Jews around the globe are mobilizing to donate to help fight the effects of the recent fire in Israel’s Carmel Forest.

One of the outcomes of the Haiti Earthquake (January 12, 2010) is an in-depth case study in disaster-relief giving. Hence, those donating to Carmel Fire relief efforts need not reinvent the wheel and can rely on the many lessons learned just 11 months ago.

Money is not the Impediment

In response to the Haiti disaster in January 2010, The Stanford Social Innovation Review (SSIR) wrote in an article entitled, “Don’t Give to Haiti Now”:

Money is not the impediment to getting aid to Haiti right now…they need military and security forces to help organize rescue, logistics and transport and security operations.

While on a much smaller scale, the same logic holds true for Israel.

The recovery and rebuilding efforts do not exist in a vacuum; without certain guarantees and logistics in place, money alone will not be effective. (Just look at the Interior Ministry’s refusal to accept fire trucks from certain charities. The money was there but the trucks were never bought.)

Plan for the Long Term

With nearly half of the Carmel Forest destroyed (about 37,000 acres) and rehabilitation efforts expected to take years — if not decades — donations will be needed for far longer than just the upcoming months.

SSIR went on to write that

The rebuilding effort survives over the long term, donors need to stagger their funding and guarantee it over many years, instead of sending the money all at once…For Haiti, my advice is this: set aside money now for what you would give Haiti this year and for at least the next 3 years. Give money when aid can logistically get there, when efforts get coordinated, when you can get reports on which nonprofits are doing what and which ones are actually on the ground making an impact.

Research Before Giving

1. Prior Experience

Prior experience working in a particular geographic area or a particular field is crucial in making sure that donors get the biggest bang for their buck (or shekel) — whether on the island of Haiti or in the State of Israel.

After the Haiti Quake, for example, The Miami Herald provided a link to a database that listed the charities assisting after the disaster and if these organizations had prior experience working in Haiti.

2. Needs Most Dire

Additionally, with a country as small as Israel, popular news outlets can provide the necessary research into what needs are the most dire — and there will be many. For, example, The New York Daily News article, “How to Make Donations to Haiti Wisely” stressed that large disasters will required both “disaster relief and extensive assistance to rebuild.”

3. Donor Advisers

It is important to mention that the Haiti disaster also saw consultants play an important role; likewise, donors to the Carmel Fire relief shouldn’t shy away from advisers to help them “structure effective support.” (Investment News)

Give Cash, Not In-kind Donations

If a donor has taken the time to vet a charity, he or she should trust the organization to use the donations as it deems wise.

Furthermore, in-kind donations — food, diapers, clothing etc — cannot always be used or might have already been purchased. Donors outside of Israel should also realize that Israeli charities are charged import tariffs even on donated goods. Not to mentioned the trouble sometimes with getting goods through customs. (Read this JPost article for more information on Israeli nonprofits and import tax.)

Additional problems connected with in-kind donations were elaborated upon by these international aid bloggers after the Haiti Earthquake: Good Intentions & Aid Watch.

Closing Words…

The Haiti Disaster, observed Tactical Philanthropy, marked a “turning point in American philanthropy where donors are now expected to ‘give smart,’ not just give.”

It is my hope that this still holds true — not just for Americans, but for donors worldwide.

Tizku Lemitzvot,

Shuey

Related Posts: NonprofitBanker Video Blog: Haiti & Relevant Donor Strategy

N.B. The articles in The Miami Herald, The Daily News, Good Intentions, and Aid Watch are credited to the Tactical Philanthropy post, where I first read of them and found their links.

Chana Mason was born in Colombia and grew up in South Florida. She has a degree in Theatrical Directing and Engineering from Dartmouth College. She has worked in management consulting, high school education, and high-tech. Since moving to Israel in 2003, she has been involved in a number of Israeli non-profits.

Recently, within a matter of months, I opened and then proceeded to close a amutah [Hebrew referring to a registered charity in Israel] here in Israel.  I wanted to open up a seminary [school focusing on religious studies] and, with the advisement of experts in the field, decided it would be best for the seminary to run under its own administrative body.  Unfortunately, we did not come to this understanding until late into the process of developing the seminary, which meant that we were rushed to register the amutah, file in the tax authorities, and open a bank account.  I learned many things in this process that perhaps can help others looking to start their own non-profit organizations.

1.  Work Through a Fiscal Sponsor

Though it can be an administrative hassle, I recommend working under the auspices of another charity until you have your organization strongly in order.  Opening up an amutah and all it comes with can cost up to 2000 shekels (around $550) and takes a lot of your energies away from creating a strong organization and getting to know how the various government bureaucracies work.

2.  Foundations for Success: A Good Lawyer & Accountant

Having a great accountant and lawyer make a huge difference.  They can explain the process along the way.  A smart accountant will prepare you ahead of time for tax issues you could have never imagined in your wildest dreams.  My accountant wanted to read every contract I signed and wanted to know about every person I had an interaction with in regards to the amutah.  He is incredibly sharp and honest and let me know what was legal and what was illegal but unnoticeable.  A good lawyer wont charge you for every little thing and will charge an honest fee for his work.  When opening a charity in Israel, a lawyer in mainly just a notary, so getting a notary you know for a small amount of money is a great place to save.

3.  Never Underestimate the Importance of Your Banker

I never thought that in Israel my bank would be my greatest ally and asset, but it truly has been.   In a process where the learning curve is steep, having good advisement and support means a great deal.

While having staff that is pleasure and helpful is a definite plus (maybe even a must), there were other aspects of the bank’s service that were important to my small non-profit: (1) explained the types of accounts available; (2) provided a minimal-hassle process for opening and closing the amutah’s bank account; (3) worked openly with my accountant; (4) negotiated an appropriate fee structure; and (5) agreed to meet at a convenient location (outside the bank) for the charity’s signatories to sign the paperwork.

4. Budgeting: Reduce Costs and Seek Advice

Make sure you have squeezed every shekel you can out of your budget.  Fundraising in this economic climate, especially for a novice like me, can turn out to be a disappointment.  Reducing costs to an absolute minimum can make a huge difference.  This is where getting advice from people in the know and having lots of people analyse and churn through your budget is also useful.  For my non-profit it is clear looking back that my fundraising expectations were too high and my budget was also too high.  We relied quite heavily on one main donor, who in the end could not afford to support the institution and we also budgeted to offer the best to our students.  It would have been better to offer lower salaries, smaller spaces and a smaller scale program at the beginning to create a safer budget.

5. Make the Tough Decisions Earlier Rather Than Later

We also saw that though many people were to be disappointed by our closing the amutah, it was better to close the organization as early as possible.  Otherwise higher debts would have been incurred over the long run.  Looking back, we are incredibly happy with our decision.  Accruing debt is no small matter and is counter to the mitzvah of tzedakah [charity] that we are aiming for when creating a non-profit institution.

Wishing all of us much success in working to improve the lives of people everywhere!

Chana Mason

Welcome to the first of a new style of video posts, “Money Musings,” which will cover issues and challenges inspired by conversations with nonprofit professionals.

In this episode, I discuss 2 reasons why local nonprofit organizations should fundraise from their constituents first. While the video specifically describes a nonprofit operating in Israel, the principles are true for any charity in any country.

Alternatively, the video can be viewed directly in YouTube: http://www.youtube.com/watch?v=jFpP4wxjnOU

As always, comments are welcomed and appreciated.

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.

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.

(N.B. While this post is most relevant for charities operating in Israel, its underlying principles are true regardless of location.)

WHY USE A MONEY CHANGER?

Cost

When using traditional financial institutions to process foreign currency, fees tend to be higher. This impression holds both for foreign currency transfers (wires) and checks — this is of course, assuming that many individuals and charities aren’t using banks that specialize in foreign currency (i.e. bankers unlike me).

The belief — and not necessarily correct — is that money changers offer better exchange rates, as well. Again, this is not always the case (see previous parentheses).

Speed

Turnaround is always an important factor when receiving money from abroad. One, because of exposure to currency fluctuation. Two, because of cash flow.

While money changers may have a shorter turnaround than banks vis-a-vis transfers, they definitely have a shorter turnaround than banks vis-a-vis foreign currency checks. (Though, everything comes at a price.)

Wow, seems pretty good. Why in the world shouldn’t a nonprofit organization use a money changer!?

After all, doesn’t the charity have an obligation to its constituents to make sure that the money it raises arrives at its destination as quickly and as cheaply as possible?

NO.

The mission of the charity is to show its donors and relevant governmental agencies transparency, control, and accountability for ever cent, agurah, peso, and shilling raised.

With respect to this charge, money changers are a danger to proper book keeping and the transparency everyone is demanding:

1. Lack of Control and Transparency

Whenever an organization uses a money changer it is voluntarily relinquishing control and permitting a third party to handle its money. While receipts can be issued and paper-trails followed, a small but unavoidable black hole is created.

Instead of having a bank statement that clearly shows where the donation originated from, the bank page will simply show an generic “incoming wire” (from the money changer) or even worse, an ambiguous “cash deposit.”

True Story: I have seen nonprofits arrive at a bank to deposit tens of thousands of shekel IN CASH. Now is this really the kind of impression an organization wants to make to its bank, donor or oversight body? Somehow, a wad of bills in a paper bag just doesn’t scream “trust me.”

2. Blurred Beneficiaries

When money is given to a money changer, the intended recipient is not the one either directly receiving the money nor cashing the check.

This is especially problematic with foreign currency checks, where the intended beneficiary never even deposits the check into the bank — an issue that effects the donor perhaps even more than the charity.

True story: Charities have no way of knowing where its money changer might redeem its check. Some money changers use Arab Banks to clear their checks. Putting politics aside, donors (and sometimes even the IRS) get mighty curious when a check earmarked for an Israeli cause has either “Bank of Cairo” or “Bank of Jordan” stamped on the back.

3. Cost is Now a Secondary Concern

In a previous post I quoted documentation that specifically mentions that cost is an irrelevant factor when the IRS examines a charity for effectiveness:

The Treasury Department is standing by its suggestions, thus, signaling to all that “life is simply more expensive and inconvenient as a result of global terrorism, and everyone is expected to bear a share of the new costs of doing business.”

And the IRS isn’t the only one using similar logic.

AND SPEAKING OF COST…

Did I mention that money changers might not even be cheaper than banks? If you’re looking for proof, contact me. I’ll make you a believer.

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.

The phone number is clearly listed on its site, yet no one answers when I call.

It is a complaint I have heard from Israeli nonprofits and one that I recently verified — repeatedly.  So the question remains, how can someone get in touch with Israel’s Registrar of Charities [Rasham Ha'amutot]?

And make no mistake about it, reaching this office is crucial for those looking for general information, to change their by-laws, or simply see if a nonprofit’s file is available at the main office.

I was ecstatic — nearly giddy, even — when a colleague of mine shed some light on this question just today.  Treat the office like you would a lawyer: everything should be given in writing.  The Office, it seems, works best on goood, old fashioned A4 paper.

While faxing is the easiest, it is hard to confirm that the fax has indeed arrived (after all, you have to call).  The other way is to send an email with a scanned letter as an attachment; it serves the same purpose only arriving securely at the near instantaneous speed of modern technology.

However, the truly best way to reach the Registrar, suggests Arnie Draiman, a philanthropic consultant specializing in smaller nonprofits, is to go there in person.  He describes the personnel working there as “nice, courteous, helpful, and efficient. Though it’s still a government office, going there in person is 1,000 times better than calling, faxing or emailing.” I’ve been to the office and agree wholeheartedly with Arnie’s assessment. (So much so that I updated the post with this last paragraph 18 hours after its original upload — thanks Arnie!)

The contact information for the Registrar is:

• Beit Hate’omim, 15 Kanfei Nesharim St. Jerusalem
• Phone: 02-654-6600
• Fax: 02-654-6683
• Email: RashamA@justice.gov.il

This and other information can be found on the Registrar’s website:

• http://www.justice.gov.il/MOJHeb/RashamAmutot/

Happy Hunting,

Shuey

A recent New York Times’ article attacked American charities that help build communities in  Israel’s West Bank and IRS policy that enables donations to these organizations to be tax-deductable.  As with any piece about the Palestinian-Israeli conflict, many people have been quick to attack or defend the veracity of the article.

To nonprofit organizations, the value of the article is not the accuracy of the authors’ claims, but rather the article’s insight into current concerns and trends influencing the nonprofit sector.  These can serve as warnings and guidelines to US charities that operate internationally.

Towards this end, I have highlighted themes in the article through blocks of text.

Charity Law as an Extension of US Policy

Using tax-exempt donations to help Jews establish permanence in the Israeli-occupied territories – effectively obstructing the creation of a Palestinian State.

Mr. Obama has particularly focused on them as obstacles of peace.

As the American government seeks to end the four-decade Jewish settlement enterprise…the American Treasury helps sustain the settlements through tax breaks on donations to support them.

Washington has consistently refused to allows Israel to spend American government aid in the settlements.

The article hints to a link between United States charity regulation and governmental policy.   While there necessarily shouldn’t be a connection between the two, the facts on the ground seem to hint otherwise.  More because of increased scrutiny by the governmental department tasked with overseeing nonprofits rather than because of changes in law.

It would behoove organizations operating overseas to consider this growing link (at least during President Obama’s tenure) and to consider US policy when formulating strategy and governance.

Board Members and Officers Should Not Be A Rubber Stamp

It [Shuva Israel, a US tax-exempt charity] has two volunteers who double as board members. “I’ve never been to the board,” said one of them, Jeff Luftig.

Independence and control: two running themes in nonprofit legislation, regulation, and audits.

Volunteers who agree to serve as a board member should understand that this voluntary service comes with mandatory responsibilities. The same holds true for a nonprofit searching for potential candidates.  The United States Government and the public look to a Board of Directors as the brains and power behind a charity; as such, the board is expected to actively participate in the running and planning of a nonprofit.

Local Charity, Local Board

Although IRS rules require that American charities exhibit “full control of the donated funds and discretion as to their use,” Shuva Israel [a US tax-exempt charity] appears to be dominated by Israeli settlers.

The IRS does not want an American charity to be a puppet, subservient to the wishes of another organization or individual — local or foreign.  While foreigners are allowed to sit on the boards of American charities, the nonprofit should never appear as if it has lost its American identity and independence.

Silence Speaks Volumes

Settlements violate international law…

In some ways, American tax law is more lenient than Israel’s.

Asked whether it had ever filed a tax return, he responded, “I’m not in a position to answer that.”

Records from the group [Manhigut Yehudit] say a portion of the $5.2 million collected has gone to Israeli “community facilities”…neither man would answer questions about the nature of the “community facilities.”

Silence can sometimes be the worst answer an organization can give as it hints that perhaps no employee knows the answer or, even worse, that the organization has never bothered to ask the question.  Conferencing with lawyers, accountants, and other professionals can often turn up most of the potential challenges facing the charity. It is to the benefit of the organization to prepare responses to expected Frequently Asked Questions and designate  employees and volunteers best equipped to answer them.

The organization’s reputation demands an answer better than silence.

Filing with the IRS: The Best Defense is a Good Offense

Religious charities are still more opaque; the tax code does not require them to disclose their finances publicly.

Religious groups have no obligation to divulge their finances, meaning that settlements may be receiving sums that cannot be traced.

Religious organizations – like many of the charities that support Israel – that expect to come under government or general scrutiny should consider filing relevant IRS paperwork even though they are not required. Entering background, managerial, and financial information information ahead of any “investigative piece,” is convincing evidence that the nonprofit’s intentions are noble, as well as legal.

Conclusion

As the United States Government loses millions of dollars from noncollectable donations to tax-exempt organizations, charities will always be subject to public and governmental scrutiny.

After reading the excerpts from the Times article, one can certainly understand more of the public and regulatory sentiment towards US registered charities operating abroad, especially those supporting Israel. This said, American nonprofits can still fulfill their mission, operating at their peek capacity.

Among the many DON’Ts mentioned by the authors were also some excellent DOs, which, if followed, can prevent the very accusations highlighted in the article:

The [US] tax code encourages citizens to support nonprofit groups that may diverge from official policy, as long as their missions are educational, religious or charitable.

The Time’s review of pro-settler groups suggests that most generally lie within the rules o the American tax code. Some, though, risk violating them by: (1) by using the money for political campaigning and residential property purchases, (2) by failing to file tax returns, (3) by setting up boards of trustees in name only and (4) by improperly funneling donations directly to foreign organizations.

But the IRS does allow deductions for donations to American nonprofits that support charitable projects abroad, provided the nonprofit is not simply a funnel to another group overseas.

Truly, good advice to follow.

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.

There is debate raging in the United States about tax incentives and the Nonprofit Sector. The U.S. government, by allowing donations to be tax-deductible, is surrendering money “owed” to it for the sake of encouraging charity. Many believe that the two – the rate of deductions and the amount donated to charity – are directly linked. Any decrease in the rate of deductions will lead to a decrease in the aggregate amount of charity donated to nonprofit organizations.

A recent study in Israel advocates the same theory, claiming that Israel’s poor standing in charitable-giving is directly related to the Israeli Government’s comparatively lower tax-deductible incentives.

However, by placing the blame squarely on the Israeli Government – instead of sharing the burden with the nonprofit organizations operating in Israel – these researchers are causing the Israeli Nonprofit Sector to leave a huge well of potential-donors untapped. The charities in Israel are failing to engage would-be donors, and it is this lost opportunity that should really be addressed.

Study: Israelis Don’t Donate

A recent article in Haaretz quotes two studies that highlight Israelis’ lack of charitable nature and provides some hard-to-ignore numbers:

Support for nonprofits in Israel — from outside and inside Israel — stands at 1.34% of GDP, second only to the United States (1.85% of GDP).  If donations from abroad are not counted, the rate plunges to 0.8% of GDP, less than in most of the West.

In 2006, revenues of nonprofit organizations [in Israel] totaled NIS 6.6 billion, of which only NIS 590 million originated with Israelis, while NIS 3.5 billion came from abroad. The rest came from the income the organizations generated themselves and from the government.

The 6,377 foundations in Israel dish out a combined $150 million a year.  Compared to the 1500 foreign philanthropic funds operating in Israel, which donate a combined $1.5 billion a year.

The Johns Hopkins study found that only 6% of Israelis volunteer, slightly more than in emerging markets but well below the roughly 15% rate in the West.

The government provides 51% of the funding to nonprofits. That rate is far above the Western norm: the average proportion of government support among the other 22 nations surveyed stands at 37%.

The Israeli research team, all big names with “facts on their fingertips” – Dr. Nissan Limor, Prof. Benny Gidron, Raanan Dinur, Zvi Ziv, Ahuva Yanay, and representatives of Israel’s Tax Authority – noted that Israel’s tax-deductible policy does not encourage charity.

One way to measure this is the lost tax-revenue from claimed donations to nonprofit organizations; this number stood at NIS 170 million in 2009, which was 0.08% of total tax-revenue of that year. In the United States, the equivalent cost stood at 2% and in Canada at 0.4%. In other words, percentage-wise, less tax-deductible donations are made in Israel than in other countries.

Are We Selling Israeli Donors Short?

The article continues:

Why don’t Israelis donate more? Because the government doesn’t encourage it, says the team. “It isn’t a question of culture, but of policy,” says Limor. “Philanthropy needs encouragement. The Israeli government never did encourage it. Incentives for donors are quite limited.”

In other words, Dr. Limor points the finger solely at the government, not at the Israeli people and not at the nonprofits operating in Israel.  If ind it hard to believe that there is nothing more that can be done by the charities to encourage more donations and by the donors to get more involved.  Thus, this explanation, sells the Israeli people short.  The grim numbers shown above cannot be easily dismissed by blaming it all away on the Israeli government.

Israelis Want to Give, They Just Don’t Know It

I attended an event organized by Shiur Acher [A Different Lesson] on April 25th. This Israeli charity encourages companies to donate manpower to teach classes in schools located in underprivileged neighborhoods.

At their event, Shiur Acher unveiled the findings of a survey sent out to the 1,600 past-and-present Israelis who have volunteered their time to the organization; 275 volunteers, or 17%, responded. (The survey had a dizzying, 40 questions. Additional answers can be found after the post marked *)

Highlights:

59% Reported that they do not volunteer outside of Shiur Acher.

67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved.

89% Recommended or plan to recommend Shiur Acher to others

Conclusion

With only 270 people answering the Shiur Acher survey, it can hardly be seen as decisive proof. However, the evidence shows that the Israeli non-giving culture can be changed when donors are properly engaged.

The study showed that volunteering for the organization was, for a majority of the volunteers, their first encounter with charity. Additionally, a majority noted that volunteering had “awakened in them a desire to become more socially active.” In other words, those that have been successfully engaged, those that had a chance to volunteer at a place that made them excited, actually want to do more charitable acts and want to encourage their friends to do the same.

The Nonprofit Sector in Israel needs to look within itself how to inspire the population to become more socially involved. Yes, the government can improve its tax-deductible incentives. But this will only increase the amounts given to charity. The desire to initially give lies within the donors themselves. So too, the responsibility to stoke that desire, to transfer that yearning into action, lies within the organizations themselves. Let us not be complacent. Donor relations is not a job title, it is a challenge. It is a call to arms.

Tizku Lemitzvot,

Shuey

* Additional highlights from the Survey:

How many years have you been volunteering with Shiur Acher?

• 44% 1 yr
• 44% 2-3 yrs
• 12% 4 or more

Would you recommend volunteering at Shiur Acher to your colleagues?

• 89% Have recommended or plan to recommend volunteering with Shiur Acher to their peers
• 74% Of the above 89% would recommend volunteering with Shiur Acher to their colleagues

What motivated you to volunteer? (Can choose more than one reason)

• 68% The desire to help educate children and help a community in need
• 22% Breakup routine, pleasure, curiosity, interest, satisfaction
• 15% Volunteering is an integral part of working in my company
• 14% Recommendation from a colleague
• 14% Request from the coordinator working for the charity
• 10% A chance to try out teaching
• 7% Existed an expectation in the company that I would volunteer
• 3% Other reasons

Do you volunteer outside of Shiur Acher?

• 59% Reported that they do not volunteer outside of Shiur Acher
• 41% Reported that they do volunteer. Of which 47% of those, belong to neighborhood watch, PTA, youth movement or give charity.

Other Survey Highlights:

• 67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved
• 77% replied that their volunteer work was very, very important to them.
• 50% Believe that volunteering is important to their company
• 47% Appreciate/value their employer more because of their participation in the Shiur Acher Project
• 57% Reported that participation in the project brought them closer to their coworkers

A list of great articles from around the web that I posted to Twitter from May 16 – May 22, 2010.  This week’s topics include: Strategy & Governance; US Tax Tidbits; Social Media & Fundraising; Economy & Finance; and Potpourri.

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

<br>

Strategy & Governance

Guidestar CEO stresses that good metrics help nonprofits attract (strategic) deep-pocket donors http://ow.ly/1LFba #philanthropy

<br>

US Tax Tidbits

RT @NAFund & @aznonprofits: 6 Important Facts about Tax-Exempt Organizations http://bit.ly/9n8Qcz // The ABCs of donating money to US NPOs

New online tax form for small US charities: Good. IRS deadline-extension of new form: Bad. http://ow.ly/1ODte via @philanthropy

<br>

Social Media & Fundraising

6 Ways Board Members can fundraise w/out having them solicit peers, by @GailPerrync http://ow.ly/1LDdY via @npmaven @PamelaGrow

Engaging consumers about their social/environmental concerns? 75% believe you should (by @andrealearned) http://ow.ly/1NQkP via @elainecohen

Real-Life stories from nonprofits on incorporating social media into marketing strategy http://ow.ly/1OAyg via @nptechblogs @reedstockman

The mantra for all who work with social media >> The Cornerstone of Social Media Strategy is Clarity, by @askdebra http://ow.ly/1OD3d

Intro in “What the Hastag,” a wiki hash directory & metric analyzer, by @jewishagency http://bit.ly/bskHmx via @eJPhil

<br>

Economy & Finance

Rethinking the metric of a good economy, maybe the G.D.P. isn’t the best judge. On @nytimes http://ow.ly/1LFvj

Haaretz: European crisis could cause #Israel exports to fall by $1 billion http://ow.ly/1LWi7

Haaretz: Why gold is spiking & why it matters to the Bank of #Israel http://ow.ly/1LWoM // Good summary of currency fluctuations & inflation

<br>

Potpourri

ATM-style vending machine that dispenses GOLD! http://ow.ly/1LSTh Not to be confused with ATM-style vending machine that dispenses French Fries http://ow.ly/1LSXX

Who says Britons don’t have a sense of humor? >> RT @johnhaydon: Man loses licence after drunk driving in toy Barbie car http://ow.ly/1NQxP

A list of great articles from around the web that I posted to Twitter from May 2 – May 15, 2010.  This week’s topics include: Strategy & Governance; Social Media & Internet >> Fundraising; Social Media & Internet >> Recreation; Israel; Banking & Economy; and Potpourri.

I didn’t have so much time last week, forcing me to combine 2 weeks worth of links. Man, oh man. I hope you’ve got some time, there are some great articles below.  Not to mention some really funny ones, as well. Enjoy them both.

Tizku Lemitzvot,

Shuey (@nonprofitbanker)

<br>

Strategy & Governance

Protect your #Nonprofit: 3 critical manuals all NPOs should create http://ow.ly/1JQRl via @NonprofitSRQ @npa_online @PamelaGrow

IRS interim report “Exempt Organizations – Universities Compliance Project” http://ow.ly/1Jdeq – focus on unrelated income & executive comp

4 Reasons Why IRS Interim Report “Exempt Orgs – Universities Compliance Project” is an Important Read http://ow.ly/1JheM

RT @socialcitizen: Is the $5 Donor a Philanthropist? http://ow.ly/1Grmq >> Great question raised. I weighed in, interested in your feedback

Koret CEO Jeff Farber shares: “It’s time #Jewish #philanthropy stop operating like a charity” http://ow.ly/1GN3Z

Well said! >> RT @nptechblogs: With great market share comes great responsibilityhttp://bit.ly/c5QwgE (via @socialsignal)

How to tell if your brand is useless (2 min VIDEO) on @jeffbrooks http://ow.ly/1KJmA // @CharlieKalech reminds me of speech you gave @ GBN

Great resource for boards >> RT @HeidiEKMassey: RT @npmaven: Creating online ‘readings’ handout 4 #nonprofit boards.http://is.gd/c2Lsh

<br>

Social Media & Internet >> Fundraising

Dan Brown of @eJPhil gives highlights from 2010 eNonprofit Benchmarks Study.http://bit.ly/94DYxy >> important numbers for email campaigns

NPTimes: Charity apps combine education & fun & translate into $ w/o limits of text-2-give-campaigns http://ow.ly/1GNor

To Mama With Love: Social Network Fundraising succeeding in Engagement & Conversation, by @askdebra http://bit.ly/cqNwuz via @shoshanak

Social Media is NOT about jumping on the bandwagon >> 10 Trends in SUSTAINABLE Social Media, by @askdebra http://ow.ly/1Lxm8 via @lblumenthal

Crucial Message! >> RT @PaulDunay: Social media is not a campaign: It’s your customerhttp://ff.im/-k6khS by @travismurdock

RT @nonprofitorgs & @askdebra How@EnvDefenseFund created its social media guidelines, by @kiramarch http://is.gd/c4D6v

RT @PaulDunay: 7 Things Your Organization/Company Must Do Because Of Social Media, by @augieray http://ff.im/-kif9L

Holy smart-bomb Batman! US Airforce has awesome Social Media Response Plan flowchart! http://ow.ly/1JQiP via @nptechblogs @wildapricot

It’s all about making it personal! >> RT@askdebra @bfholmes: NGO thinks outside-the-box to give homeless a voice (VIDEO) http://ow.ly/1Jidw

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Social Media & Internet >> Recreation

RT @GuyKawasaki: How to make your Facebook profile more private [2 min VIDEO]http://is.gd/c8eNj // Facebook privacy settings are in 5 dif places!

RT @HilzFuld @Minervity: Top 5 Social Blogging Tools http://su.pr/2QpKQd by @RuhaniRabin

RT @askdebra: Very interesting – FB backlash. Diaspora: an antidote 2 FB? Http://bit.ly/aoubb0 via @pampelmoose

RT @lblumenthal: 8 kinds of websites we need to stop building, by @oatmeal http://ow.ly/1KQj7 // Funny. Hard 2 agree w #6, need of more secure FB

RT @mayerreich: This is funny and why I hate Facebook. http://bit.ly/dbSyHs // Facebook intrudes just a tad, doesn’t it

Are social networks hurting or helping children develop emotionally/socially? http://ow.ly/1GnIg via @power2b @dovemerson @rabbigreen

RT @GuyKawasaki: “How do I delete my Facebook” query growing http://is.gd/c4Iif

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Israel

RT @inwnews: Globes: CITI mulls retail banking in #Israel http://ow.ly/1GnlC >> more competition & lower fees? I hope so

RT @ISRAEL21C: OECD accepts Israel as member http://su.pr/2Joo35 #Israel#economy #business

RT @Israel_News: Euro drops sharply vs Shekel as IMF judged EU’s emergency fund as a temp solution. http://ow.ly/1Js4A

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Banking & Economy

The New Poor: Even w/ rebounding economy, many jobs – tnx to tech advances – won’t be coming back ever http://s.nyt.com/u/wuwm

US Crisis Panel to probe how big banks routinely – and legally – fudge their quarterly books. http://ow.ly/1Hb8q

US Treasury Sec urged Congress 2 impose 10-yr $90 billion bank-tax 2 recoup 2008 bailout-costs http://ow.ly/1Hbbr

As stimulus $ dwindles down, expect States to make deep cuts http://ow.ly/1IQwd via @NAFund @PANONonprofit @robertegger

RT @askdebra: Social media and the banking industry, by @davidfinch http://is.gd/c6YkI // Essential services made easier, free advice & more

Thanks for the referral Debra >> RT @askdebra: Mobile banking set to soar, courtesy of @emarketer http://is.gd/c5ZPJ

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Potpourri

RT @Neil_Hamburger: Another “world’s oldest person” died today. Clearly, a dangerous competition that should be stopped. http://ow.ly/1GUIC

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.