With such as significant portion of donations to Israel’s charities coming from the United States, changes in American legislation can have a profound impact on Israeli nonprofit organizations.

For this reason, I was excited to co-host (along with Charlie Kalech of J-Town Productions) Laura Solomon, an attorney based in Philadelphia who specializes in nonprofits.   Laura was a powerhouse, leaving me and the other attendees racing to take notes fast enough.

Most revealing was what Ms. Solomon had to say about individual States’ severe rules governing fundraising registration, specifically the broad definition of those required to register and the consequences of failing to do so.    

Below are my notes from the event. Please remember that many of the things mentioned only scratch the surface and proper council should be consulted before acting on anything.

BACKGROUND TO U.S.A. STATE SOLICITATION REQUIREMENTS

Nonprofits are subservient to two forms of regulations, Federal and State. While the focus since 9/11 has been more on the Federal level – Patriot Act, Sarbones-Oxley 990 changes, etc – recent rulings in the State level are forcing charities to pay close attention to the additional guidelines (and penalties) emanating from this sphere, as well.

Federal law regulates how organizations use and report funds. In contrast, State law  regulates how funds are raised, which States call Solicitation (and what us normal folk call Fundraising).

As far as States are concerned, Solicitation is anything that leads to a request for a donation or collects data. And yes, organizations are held accountable to this broad definition.  Any solicitation requires registration & annual reporting in the State where the nonprofit is soliciting donors. (Though Laura estimates that only 20% of charities register with the State where they solicit.)

The recent push is a result of the tremendous pressure that States are under – even more than the Federal government – to shrink their vast deficits. Within the States, it is most often than not the Attorney Generals who are spearheading the efforts to examine tax exemptions and compliance by nonprofit organizations.

FILING REQUIREMENTS

40 out of 51 states, including Washington D.C., regulate solicitation of charitable funds.

Laura stressed that the filing requirements can be quite tricky.  Unfortunately, there is no master registration form that applies to all 51 jurisdictions. However, there are instruments that try to ease filing requirements. The Unified Registration Statement (URS) claims to offer one form for 37 participating States. Though, the site notes that even participating States may require supplemental forms.

Ms. Solomon stressed that it is best to ensure that the in-house employee or external firm tasked with organizing the solicitation registration have a propensity for detail, with a law degree being very helpful if not critical.

WHO NEEDS TO REGISTER?

An important point to remember is that even if the charity is using a fiscal agent (a.k.a. intermediary) the benefiting charity still needs to register at the State level. The exception to this would be when a fiscal agent or fiscal sponsor lists the benefiting project in its own filings with the State. In such a case, it could be possible that the benefiting charity would then be exempt from submitting its own paperwork.

Along the same lines, independent solicitors (individuals or companies) that are hired by a nonprofit to fundraise must also register. Failure to do so will affect the recipient charity.

In contrast, grassroots volunteers or community-based (unpaid) “fundraisers”  do not have to register.  However, charities are ultimately responsible for the conduct of the volunteers and must register if volunteers are collecting donations on behalf of the organization. Laura suggested that charities should have a written agreement with their volunteers to create a paper-trail that can prove or deny any official connection / responsibility between the volunteer and the nonprofit.

Most relevant for Israeli charities is the need for foreign nonprofits to register, as well. Much like a fiscal agent, it is also possible that a “Friends of” organization in the States can list it’s Israeli nonprofit  as a benefiting charity, thus, enabling them to avoid registration. Again, please consult with legal counsel to determine if and how this can be done.

CONSEQUENCES OF FAILING TO REGISTER

The fines for noncompliance are pretty steep, with 5 to 10 thousand dollars being the norm. It could very well be that the decision whether or not to register in a particular State might just boil down to simple math: $125 to register vs. $5,000 if fined. But of course, the ultimate decision resides with the charity and its licensed advisers.

Non-registration can have operational side-effects, as well. Laura reported that foundations are starting to require proof of registration when potential recipients apply for grants.

POINTS OF INTEREST

• Most States prohibit fundraisers from receiving a percentage of the money they raise.
• Merely having a website might not be considered Solicitation.  However, a “donate” button can change this perception.
• While slightly out of date, the Charleston Principles listed on NASCONET.org, provides a great working definition of Solicitation.

Do you have experience with State solicitation that you think others can learn from?

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 and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Photo Credit: “Paperwork” by Curtis Gregory Perry (Flickr)

I’ve gotten emails from readers recently asking if my site has been on the fritz because they haven’t seen any recent Weekly Roundups. I’m happy to report that the sole reason I’ve been WAY out of touch is because on December 29th, my wife gave birth to our forth child, our first boy after three girls.  To put it mildly, my schedule is not my own.

Sorry for the tardiness, but I am officially back on track — so enjoy and keep the emails coming!

Here are links to the articles I’ve reviewed and posted to Twitter (yes, I’ve still been posting to Twitter) between December 12 – January 12, 2012.  This week’s topics include: U.S. Regulations • Jewish or Israel • Finance & Fiscal Health • Strategy & Governance • New Year Resolutions • Fundraising & Donor Strategy • Marketing & Branding • Corporate Culture • Social Media & Internet • Personal Development

As always, 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

Has your nonprofit filed w/ the State where it fundraises? Basics from @TonyMartignetti tony.ma/u966NF

RT @GTak: The Rise of the Charitable For-Profit Entity ow.ly/1EaJMn // hoping these lead 2 shift in thinking in other countries too

RT @GTak: IRS new online search tool for nonprofits & donors 1.usa.gov/xLkh3J

RT @DonKramer: Can a house of worship rent their facilities? Would it affect nonprofit status? bit.ly/bT1XAJ

RT @DonKramer: Can the Executive Director of a nonprofit fire a board member 4 disagreeing? bit.ly/wBiw83

JEWISH OR ISRAEL

In interesting trend of Jewish donors & the challenge to Jewish nonprofit orgs ow.ly/1DYYmA on @eJPhil

@NonprofitBanker: New Post: Israel Nonprofit Orgs Can (Begrudgingly) Now Use Credit Cards ow.ly/8Xs3V Progress?

FINANCE & FISCAL HEALTH

Packed PDF: Detecting & Preventing Fraud/Embezzlement in Your Nonprofit bit.ly/uVWgib by @VenableLLP via @Nonprofitslaw @GTak

RT @GTak: Beyond Financial Oversight: Expanding the Board’s Role in Pursuit of Sustainability ow.ly/1Cq1PN

RT @NAFund: Fiscal fitness is a great New Year’s resolution! ow.ly/8kEjj

8 key steps for Nonprofit Financial Leadership (thats right, didn’t say Management) ow.ly/1Ek0ZG via @NAFund

ABCs of Financial Oversight: Good review of the WHYs & HOWs of transparent reporting ow.ly/8ERmz on @eJPhil

What comes 1st, strategic planning 4 the future or financial sustainability 4 now? ow.ly/1FU9Qd on @eJPhil

STRATEGY & GOVERNANCE

RT @NAFund: A to Z Survival Guide for Uncertain Times via @fdncenter ow.ly/8228T

I hate learning lessons from disasters >> A Global Nonprofit Ponzi Scheme? Lessons from a Fiscal Sponsor’s Collapse ow.ly/91uk8

4 ingredients to keep your nonprofit connected to its mission statement ow.ly/1EdfiJ by @Cmcuesta via @npmaven

Tips from the trenches: Building a board & selling impact when launching a nonprofit ow.ly/8yIYr via @emilychan @FCNewYork

Uber comprehensive >> Legal & strategic look at having youth serve as board members ow.ly/1EEpuI by @emilychan 

Charities should trust themselves more & not jump on band wagon of “must-have” tools ow.ly/8EQs3 on @eJPhil

Using a Decision Matrix: the road to joyful decision-making, by @HildyGottlieb ow.ly/1F5Evf

42 pgs of thorough RT @emilychan: Strategic Volunteer Engagement – understand complexities & max advntgs @RGK_Center bit.ly/w8LaC6

NEW YEAR RESOLUTIONS

RT @GTak: 5 [Optimistic] Nonprofit Trends to Watch in 2012, by @nedgington ow.ly/1C6Yxv

A potporri of new Year resolutions from various nonprofit personalities ow.ly/1DcTVw Compiled by @Philanthropy

Nonprofit Law Blog: Top 10 Events in ’11 ow.ly/8v3V3 from @emilychan @GTak via @FCAtlanta // like watching a movie in fastforward!

FUNDRAISING & DONOR STRATEGY

Proof that Donor Advised Funds aren’t just 4 evading taxes >> Fidelity Charitable has best yr ever ow.ly/1F3IWL via @dan_blakemore

RT @GailPerrync: How to throw an event/party that everyone wants to attend ow.ly/8tChp // Wow. I’m flying in for next year’s!

9 Ways Board Members Can Raise Money w/o Fundraising, by @nedgington ow.ly/1FaApQ via @NAFund

RT @GTak: Refining the Art of Giving: Donating to good causes has become a complex biz ow.ly/1BYuTI on @WSJ

Dif perspective, like Drucker RT @GTak: Branson: Screw Business As Usual & Make (Huge Piles Of) $$ By Doing Good ow.ly/1BHv9y

Excellent RT @p2173: Worth a read. The Trouble With Impact Investing – Part 1 on @SSIReview shar.es/fXTd4

R the giving priorities of wealthy Americans totally off? This author thinks so ow.ly/8GLRJ via @GuideStarUSA

Inspiring story of the ripple effect 1 charity can create (& the potential we all have) ow.ly/1Eft8s

MARKETING & BRANDING

RT @phyllismufson @JobHuntOrg: Personal (& org) branding using your email signature ow.ly/8tHkx

I’m on a reading binge of articles by @Sales_Source on marketing & selling yourself & your biz/org ow.ly/1ERvoV - something 4 every1

Oy! >> The Accidental Rebranding of Komen 4 the Cure, by @kivilm ow.ly/1FlIEH ht @eJPhil // When a gr8 nonprofit lacks a com strategy

RT @HildyGottlieb: Excellent RT @kevin_monroe: 6 questions your nonprofit board can use 2 avoid a Komen-like Crisis ow.ly/1FUCHf

SOCIAL MEDIA & INTERNET

Google+ intros pages >> RT @IndSector @dheyman: A primer on Google+ for nonprofit orgs bit.ly/y6Aidl

Dead-on! >> Creating a Social Media Strategy 4 Your Nonprofit: The Secret Sauce, by @askdebra ow.ly/91ozn on @eJPhil

The advantages to nonprofit orgs of using infographics ow.ly/8BSbe

CORPORATE CULTURE

Amen! RT @going_concern: 5 Reasons Why Your Boss Should Buy You an iPad tinyurl.com/8x2k8dt

RT @joannefritz: neg coverage of JPMorganChase’s “American Giving Awards” nyti.ms/uPNTAO // rare 4 public contests 2 actually do good

Gr8 takeaways >> RT @Mule_Kick: Blockbuster Misses a Golden Opportunity…Again bit.ly/sR4CBl

RT @kyleplacy: Taking Your Business Mobile: The Why & The How ow.ly/1G6meI

Powerful >> RT @augieray @mkrigsman: How Fuji survived & Kodak didn’t ow.ly/1Ek3QU (Danger of competing w/ marketing not products)

PERSONAL DEVELOPMENT

Volunteering – A Great Way To Learn Real Executive Leadership ow.ly/1CPbvb

Gr8 Advice: Why Most LinkedIn users Don’t Get Results, by @DanSchawbel ow.ly/8gya5

How modern tech has made “getting organized” less efficient ow.ly/1E6Dz1 on @HarvardBiz via @joannefritz

RT @AlisonRapping @phyllismufson: How 2 Be a Leader When You Don’t Have Authority ow.ly/1E9JDI by @workawesome

10 questions that lead to true success (spoiler: money isn’t the answer) ow.ly/1EPpZa via @GuyKawasaki

“Failure Week” at British high school to teach students resilience & benefits of risk ow.ly/1FGILv

Links to the articles I’ve reviewed and posted to Twitter between December 5 – December 11, 2011. This week’s topics include: Governance & Strategy • Transparency • Management & Corporate Culture • Funding & Fundraising • Marketing

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

GOVERNANCE & STRATEGY

3 challenges affecting small nonprofit organizations & 5 ways to mitigate them, by Npmaven ow.ly/1BE1oS via EmilyChan

Why taking over a nonprofit instead of opening new 1 doesn’t save time or $$, by Charitylawyer ow.ly/1BGWfy

Maybe there’s a reason people don’t play nice: 8 Dangers of Collaboration, by Nilofer ow.ly/7TjY9 in HarvardBiz via GTak

NAFund & ToscanoAdvisors: 10 Things Every Nonprofit Board Member Should Know ow.ly/1BQnsF

Oy vey! Lessons from a donation bequeathed to a nonprofit but under incorrect name ow.ly/1BE0uM on eJPhil

Programs pairing MBAs with nonprofit organizations give students opp as Board member @ younger age ow.ly/1BGqNs via LawForChange

Get some popcorn & a pencil >> NAFund: Watch our 15 min VID how to manage Restricted Funds ow.ly/7CXZZ

TRANSPARENCY

Opendata: Not because your donors want it but because the nonprofit sector needs it (by p2173) ow.ly/1BvZSf via tkb

An increasingly important topic >> GTak: Finding the Right Transparency, by Emilychan ow.ly/1BQvDl

Gr8 debate re: end-goals of transparency. Kanter summarizes recent articles & forums bit.ly/tEHRBN via GTak

FUNDING & FUNDRAISING

Is a nonprofit about to go bust? BrokersWorld offers some ways to find out ow.ly/1BxolV on WSJ via GTak

5 ways to ensure your nonprofit gets that government funding ow.ly/7PBMx on BridgespanGroup

Making the case for donating to Overhead. A discussion with Tom Tierney of BridgespanGroup ow.ly/1BAbD1 on WSJ

Very sound advice >> ProGrantWriter: What new nonprofits need before hiring a grantwriter ow.ly/7pPX5

MARKETING

YNPNDetroit: VIDEO how to drastically improve your nonprofit’s mission statement ow.ly/7JZ5i via KatyaN4G

MANAGEMENT & CORPORATE CULTURE

Awesome! >> 9 Things That Motivate Employees More Than Money, by IlyaNeverSleeps ow.ly/1BxrOZ on IncMagazine

The Pen Is Mightier than the App: A Case For Writing Things Out, by Kevinpurdy ow.ly/7PX2M on FastCompany

Links to the articles I’ve reviewed and posted to Twitter between November 28 – December 4, 2011.  This week’s topics include:  U.S. Regulations  •  Jewish & Israel  •  Management & Strategy  •  Fundraising

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

DonKramer: Is it legal/ethical for former staff to take donor list? ow.ly/1BgdnE

JEWISH & ISRAEL

Power of the People: Israel’s social protests hit profit at Supermarket chain, CEO quits ow.ly/1BcGaz

Against the Grain: Why People Shouldn’t Jump to Criticize Jewish Federation’s GPT ow.ly/7O479 on eJPhil

Op-Ed on Jewish innovation as independent sector vs inherent aspect of nonprofit orgs ow.ly/1BsKjP on eJPhil

MANAGEMENT & STRATEGY

Semantics or What Defines a Good Manager? “There’s No Such Thing as Constructive Criticism” on HarvardBiz ow.ly/7IFyE

Golden! >> Alicekorngold: Lessons 4 Nonprofit Boards per Penn State + 2nd Mile ow.ly/1Btpe0 by GTak & Emilychan

GTak: Should Philanthropies Operate Like Businesses? Interesting debate on WSJ

How Philanthropy Taught Me to Embrace Failure: A Precondition to Success, by Rmarker ow.ly/1Ba1oT via eJPhil

FUNDRAISING

IndSector & CharityIdeas: How Non-Profits Can Use Mobile Digital Wallets for Fundraising on.mash.to/uFxuSj on Mashable

CharityNav: Donations inch back up after recession decline ht.ly/7IjbZ on USATODAY

4 ways to nurture social enterprise (hint: not from the Gov) ow.ly/7AG2V via SVPMinnesota & ColleenEbinger

Links to the articles I’ve reviewed and posted to Twitter between November 21 – November 27, 2011.  This week’s topics include:  Jewish Federations’ New GPT Directive  •  Jewish & Israel  •  Management & Strategy  •  Fundraising & Marketing  •  Social Media & Internet

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

JEWISH FEDERATIONS’ NEW GPT DIRECTIVE

Global Planning Table Recommended to JFNA’s Board - JFNA Briefing

Federations Drop Overseas Giving Formula – The Forward

Global Planning Table Ends Funding Split between Two Agencies – Jewish Ledger (nice history & background)

The Jewish Federations’ Big Gamble – Op-Ed by Dan Brown on eJewishPhilanthropy (great discussion in the comments)

JEWISH & ISRAEL

New Canadian Foundation aims 2 expedite donations to worthy nonprofits in Israel ow.ly/1B6hiS on eJPhil // expect serious scrutiny (as with all Canadian charitable ventures)

Congratulations to Prof Eliezer Jaffe, Israel “Dean of Philanthropy”, on receiving Knesset Speakers Prize ow.ly/7AlXA on eJPhil

MANAGEMENT & STRATEGY

Global recession impact: new study shows nonprofit orgs seek financial stability ow.ly/1B4McE on eJPhil

Donor Advised Funds: answer to our prayers or devil in disguise? Op-ed on NyTimes ow.ly/7G7s3 via IndSector

Calling All Boomers: Don’t Start More Nonprofits ow.ly/7Dp5e on Philanthropy via NAFund

Does your boss know that worker disengagement costs $300 billion a yr in lost productivity? ow.ly/1AKOpk

FUNDRAISING & MARKETING

Awesome & Inspiring >> Pndblog: (12 min VID) I am a Philanthropist: Diverse Voices in Giving ow.ly/7GqzM

PatrickSternal: The World’s 7 Most Powerful Philanthropists Forbes onforb.es/v7bV6R | The .000000001%

Principles that apply to so many things >> Johnhaydon: 3 Ways To Keep Cause Marketing Authentic zite.to/uHZTx9

SOCIAL MEDIA & INTERNET

Askdebra: Twitter donors worth the most on social media via Stevebridger | Scoopit bit.ly/v9vL79

VID – Are LinkedIn pgs actualy more robust than Facebook pgs 4 your nonprofit ? ow.ly/1AKRai via Johnhaydon

It’s more than just Likes & Shares >> Franswaa: Thoughtful engagement matters more than we think ow.ly/7yVQp

Links to the articles I’ve reviewed and posted to Twitter between November 13 – November 20, 2011.  This week’s topics include:  Israel  •  Management & Strategy  •  Fundraising & Marketing  •  Social Media & Internet

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

ISRAEL 

Are countries to quick to jump the gun or is Israel truly “limiting civil society”? ow.ly/7rJX4 on Haaretzonline

Too many nonprofit organizations in Israel? To say that Fundraisinisfun thinks so is an understatement ow.ly/1AsBR8

MANAGEMENT & STRATEGY

6 questions your nonprofit should ask before hiring new staff ow.ly/1At13O on eJPhil

FUNDRAISING & MARKETING

CauseWire: 5 Cause Marketing Tips to Actor Hugh Jackman & his New Nonprofit Venture ow.ly/7l9TP

Natanfund: 10 Basic Steps to Starting a Giving Circle ow.ly/1A5d3U

Could it be this simple? Shiraabel: Why Startups Fail ow.ly/1A6QLG via White_spaces 

SOCIAL MEDIA & INTERNET

Johnhaydon: Case Study: The Success of No Kid Hungry’s Tweetathon (Interview w/ Amanda Hite) ht.ly/1fwqN7

I was dismayed when I heard that some American (and European) Foundations are requiring amutot [Israeli nonprofit organizations] to have the Se’if [Paragraph] 46a status, which declares donations to a charity to be tax-deductible.

This latest phenomenon demonstrates a lack of understanding of the intricacies of international nonprofit regulations and makes it harder for worthy Israeli charities to raise money abroad. 

WHY DEMAND THE EXTRA LEVEL OF TAX-DEDUCTIBLE (SE’IF 46) STATUS?

Simply put, people are scared.  As a result, Foundations, in particular, are subjecting their recipients to increasing levels of scrutiny; in this case, requiring Se’if 46 to provide an additional measure of protection.

An “additional measure” because Israeli nonprofits are assumed to have already received the Nihul Takin [Certificate of Proper Management] from Israel’s Rasham Ha’amutot [Registrar of Charities].

At the outset, this seems like a reasonable request.  After all, in the United States a charity or nonprofit organization is one which is categorized as 501(c)3, which declares donations to this charity to be tax-deductible.

THE DEMAND OF “PARAGRAPH  46″ ISN’T FAIR

In Israel, three different government bodies oversee charities: the Knesset, Rasham Ha’amutot [Registrar of Charities], and Mas Hachnasah [Tax Authority].  Each evaluates Israeli charities with its own particular set of lenses and priorities.

Stage 1

The Knesset, Israel’s Parliament, defines the context and framework of an Israeli charitable organization through Chok Ha’amutot [Law of Charities].   Charitable, effective, or well-governed are of no importance at this first and most basic stage.

Stage 2

The Rasham Ha’amutot, or Registrar of Charities, is the executor of the Law of Charities, reviewing the applications of charities and assigning them their amutah [charity] number.  More importantly for evaluation purposes, the Rasham oversees the Nihul Takin [Certificate of Proper Management]. This status is granted to those organizations, for lack of better word, which are governed well. The 45 page guideline detail such things as: how to transfer money, minimum number of signatories, proper way to reimburse board members, and other things (like I said, it’s 45 pages).

(It is this document, I feel, which lacking anything better, is the best test to judge if a charity is worthy).

Stage 3

The last, and certainly not least, is the Se’if 46 that is granted through both Mas Hachnasah [Tax Authority] and a Knesset sub-committee. The Tax Authority checks if the charity is financially sound (pay close attention, I didn’t say charitable) and recommends the organization for Se’if 46 — but it is the Knesset sub-committee that has the final say and  actually approves the granting of this much-coveted tax-deductible status.

This last stage poses a number of tough questions that are the roots of the incongruities between 501(c)3 and Se’if 46:

The Tax Authority — through a serious of predetermined ratios, number games, and fiduciary rules — determines if an organization is for the public good.  Isn’t this the Registrar’s job? Isn’t the Nihul Takin already tasked with determining if an organization is charitable and run well?

Furthermore, why is a Knesset sub-committee part of the process? What sort of expertise is wielded by this group of lawmakers that is somehow lacking from both the Registrar of Charities and the Tax Authority?

The message implied is that the decision to grant tax-deductible status is as much a political decision as it is a meritorious one.  (And I know of at least one organization that was approved by Mas Hachanasah but rejected by the Knesset panel.)

ADDITIONALLY, IT’S A TIME ISSUE

Much like in the States, in Israel tax-deductible status isn’t issued immediately.  More specifically, it takes a minimum of approximately two years to receive Se’if 46 (for a variety of reasons).  This means that many worthy charities can exist in their early years without the possibility — through no fault of their own — of achieving tax-deductible status.  Effectively, holding a charity’s age against them.

And yes, the process takes less time in the United States.

THE DIFFERENCE BETWEEN 501(c)3 AND SE’IF 46

Contrary to Israel, the United States has a much more simple approach to what is considered tax-deductble, focused around two ideas:

1. Cannot be organized or operated for private benefit
2. Must be serving some public good (a.k.a. charitable), or what the IRS refers to as exempt purposes.

This is in contrast to Israel, which will first inspect (for better and for worse) a nonprofit’s management & organizational composition (Nihul Takin) and then it’s financial structure (Se’if 46) in order to grant tax-deductible status.

While not declaring one set of regulations to be better than the other, it can still be said that comparing the two is nothing short of comparing apples to oranges.

So it all comes down to this:

American Foundations do not have to play by Israeli rules, so why voluntarily choose to do so?

Have you experienced increased scrutiny? Has your experience been positive or negative?  I’d love to hear them in the comments.

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 and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

Additional information on the structure of Israeli charities can be found in a previous post, Defining an Amutah [Israel Charity].

Photo Credit: “Money and Magnifying Glass” by Images_of_Money

ADDENDUM:  WHAT SHOULD AN ISRAELI CHARITY DO IF THEY ARE LACKING SE’IF 46?

I hope this post serves as the basis for an explanation to American Foundations why an Israeli nonprofit might lack Se’if 46.  Armed with the new-found understanding, hopefully the Foundation will process the request and forward the grant as promised.

However, it is also quite possible that if a particular Foundation already believes that the requirements for tax-deductible status in the two countries — 501(c)3 and Se’if 46 — are similar, then it is predisposed to a negative answer.

If this is the case, it might be best to immediately re-apply, using a Conduit with a Se’if 46 instead.  Obviously, both the Conduit and the Foundation would have to be open to this idea.  The colleague who suggested this idea was in the process of having his organization do exactly this.

While there will be a delay as the application will have to be re-processed, he explained that this was the only way to bypass the American Foundation’s insistence and suspicion regarding the lack of tax-deductible status — getting money late is better than not getting money at all.

Links to the articles I’ve reviewed and posted to Twitter between September 26 – October 9, 2011.  This week’s topics include:  Regulations  •  Strategy & Accountability  •  Fundraising  •  Tech  •  Op-Ed

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

REGULATIONS

DonKramer: What kind of record-keeping, policies/procedures are required of nonprofit orgs? ow.ly/1xGlxL

Does your nonprofit org solve problems or address difficulties? Yes, there is a dif (by @p2173) bit.ly/pqoRHx via FundraisingNews

Emerging Legal Questions in Today’s Boardroom, by Emilychan http://ow.ly/6RZ5X // great links & additional resources for further study

STRATEGY & ACCOUNTABILITY

Performance Measurement System 4 Social Investors Unveiled ow.ly/1xZaAm via SmartNonprofits // Any other good summaries out there?

Intriguing >> AlisonRapping: Transparency is the Key to Sustainability (by CSR guru Elainecohen) ow.ly/1xLd9a

A brief overview of the new CharityNav (what they’re calling CN 2.0) from Craignewmark http://ow.ly/6GVCS

Strategic plans arent enough: Budgets are lousy financial plans, by KateSBarr ow.ly/1yc1J0 via NAFund

FUNDRAISING

GailPerrync: Love this! Nathan_hand: Tis popcorn season. 10 fundraising tips from a 10 yr old

7 ways to thank a donor 7 times a yr (clicking heels of ruby slippers not required) http://ow.ly/6GVUD via Johnhaydon

SocialGoodToday & Razoo 5 Tips to Make Donating Easy ow.ly/1y7LWQ

Multi-channel, the Holy Grail of Fundraising ow.ly/1ym5KZ via Franswaa

TECHNOLOGY

IndSector: How can philanthropists make the most of socialmedia? http://ow.ly/6OtTL via Guardiannews

FYI, you nonprofit techies >> Joewaters: Goodbye QR Codes, Hello Near Field Communication? ow.ly/1xY3eM

What Facebook’s Changes Mean for Cause Marketing, by Joewaters ow.ly/1xIGeT

OP-ED

Johnhaydon: Why should we hire a consultant? by NancyIannone http://ow.ly/6EXIu

This is one sassy blogger! >> Get Off Your Butt & Learn, by AmberCadabra ow.ly/1y5vsx via eJPhil

Links to the articles I’ve reviewed and posted to Twitter between September 12– September 25, 2011.  This week’s topics include:  U.S. Regulations  •  Israel & Jewish  •  Accountability & Impact  •  Fundraising & Marketing  •  Social Media & Internet  •  Personal Development

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

Lesson learned the hard way: Nonprofit run business is not always exempt from state/local taxes ow.ly/1x0ntz via PatrickSternal

JEWISH & ISRAEL

Report by EHL Consulting: Giving to Israel down 16%. How will your nonprofit cope? ow.ly/1wZCkE on eJPhil

Great analysis in haaretz of S&P’s decision to raise Israel’s credit rating & its implications ow.ly/1x20Qb

Just in time for the 2nd recession! >> 23 Jewish Nonprofit Orgs Lose their CharityNavigator 4 Star Rating http://ow.ly/6EfOZ via eJPhil

ACCOUNTABILITY & IMPACT

CEP_CambSanFran Study: Ever wonder how foundations judge effectiveness in their grantees? ow.ly/1wZPvy

GTak: Accountability in Social Enterprises (ie nonprofit org that sells product/service) ow.ly/1x54k6 // 22 pgs thorough

Do accountability measures undermine public confidence in nonprofit orgs? ow.ly/1xCBBD via Npquarterly

And none of these ideas cost $$! Ppanepento: 5 Ways Foundations Can Strengthen Nonprofit Boards http://ow.ly/6APdJ

FUNDRAISING & MARKETING

NonProfitBanker: New Post: “Priorities When Deciding to Accept Donations Online” http://ow.ly/6yH3D

NAFund & GrantSpace: Mission-Related Investing: A Cautionary Tale ow.ly/1x57Uj via Pndblog // why risk charitable funds?

Is the word nonprofit no longer adequate to describe today’s sector? ow.ly/1x63t8 on eJPhil // skip to last 4 paragraphs

How to frame your fundraising ask 2 get the right respinses (+ mucho links), by GailPerrync http://ow.ly/6uWD6 via TonyMartignetti

Increase gifts by $200 per donor: 7 ways to a committed relationship with a donor, by KatyaN4G bit.ly/n6bJcW via SocialGoodToday

Definitly unique >> Sldoolittle: ‘He will melt your face w/ his philanthropy.’ Super fresh donor stewardship video! ow.ly/1xvvDN

Want to weaken nonprofit fundraising? >> 5 Online Donation Form Bad Practices, by Blackbaud ow.ly/1xCEAA via Npquarterly

SOCIAL MEDIA & INTERNET

Bite-size & easy to digest >> Kanter & Blackbaud: 20 Twittertips for Nonprofit Orgs, by Christuttle ow.ly/1x7Oku

PERSONAL DEVELOPMENT

6 Networking Coups to Win Jobs, by Asklizryan ow.ly/1x0c8s // and win clients too!

Online donations are rising every year, becoming an increasingly important fundraising tool for nonprofit organizations.  To facilitate the growing demand and varied needs of charities, the number of online donation processors has been expanding accordingly.

As a result, charities have expressed their difficulty in sorting through the nuances and assorted extras to find the online solution(s) that’s right for them.

For this reason, I was thrilled to co-produce an event early in July that hosted representatives from the leading Online Donation Processors here in Israel (and the world); including Paypal Israel, IsraelGives, Taramta, Give2Gether, and Tranzilla.

The format allowed for a five minute presentation from each company-representative and a follow-up Q&A session. Each speaker was encouraged to forgo the usual humility and reserve expected of a panel participant and to, instead, guiltlessly sell themselves and their product.

What transpired was more of an intimate exploration into the concerns of nonprofit organizations than a survey of the various services.  I say this because in addition to the processing of donations, each portal offers added-value that is shaped, in part, by an understanding of the challenges facing today’s charities.

So which donation processor is right for you? Well, naturally, it depends on the particular fundraising-priorities for your organization. 

SOCIAL MEDIA

Reports have come out over recent years about how social media can be an instrumental tool for engaging an organization’s supporters. The hope being that increased engagement will at some point (sooner rather later) lead to increased fundraising or a stronger fundraising network.

With social media still in its infancy, however, organizations are finding it difficult to create a social network that is “showing them the money.”

Give2Gether’s solution to this conundrum is to harness the power of networks inherent in social media.  As a matter of fact, it seems that its platform has the most robust integration of social media around (but don’t take my word for it).

A nonprofit creates a page on the Give2Gether site whose goal is to mimic the power of giving circles and “matching” challenges.  Proving this point, another of Give2Gether’s intriguing (and some might say crazy) options, is the All or Nothing Campaign.  Organizations can set a goal and if not matched – even if short by only a few dollars – all of the money raised is returned to the various donors. Like I said, a tad insane and virtually unheard of in the nonprofit sector but similar to how an organization might fundraise face-to-face.

The Give2Gether representative advised organizations that do not have a developed social media presence to think twice before joining Give2Gether as there are fixed monthly charges (in addition to percentage fees).

CELL PHONES & SPONTANEOUS CHARITABLE GIVING

The Red Cross was all the rage when it came to Text-Donations for Haiti: a donor saw the ad, understood the pain, and was immediately able to help the cause.  Thousands of stories like this one led to a multitude of $10 donations through cell phones, totaling an approximate $7 million dollars.

While impressive as this might be, analyses of the phenomenon showed that the success of Text-Giving is generally limited to disasters and relatively small donations; thus, only truly great numbers (and truly horrific events) can raise significant money.  Furthermore, the simplicity of the text-giving process reduces engagement between the donor and the charitable recipient to virtually zilch.

But this doesn’t mean that we should abandon cell phones as an excellent source of fundraising!

The Israeli donation portal, Taramta (in collaboration with Merkaz HaMatara), released Cellarix. The product, developed especially for cell phones, combines the availability and ease of a cell phone with the flexibility and longevity of a bank account.

The system, basically an acquirer, assigns a user an account with the same number as his cell and essentially mimics a PayPal or GoogleCheckOut account.  Donations (or any payments for that matter) can be made easily between Cellarix accounts (both the donor and nonprofit must have accounts) whenever inspiration hits, without the limitations of Text-Giving.

OLD FASHIONED, DONATE DIRECTLY ON THE SITE

While technology is making inroads even with the more traditional users, not everyone is operating circa 2005 (let alone 2011). These users are comfortable entering their personal and financial information into any and every website, whether to buy clothes or to donate to local charitable campaigns.  These consumers do not want nor need the added security and “convenience” of user names, passwords, or third-party vendors.

If this is the case, why limit them?

Tranzilla offers the donor the chance to donate directly on the organization’s website with virtually any credit card.  No third-party verification or linking required.  Short and to the point.

INCREASED SECURITY AND CONVENIENCE

For a slightly more sophisticated user, entering personal and financial information on different websites can be seen as both tedious and risky.

PayPal acts as a third party “gatekeeper,” allowing users to input their information only once and will coordinate payments with various for-profit and nonprofit merchants when the user/donor chooses to execute a transaction.

With over 230 million PayPal users worldwide, the chances are good that your customer or donor either already has a PayPal account or trusts the company enough to register for a new one.

In short, nonprofits that are looking for a no-thrills way to receive funds (i.e. don’t need a true fundraising platform) will find PayPal an excellent choice.  By-the-way, did I mention that nonprofits are eligible to receive a 1% discount?

CONDUIT SERVICES 

Sometimes, donation processing isn’t enough as many charities lack the tax-deductible status that encourages an initial gift. In such case, a Fiscal Agent or Conduit is necessary.

Groups that use Conduits in this way are charities located outside of the United States (and, thus, not considered tax-exempt in the eyes of the IRS) that are looking to fundraise in America.

(For more information, see this previous post “Defining a Conduit Organization.”)

Designed with the multidisciplinary needs of Israeli charities in-mind, IsraelGives can function both as a American or UK “Friends of” Organization, issuing tax-deductible receipts directly to donors abroad.  A crucial service for those organizations lacking a formal presence in the United States.  Of course, if your organization is only looking for a donation processor, IsraelGives can do that, as well.

(For more an “Friends of” Charities, please see my previous posts, “4 Reasons Why NOT to Establish an “Friends of” Charity” and “6 Questions to Help You Choose the Right Conduit Organization.”)

CONCLUSION: A CHECKLIST

The brief descriptions above only scratch the surface of what these donation processors offer their nonprofit clientele.

Furthermore, the considerations listed above in GREEN are not all-inclusive. The discussions and questions at the end of the event honed in on a more expansive list of concerns and priorities facing charities that are looking to raise funds on the internet:

• How are donations made? Does the organization insert code into its existing site or create a separate page on the processor’s domain?
• Does the donor also have to have an account with the processor? (ex: PayPal)
• How quickly are donations processed?
• What are the fees involved? Flat, monthly or percentage?
• What other services are offered or available (for free or fee)? (i.e. one-stop shop)
• Can the processor act as a Conduit?
• What type of receipts are offered? Are receipts provided at all? What names appears on the receipt?
• Can the processor integrate with your Customer Relationship Management (CRM) software or database?
• Can the portal be integrated into social media efforts?
• Can unique landing pages be created to better facilitate fundraising through tailored pages?
• What payment options are available/lacking? What kind of donor will, therefore, be left out?
• Can the portal handle Text-Giving or integrate with cell phones, smart phones and/or tablets?
• How is the customer service and/or tech support? How easy is it to reach a human being if something goes wrong?

Any considerations that you would add?  Did you get any different/additional takeaways from the session?

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 and ever-changing, please refer all questions to qualified and licensed professionals. Read the full disclaimer.

It was a pleasure to co-produce with Charlie Kalech (volunteer coordinator of JWP) and his team at J-Town Productions. See their other events here.

Many thanks to the people that live-tweeted the event: TheBigFalafel, IsraelGives, & Reach_3K

Dan Brown: While this piece wasn’t entitled, “Technology as a Journey” I do think it fits the bill. I guess that only leaves me one more piece for the series.

Photo: “Credit Card Swipe” by Robert Bahn