Laura Solomon is a nonprofit attorney extraordinaire based on the East Coast (read more about her after the post).  The topic addressed is especially relevant with today’s focus on the IRS’ increased scrutiny of Americans’ activity abroad and Israeli charaties’ reliance in general on foreign charity.

Every year the IRS Exempt Organizations Division (“EO”) releases a Work Plan that shows where it plans to deploy its resources. The Work Plan is essentially a roadmap for EO activity in the coming year and, this year, the Plan includes a renewed focus on international activities by American charities.

The EO’s goal is to assure that, in keeping with US tax laws and regulations, charitable assets used internationally are not being diverted for non-charitable purposes. The Work Plan announces that “we will continue to examine exempt organizations that operate overseas to ensure that those activities are consistent with their charitable purpose. “ In addition, the EO has signaled that it plans to examine large private foundations and organizations that report ownership of a foreign bank account.

Nonprofit professionals interested in learning more may want to look at the Work Plan itself or watch the IRS August 2011 Webinar on International Activities.

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.

Further evidence of the EO’s focus on international activities is evident in the newly proposed regulations that illustrate permissible PRI’s or “program related investments” by private foundations (Issued April 19, 2012). The regulations include helpful examples that demonstrate that a private foundation can use a broad range of programs (including investments, grants, and loans to foreign individuals, business enterprises and charities) to support their purposes through PRI’s. Perhaps the most important clarification that the proposed regs provide is confirmation that an activity in a foreign country is charitable if it would be considered charitable when conducted in the US. Interestingly, they don’t address L3C entities. For more information about low-profit limited liability companies, you can access this information on the Community Wealth Ventures site.

Laura N. Solomon, Esq. is the founder of Laura Solomon Esq. & Associates, a law firm devoted to the representation of nonprofit, charitable, and other tax-exempt organizations. She and her associates provide a full range of corporate and tax legal services, including representation for mergers, joint ventures, and complex financings.

Ms. Solomon is on the Faculty of the Nonprofit Institute and Animal Law Institute of the Philadelphia Bar Institute, and currently serves on the Charitable Organizations Committee of the Pennsylvania Bar Association, the Tax-Exempt Organizations Subcommittee of the American Bar Association, the Standards for Excellence Committee of the Pennsylvania Association of Nonprofit Organizations, and the Advisory Committee for the Pennsylvania Volunteer Lawyers for the Arts. She is a columnist for the Pennsylvania Nonprofit Report who is quoted frequently in the media, and lectures often for lawyers, accountants, and other professional and community groups on nonprofit, corporate, and tax issues. Ms. Solomon also lectures at the La Salle University Nonprofit Center, the University of Pennsylvania, and Villanova, Drexel, and Temple Universities.

You can find more information about her practice along with links to helpful information on nonprofits at her website: www.LauraSolomonEsq.com.

The sole purpose of my previous piece, Defining a Conduit Organization, was to address the more important question of this post, “How to Choose the Right Conduit?”

After all, for many organizations operating outside the United States, specifically those in Israel, fundraising in America plays a vital role in the business strategy of the nonprofit.  Some charities choose to establish an organization known as an “American Friends of” charity to offer American donors a tax-deductible option. Others, however, will decide to use Conduit Organizations to process the donations on their behalf — also a valid option.  But I digress. (If you, on the other hand, would like to digress, see 4 Reasons Why NOT to Establish an “American Friends of” Organization.)

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 the 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.

1. COST

What will the Conduit charge me for the service?

The logic being that the less a charity pays in fees, the more money actually makes it the organization’s bank account to fund programmatic and administrative expenses.

Fees generally come in three flavors:

(a) Flat

The advantage of Flat fees is that you know them upfront. While the other options are calculable, this method is the most straight forward.

There are actually two structures for this option:  (1) Flat rate regardless of the amount sent and (2) Flat rate per range of money sent.  For example, $25 up to $2,000, $50 up to $10,000 and $100 up to $50,000 etc.

Example: The Jewish Funders Network, as of March 2010, offers Intermediary Services to nonprofits based in Israel. According to a seminar I attended in March of 2010, it is a flat fee of $200 for transfers up to $100,000. (As this information was obtained when the product was first launched back in March, it may not be up-to-date.)

(b) Percentage

A percentage of the amount transferred, sometimes with a minimum fee.  The advantage of this option is that you “only” pay per what you send.  This seems to be the most popular option.

Example: The Jerusalem Foundation, The New Israel Fund, The One Israel Fund and others use this method.

(c) Free

Use the service will cost the beneficiary nothing. However, to offset costs our reduce expenses, the Intermediary might impose some restrictions on the funds, turnover or method of payment

Example: The P.E.F. offers this service free of charge but will generally only forward the money to the recipient after a month (although some have told me it could be up to three) and in the form of a dollar check. I have heard some organizations get it shorter, but truly the exception.

2. CURRENCY

In what currency will the donation arrive in my account outside the United States? Will the donation be received in the original currency (dollars) or in local currency (in this case, shekels)?  Do I get to choose?

Currency is an important factor for three reasons:

(a) Conversion Rates

Conversion rates can have a big affect on donations received from abroad; namely, the better the rate the more local currency is created when converting the money. As demonstrated above, even a small change in the rate can have a substantial effect. By receiving the money in the original currency, the beneficiary can retain control over when and how much to convert.

(b) Accountability

Certain donors like to know exactly how much buying power their donation has and might demand to know the conversion rates that their money is getting. It is quite possible that an organization might be unable to obtain this information and relevant information from its partnering Conduit.

(c) Cost

Generally speaking, it is more expensive to work with foreign currency than local currency. Thus, receiving money it is original money with come with a higher handling fee for the handling bank or financial institution.  Although, these higher fees might be mitigated by other concerns (like items one or two).

3. TIME

How long will it take me to receive the donation in my account outside the United States?

As the axiom goes, time is money.  Knowing the turn-around time is important for two reasons:

(a) Currency Exposure

One of the biggest unknowns and worries for a nonprofit that relies on donations received in foreign currency is currency fluctuation. The longer a transaction through a Conduits takes, the greater risk to a change in conversion rate.

I have seen firsthand organizations that relied on Intermediaries that didn’t forward monies in a timely manner. By the time the money was received, rates had changed for the worse (though they could just as easily change for the better).

Example: Back in September of 2010 the shekel vs. dollar rate was 3.81. The following Monday morning, only four days later, the rate stood at about 3.77 – a four agurot (4/100 of a shekel) difference. For a donation of $50,000, this four-day delay would have cost the recipient 2,000 shekel (over $500), an over 1% cost (2,000/190,500).

(b) Cashflow

Checks, pledges, and grants come with dates attached.  Budgets are then built around these deadlines.  Donations that are delayed because of a Conduit can severely hamper a nonprofit’s ability to pay its bills or run its programs, possibly leading to ruined reputations, frayed nerves, debt, and/or unexpected credit charges (to name but a few) .

Allow me to tangent for a moment: Conduits that fail to forward monies in a timely fashion are doing a disservice to the end-recipient.  As a matter of fact, receiving the money on time can be even more important that being approved for the donation/grant in the first place. Without a grant or donation a program might never have taken place. No harm, no foul. With the promise of financial support, however, commitments have now been made and money spent.

4. PAYMENT METHOD

Will the money be given to me as a wire transfer or as a check?

This question is more of a concern for those organizations that will be receiving their money in its original currency (dollars).  In Israel, for example, shekel grants and donations can be easily be forwarded by wire, though, even shekel checks clear within a few days.

Foreign currency — whether in Israel or in other countries — is more costly to process and takes longer to clear.   Two points that refer to the earlier questions of Cost and Time.

5. COMMUNICATION

How will I or my donors contact the Conduit if we need to? Or vise versa?

For two reasons, never underestimate the power of communication:

(a) Donors

Donors will have to mail/wire the money to these Conduits. It is imperative when trusting a third party to deal with your donors that it is an organization you can rely on. There will be times when the Intermediary will need to contact your donor — will this be a pleasant interaction that will ensure continued support by your donor and a swift transaction?

Organizations have told me stories of their donors that were driven away or even rescinded their check due to unpleasant experiences with a Conduit.

Furthermore, referring back to an earlier point, will the Intermediary release specific information about your donor’s check/wire, such as wiring dates and conversion rates? This is important information to donors that are looking for transparency and accountability.

(b) Turn-around

Better channels of communication and trust between recipient and Intermediary can help ensure that monies are transferred as efficiently and as quickly as possible.

6. ASSOCIATION

How will my association with this Fiscal Agent affect how people view my organization?

No nonprofit exists in a vacuum. This question can have two types of affects (not mutually exclusive):

(a) Character

Does the organization that is accepting donations on my behalf have religious or political leanings that might color the organization in the eyes of the public (for good or for bad)?  Is the Intermediary known for anything unsavory? What headlines has the Conduit made?  Do people think very highly of the organization and its leadership?

These questions and others like them can alter the flavor of even the most pareve, middle-of-the-road nonprofits.

(b) Fundraising

Will the good name, reputation, or connections of a Conduit help the organization raise more money?

…AND DON’T FORGET TO BE HELPFUL

These Conduits are taking a risk vis-a-vis the I.R.S. by providing this conduit service, regardless if the Intermediary is being paid or not.  Participating charities should, therefore, appreciate a Conduit’s position and provide the necessary paperwork requested of them.

And, of course, being helpful could lead to some of those much-desired exceptions that I mentioned above.

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

The fiscal responsibilities of an American charity have become more complicated in recent years. Increased scrutiny from the IRS, more intricate tax documentation, the recent economic crisis, and donors’ need for transparency, are just a few of the challenges facing the sector. When a charity operates internationally these difficulties are only exacerbated. These global organizations are expected to be familiar with regional and global charity regulations, comfortable working in foreign languages and cultures, able to cope with inherent increased expenses, and capable of forging new relationships – all while maintaining a high level of accountability.

A powerful tool in helping a “Friends of” organization cope is an additional account abroad in the country in which it operates. When used to its potential, this kind of account is invaluable.

(For this purposes of this article, I’ll be using Israel as my example, as American fiscal support for Israel is wide-spread and well documented.)

The Benefits of Maintaining an Account in Israel

1. Deposit Checks in Israel

Checks designated for the U.S. charity that are received in Israel can be deposited locally. Because the account in Israel is owned by the American charitable organization any check deposited in the account can receive an IRS tax-deductible receipt. Donors can write the check while the feeling is hot, as opposed to waiting until they return back home to the United States. The organization can save: (1) money by not using postal or delivery companies; (2) time as checks can be deposited immediately in the Israel account, and; (3) hassle as there is no need to hold on to checks to mail them in bulk, photocopy and catalog mailed checks, worry about lost mail, etc.

2. Wire Monies to Israel when Convenient for the U.S. Charity

Similarly, because the account is owned by the American entity, money sitting in the account in Israel still shows in the American organization’s books. This allows the nonprofit to transfer funds according to their own schedule and not just when Israel charities need support. With this flexibility, the U.S. nonprofit can cut costs by transferring funds in bulk and increase feelings of control, while at the same time reducing the hassles of constantly operating on someone else’s timetable.

3. Transfer Funds Immediately to Israeli Nonprofits

As money can, theoretically, already be in the U.S. charity’s account in Israel, when support is approved, money (converted and) transferred the same day. No longer are groups on both sides of the ocean dependent on anonymous, ambiguous banks to make sure that money is transferred in a timely manner.

4. U.S. Nonprofit’s Israel Account can Act as Collateral

Should an Israeli organization connected to or supported by the U.S. charity need credit – whether in the form or a loan or line of credit – the American account can act as collateral. This allows money that the “Friends of” organization prefers stay under its ownership do so while still providing the necessary credit to a worthy Israeli nonprofit. (ex: This can prevent the undesirable situation when an American organization would have to “loan” funds.)

5. Pay Expenses Directly from Israel

Any type of expense can be paid locally – whether flights, hotels, or travel expenses – from the “Friends of” account in Israel. This allows for payment in local currency (i.e. shekel), as opposed to dollar, which can be cheaper both in terms of actual cost and associated fees. Additionally, an account abroad provides a variety of payment options to the American charity; such as check, wire transfer or credit card. Furthermore, the American entity can opt to pay for certain expenses directly instead of the Israeli recipients to minimize Israeli tax or charity regulatory complications that might occasionally surface.

6. Greater Oversight in the Eyes of the IRS

While the United States Government acknowledges the need for international charity, it is concerned that US based nonprofits might not exercise adequate control over its funds or be subservient to foreign organizations. Maintaining an account overseas where the American entity operates – providing that the Foundation and the Keren avoid overlaps in its board membership and authorized account signatories, among other things – is a hands-on management approach that demonstrates to the IRS a high level of budgetary control and transparency.

Closing Words…

Please note that, as said before, an account managed in Israel by the American tax-exempt organization is still considered under the ownership of the “Friends of” charity and should be treated as such. Additionally, many of the tips raised in this article are not simply about banking and require the consultation of a charity’s Board of Director and its accountant/lawyer.

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only — not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professional. Read the full disclaimer.

A list of the essential articles that I posted to Twitter from April 11 – April 24, 2010.  This week’s topics include: Strategy & Governance; IRS Trends; Social Media & Fundraising; Jewish Nonprofits; Israel Economy & Finance; and Potpourri.

Man, does time fly by.  This list is for the last two weeks. When did last Sunday happen and why didn’t anyone tell me?

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

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Strategy & Governance

5 take-aways from The Networked Nonprofit session by @kantar & @afine at #10NTC by@sokunthea http://ow.ly/1xiw3 via@johnhaydon

6 Reasons why starting a new nonprofit might not be the answer, by @sbsfundraisinghttp://ow.ly/1xCqo via @npmaven@zyOzyfounder

RT @PamelaGrow: Why board assessment is so important: http://ow.ly/1yM42 #nonprofit #fundraising

Komen & Kentucky: When Charity is Just a Marketing Stunt http://ow.ly/1BJCT via@koodooz

RT @johnhaydon: “Komen & KFC’s Cause Marketing Program Isn’t Finger Lickin’ Good”http://ow.ly/1BJTQ by @joewaters

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IRS Trends

Abuse of Charities & Deductions included in 2010 IRS List, by @charitylawyer http://ow.ly/1xBUy // List hints to IRS pet peeves!

New blog post: Are “American Friends of” Organizations a Thing of the Past?http://ow.ly/1BOu8

I’m a believer! >> How Increased Government Intervention Undercuts American Philanthropyhttp://ow.ly/1yOJF

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Social Media, Internet, & Fundraising

How & why to use social media to engage Foundations (& hopefully get more funding), by@askdebra http://ow.ly/1xLqR

3 Ways to Overcome Your Fear of Fundraising, by @sandyrees http://ow.ly/1y2yO

Just listened 2 #afpmeet session review by@amandaharas on European fundraising trends http://ow.ly/1yAhJ via @BTalisman

How is social media impacting giving? Survey, overview & predictions on USA Todayhttp://ow.ly/1ylXC via @JGooderscom

RT @GuyKawasaki: 10 Ways for Small Businesses to Use LinkedIn http://om.ly/iFSl

RT @PaulDunay: 5 Ways B2B Companies Can Use New Twitter Ads http://ff.im/-j4B1a

RT @johnhaydon: Creating Online Marketing Strategy in 2 Hours, by @kivilm http://ow.ly/1yXi6 // awesome, story shows strategy as it unfolds

RT @GTak: Social Media and the Law -> For Professional Associations - http://is.gd/bBH85 (American Society of Association Executives)

RT @CharlieKalech: Facebook Changes – Like Anything, Anywhere – Social Sharing goes Mainstream! http://bit.ly/bWlyG0

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Jewish Nonprofits

Will reforms to NY Jewish charities prevent future misuse or just paper over underlying problems? http://ow.ly/1x2yn

Jewish Funders’ Gathering: Economy is recovering but is it too late for some Jewish organizations? http://ow.ly/1zPVa

Israeli orgs don’t get it that their US counterparts need to be independent & accountable to the IRS. http://ow.ly/1zTiv

Interesting Case Study? >> RT @CharlieKalech: Campaign against@NewIsraelFund by Im Tirzu boosted donations to NIF http://ow.ly/1Bsv0

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Israel Economy & Finance

Good overview of the 6 types of people active in day trading in #Israel. http://ow.ly/1xmbp

Why are investments in #Israel real estate declining? Should you be thinking along the same lines? http://ow.ly/1xpC2

Nice overview of currency risk and options on@haaretzonline http://ow.ly/1A6qr

Bank of #Israel sees tycoons as danger 2 stability–Israel is 1 of most centralized Western countries http://ow.ly/1BCgV

<br>

Potpourri

RT @HilzFuld: Seinfeld Talks BlackBerry and iPhone with Conan O’Brien (VIDEO)http://bit.ly/bmbsTH

->@nytimes: Goldman Sachs could help British Finance Regulator prove its got teethhttp://ow.ly/1B51v

RT @avinashkaushik: Amazing photos of lightning in the ash column of Iceland’s troublesome volcano: http://zqi.me/9xbjG6

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, allowing donations to these essentially foreign organizations to be tax-deductible.

As you can imagine, many charities registered outside of the United States consider an “American Friends of” organization as a vital part of their fundraising strategy.

Jewish causes, especially those based in Israel, are no exception to this rule. A recent report compiled by Dr. Nissan Limor estimated that foreign donations to Israeli charities from sources outside of Israel stood at 2.165 billion dollars in 2007, with much of that coming from the United States (although, he didn’t stipulate how much). There are about 1,000 new Israeli charities [amutot] created every year and it would hold that many of these organizations will seek to create an “American Friends of” supporting charity.

Hence, recent conversations I have had are causing me to worry.

The Reduction of 501(c)3 Exemptions Granted

In late July, I wrote about the scandal that rocked the Jewish community of Brooklyn and Deal, culminating in the arrest of three mayors, five respected community rabbis, and a score of government officials. Specifically, my third post on the scandal described the The IRS Expected Response.

In that post, one prediction I made was the “Reduction of 501(c)3 Exemptions Granted”

The easiest way to prevent future international fraud is to restrict the organizations that can gain tax-exempt status…The U.S. Department of Treasury has only enough manpower to audit between 2 – 3% of registered charities in America. Scrutiny of organizations that already have 501(c)3, then, seems almost like an impossibility. However, as every new organization that wants tax exempt status needs approval from the IRS, it would be a relatively simple procedure to restrict approval to new charities; more specifically, to new charities that donate to international causes.

Well, unfortunately, this seems to becoming a reality. Three recent conversations are shedding light on what seems to be new practices by the IRS. (Specific names are being withheld as applications and relationships are still ongoing.)

The Name “American Friends of” Bothers the IRS

On a recent trip to the States, I had the fortune to sit with a prominent lawyer that represents many Jewish nonprofits. He informed me that he submitted a file for 501(c)3 approval for the “The American Friends of _______,” an organization that would like to raise funds for a charity operating outside of America (but not in Israel). The application is taking an inordinate amount of time, mostly due to the staggering number of questions the lawyer has received from the IRS representative assigned to his file. His application folder measures an astounding 2.5 inches! Having been submitting similar applications for decades, the lawyer is quite surprised at the level of scrutiny and feels that it is the organization’s name that is evoking this reaction. The lawyer is losing patience and if nothing changes, will close the application and resubmit under a different name, hoping this will solve the problem.

Charities Should be Supporting a Mission, Not Supporting an Organization

The following day I met with a well known nonprofit consultant that works with both Jewish and non-Jewish charities. He informed me that it has come to his attention that the IRS will no longer approve 501(c)3 status for organizations that are founded simply to support one specific institution. In other words, when applying for exemption, the papers should list the mission or objective that the charity supports, not what organization it supports. It was implied, however, that in practice, a 501(c)3 charity can transfer money to (i.e. support) a single foreign organization without fear of losing its tax-exempt status — the American nonprofit, though, must be able to prove its independence. (More analysis, tips and background on international charity emanating from America can be found on an article I wrote: “International Charity in the Face of Global Terrorism.”)

Don’t Go Against American Policy

And finally, upon returning to Israel, I was speaking to a director of a Israeli nonprofit who told me of a colleague of his whose American charity had applied for 501(c)3 tax-exempt status.  At the time, the applicant informed this director that in his application he stated that the mission was to support Judea/Sumaria/Gaza. The applicant assured the director that the approval was imminent. A half a year later, his approval had yet to come and this applicant soon gave up.

The Obama administration is not in favor of what it calls the “Territories.” Leaving politics aside, we are seeing organizations whose mission clashes with American policy and/or opinion having trouble obtaining 501(c)3 tax-exempt status.

Conclusion

In closing, I would like to stress that whether these trends are good or bad is not the issue. The important point is that Israeli nonprofits and their American supporting counterparts should take notice and act accordingly.

These conversations stress:

1. New organizations that have the words “American Friends of” in their name will have trouble getting their 501(c)3 tax-exempt status approved.
2. By-laws of organization should list the cause that the organization is supporting, and should not specify particular organizations.
3. When applying for tax-exempt status from the American government, it might be best to “tow the party line.”

Tizku Lemitzvot,

Shuey

Disclaimer: This blog houses my personal opinions and is for informational purposes only – not advice. As charity laws can be quite complex, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

The Answer

The answer should hopefully be “yes,” nonprofit organizations can use credit cards.  Credit cards have become an integral part of running any kind of business; whether it be a not-for-profit or a for-profit corporation.   Credit cards are safer than cash and are the preferred method of payment when shopping on the internet.  Not to mention, the ease of an itemized monthly billing statement.  Nonprofit governing agencies should love credit cards and promote their use whenever possible.

But, alas, in Israel the answer is no…kind of.  Cryptic, but true. That is to say that in my experience as a banker, I have both ordered credit cards for charities that wanted them and canceled credit cards for charities that were told it was “illegal” to have them.

Why is it so Complicated?

Khok Ha’amutot [The Nonprofit Law] in Israel does not restrict a charity from ordering or using a credit card.  The law details that the default by-laws of an organization require at least two authorized signatories to sign on all transaction requests.  The law also allows for changes in the organization’s by-laws.  Examples of common changes include requirements for certain combinations of signatories that are dependant upon the amount of a transactions, as well as, permission for less than two people to sign.  This last one is pertinent as credit card transactions are viewed by the Rasham Ha’amutot [Israel's Registrar of Nonprofits] as having been approved by only one signatory.

Included in the law are the various subcategories or licenses that an Israeli nonprofit can obtain (for a full list and description please view my previous post “Defining an Israeli Nonprofit”).  Among these statuses is the Nihul Takin, or Proper Management status.  As the name implies, this license is provided to organizations that are viewed as being run well; and the Rasham has its own definition of what “being run well” means (the determination is currently left up to the complete discretion of the Rasham).  The Registrar believes that all decisions should be approved by a minimum of two signatories.  While the State law allows for only one, those organizations that want to earn their Nihul Takin status are forced to adhere to the ultra-amutah standards of kosher behavior set by the Registrar of Charities.

As previously discussed, the Israeli government and many foreign foundations use the Nihul Takin as the benchmark to determine if an Israeli nonprofit is eligible to receive a grant.  So while the State law allows for credit cards decisions, the Rasham frowns upon them.  Frowning upon, of course, is not the same as outlawing them.  And since the audits done by the Rasham are subcontracted out to a wide variety of accounting firms there seems to be no set rule.  I, personally, know of charities that the first thing they were required to do was destroy any existing credit cards while a few nonprofits seem to have not been asked at all.  Go figure.

Current Possible Solutions

I have seen organizations adopt the following solutions:

1. Create an Israeli “Friends of” organization.  Being as only the “main” amutah is concerned with obtaining a Nihul Takin, some organizations have started a brother/sister organization in Israel.  This organization absorbs the expenses and practices that are frowned upon for Nihul Takin status; thereby allowing the main amutah to avoid any troubles when applying for its Nihul Takin.  Recent auditing laws and practices designed to combine all financial statement of “related” amutotare making this option less workable.  A licensed accountant can advise if this option is relevant and feasible. 
2. Having the foreign “Friends of” organization apply for a credit card.  For this option to work, the foreign supporting charity would have to operate a bank account in Israel.  Even though this organization operates in Israel, it is not subject to Israeli charity laws (this is true even for foreign charities registered in Israel).  As such, this account can absorb the expenses and practices that are frowned upon for Nihul Takin status.  Just remember, this account must reported to the United States and should conform to IRS standards.  Somewhat simpler.  Still ask an accountant.

Hopeful Signs

I was meeting with a colleague who is a partner of a leading accounting firm in Israel.  This individual is an expert in the area of amutah financial matters and has been invited to participate in various Knesset committees concerning amutot.   In one such meeting a few months ago, the issue of credit cards for amutot arose.  The matter was supposed to be covered over a short time but ended up taking up the next hour and a half.  This person presented to the committee an article that delineated the reasons why a credit card is important and numerous ways how an organization can provide proper oversight for credit card usage; for example, one idea presented was that two signatories sign on every credit card statement.  He told me that after heated debate a few MKs were even asked to join.  It was made clear that credit cards are a way of doing business in modern times and that the Nihul Takin should reflect this.  The Rasham Ha’amutot promised to take this under advisement and provide a solution.  Let’s hope we see something sooner rather than later.

Conclusion

So how do we proceed in the interim?  Like I said, credit cards in Israel are cryptic.  Ask your accountant for the final answer and he or she will let you know if it is worth ordering a card or not. 

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

Shuey