can be whatever the organization desires so long as it matches the organization’s by-laws (I will discuss this below). The lawyer should know how to check this.
• Signatories will be expected to come to the bank to sign the account opening papers and to present valid forms of ID (I will discuss this below).

Valid Forms of ID

• For an Israeli, an ID card (teudat zehut) is suffice, but it must include the sefach (the attachment containing the address and family members).
• For an Israeli, a passport will not suffice!
• If the person is Israeli and living outside of Israel, he or she will still need to present an ID card or obtain a letter from the Internal Ministry (Misrad Hapnim) explaining that no card exists. Banks will insist on one or the other and will not be persuaded otherwise.
• For a foreign resident, a passport and additional ID is required. A driver’s license, student ID or credit card will suffice for the second ID. Picture IDs are preferred.
• Please, no copies of any of the above mentioned IDs, the banks want to see the real thing.

Lawyer’s Confirmation

• A lawyer will be required to certify any protocol to show that the decision was reached in accordance of the by-laws of the organization.
• The lawyer should also stamp next to his signature so that both his name and ID number are readable.
• Banks will prefer the nonprofit to work with an Israeli lawyer so there is someone reachable and accountable.
• This is true even for organizations registered outside of Israel, although, there are ways to work around this, depending on the bank.

Incorporating Documents

• For Israeli organizations this includes the certificate of incorporation, by-laws (takanon), and the application papers (about 4 pages or so).
• This differs slightly with international organizations.
• In the USA, there are articles of incorporation, in addition to, the certificate.
• In England, the document is called the Deed of Trustees.
  Make sure all documents are in Hebrew (where applicable) or in English (your bank should be able to work with English documents). Other languages will present a difficulty, and the bank will require the nonprofit to translate any document into English or Hebrew by a notary.
• And of course, original copies of everything, although banks might allow you to get away with a copy that is stamped “certified original copy” by a lawyer or government agency.
• Those foreign entities that are registered with the Register of Companies in Israel must present both the local and foreign incorporating documents.

Controlling Parties

• Bank of Israel laws require that every organization or company list their controlling party, with only a few exceptions.
• This is true even when there are no shareholders, like with nonprofits.
• With nonprofits, the Bank of Israel wants to know who controls the decisions of the organization. Generally, it is the Governing Board (Vaad Menahel), but sometimes it can be a smaller group of the board or even the director, depending on the nature and history of the organization.
• Be prepared to supply the bank with the names, birth dates, nationalities, and passport/ID numbers of all controlling parties.
• These individuals will not be required to come to the branch.
• Depending on the bank, a photocopy or letter with the information should suffice.

I know that I have covered a lot of ground. I will try to address certain items in greater detail in later blogs. Please contact me with a question, preference or request.

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

Shuey

The UK is pretty serious when it comes to its charities. There exists a single governing body, the Charity Commission, that oversees and registers the various nonprofit organizations in Englandand Whales. Moreover, its website is first rate and worth checking out. There you can find much useful information about UK-registered charities including trustee and contact information, financial history, charity framework and accounts. Additionally, the site is updated with timely articles that are applicable to the nonprofit sector — even those operating outside the UK.

I recently came across an article on the UK Charity Commission website entitled “The Economic Downturn: 15 Questions Trustees Need to Ask” and was very impressed by its comprehensiveness.

The questions in the article cover four main areas: Strategy, Financial Health, Governance, and Resource Usage. The questions themselves are pretty broad but contain many bullet points that make the checklist a practical and usable tool. Furthermore, after each question the article offers a link or two to sites that offer additional explanations, comments, and helpful hints. Some sample questions dealt with:

• Are we financially strong enough to sustain our operations?
• Do we know what impact the economic climate is having on our donors and support for our charity?
• Are we an effective trustee body?
• Have we considered collaborating with other charities?

It is important to keep in mind that the UK views its trustees as financially responsible and liable for anything that happens to the charity. This is generally not the case with other countries (USAand Israel for example). But this is really a topic for another blog altogether.

UK charities – be aware of the fine print! The article clearly states “If your board carefully works through the areas in this checklist that relate to your charity, it will help to demonstrate that your trustees are acting appropriately in the current circumstances.” This article outlines in very specific terms the steps that the Commission expects its members to take. Should things ever hit the fan you will be able to wave this checklist and shout “We did all that we could.” You would be wise not to take this as a suggestion but as law.

As the economic downturn has hit every country, the UK Charity Commission’s checklist is a great tool for every nonprofit, in every country, on every continent.

For those that missed the links above, here they are again:

UK Charity Commission

15 Questions Trustees Need to Ask

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

Shuey