Client updates / NPO

Due to the Swords of Iron War and the state of emergency, the Registrar of Amutot and Endowments published a new directive extending the deadlines for NPOs to file their 2023 annual reports in order to enable them to obtain a Certificate of Proper Management for 2025.

According to the new guidelines, until the declared state of emergency in Israel is over, NPOs (amutot and public benefit companies) may conduct activities intended to provide immediate and vital assistance during the war, even if these activities do not fall under their approved objectives.

The Israeli Supreme Court has ruled that NPOs are entitled to receive an exemption from real estate betterment levies, provided they use the proceeds from the sale of such real estate for a public purpose specified in the law.

While substantial defects were found in the nonprofit organization (amutah), the court accepted and approved a settlement. Issuing a dissolution order to the amutah would have affected a large community of people that require its services.

The Israeli website “GuideStar,” which provides information about Amutot (One of the common types of non-profit organizations in Israel) and PBCs, launched a new and important interface that enables these organizations to independently update their details and information.

Up until today, pursuant to an Israeli government resolution dating back to 2001, NPOs (such as Amutot and public-benefit companies) that did not possess a certificate of proper management could not engage with government entities.

A certificate of proper management is a certificate issued to Amutot and PBCs by the Registrar of Amutot and Endowments after receiving an organization’s annual report (in conformity with the statutory requirements and the registrar’s instructions). It is valid for one year (or for two years, for Amutot and PBCs that fulfill particular criteria).

The Israeli High Court of Justice ruled recently that section 46 of the Income Tax Ordinance does not authorize the Knesset Finance Committee to exercise broad discretion in recognizing NPOs and in fact the Committee’s approval is limited solely to that related to its supervisory role.

Several days ago, the second phase of financial assistance grants for third-sector companies kicked off. Compared to the first phase, the size of a company’s revenue for grant eligibility was expanded, as were the period of harm and the maximum assistance threshold.

As part of its effort to deal with the coronavirus crisis, the Social Services Division of the Accountant General’s Department at the Israeli Ministry of Finance recently released an aid package for the benefit of third-sector organizations.

In light of the coronavirus outbreak in Israel, and the restrictive measures taken by the government, the Israeli Corporations Authority has issued updated guidelines to ease the obligations of Amutot and PBCs.

The Israeli Registrar of Amutot and Dedications has changed its policy on the granting of certificates of proper management to Amutot and public benefit companies (PBC). From now on, any Amutot and PBC that meets particular criteria will be entitled to receive a certificate of proper management valid for two years, instead of for one year, as was the case until now.

Recently, after a considerable number of meetings and discussions were held between representatives of third-sector organizations and representatives of a number of authorities, led by the Prime Minister’s Office, the inter-ministerial committee tasked with easing the regulatory burden on Amutot and PBCs published a report of its conclusions.

The Knesset recently approved the Law for the Reduction in the Use of Cash. This law imposes bans and restrictions on the making and receiving of payments using cash and checks at the sums therein prescribed.

For the first time, social NPO’s can enjoy attractive, convenient loan terms guaranteed by the State for funding an investment or working capital in the NPO, and without providing a personal guarantee.

In an unprecedented action, the Knesset Finance Committee has recently recognized an Israeli organization operating abroad as a ‘public institution’ pursuant to section 46 of the Israeli Income Tax Ordinance. Such recognition affords the non-profit organization, a tax benefit, by way of a tax credit to donors for their donations granted to that organization.

Approximately two weeks ago, the Israeli Ministry of Justice issued a new revised edition of the booklet “Guidelines for Amutot conduct”, as well as a new and revised edition of the supplementary guidelines booklet regarding the “Registration of Amutot, Name, Objectives and Regulations”. These booklets include a number of revisions and clarifications to the previous drafting.

Arrangements providing release from liability, indemnity and insurance to officers in an Israeli charitable organization ’amutah’ (or ‘amutot’ in plural; the Hebrew words referring to charitable organizations) (and in Israeli Public Benefit Companies) have been gaining momentum recently, both on the part of officers of such NPO’s who are seeking shelter under arrangements similar to those customary in business companies, and on the part of insurance companies, which consider third-sector organizations as being a market offering considerable untapped business potential.

A new Israeli government draft bill was published last week for public comments – “Disclosure Obligations of Recipients of Support from Foreign Political Entities Law (Increased Transparency by Recipients of Support, when the Majority of their Funding is from Donations from Foreign Political Entities).”

The objective of this draft bill is to impose increased transparency on NGOs (associations/NPOs and public-benefit companies) regarding their activities, when the majority of their funding is from donations from ‘Foreign Political Entities’, beyond the transparency that is imposed on all recipients of such donations.

On August 16, 2015, the Israel Tax Authority published a new circular (number 8/2015), which is effective immediately. The circular presents the new material requisite tests and criteria for recognizing an organization as a ‘public institution’ pursuant to section 46 of the Israeli Income Tax Ordinance. Certification issued to an organization pursuant to section 46 of the Income Tax Ordinance confers a tax benefit, by way of tax credits to donors in respect of donations they grant to that organization, at a rate of 35% for an individual donor and 26.5% for a corporate donor (according to the corporate tax rate).