Conflicts of Interest within Israeli Nonprofit Organizations

Advocate Joshua Pex from our law firm explains the basic rules of how to avoid conflicts of interest within Israeli nonprofit organizations (or non-governmental organizations, i.e., NGOs). Our lawyers provide legal advice for residents of central Israel, including Petach Tikvah, Ramat Gan, Rosh Haayin, Bat Yam, Holon, Bney Brak and the area around the center.

An Israeli nonprofit organization is called an amutah. The amutah is a separate legal entity, which is managed by its members who select the board members (va’ad amutah) and audit committee members by democratic vote at the annual general assembly. The management committee, which is composed of at least two members of the organization, is the entity that appoints the key functionaries and employees of the organization; it also oversees the organization’s proper conduct. In order to avoid a conflict of interest within Israeli nonprofit organizations (amutah), it is important to know and apply Israeli law as well as the rules and regulations for the management of NGOs in Israel.

The official guidelines for good conduct of Israeli nonprofit organizations are published from time to time by the Corporations Authority department at the Israeli Ministry of Justice. These guidelines contain detailed information which aims to teach the public how to properly manage an amutah. Despite the laws, regulations, rules and guidelines published by the Registrar of Nonprofits (Rasham HaAmutot), sometimes there are situations which are not clear. In these cases it is advisable to consult with an attorney that practices Israeli corporations and nonprofit (amutot) law. Our lawyers will be able to examine these matters in depth according to court decisions and precedents. In cases in which it is unclear how to deal with a specific question, it is possible to contact the Registrar of Nonprofits with an official inquiry.

The Importance of Fulfilling the Goals of the Nonprofit Organization

An organization for the benefit of the public is committed to use the funds donated to it in order to promote the goals of the amutah. The goals are defined when the NGO is registered. The goals show the public the amutah’s areas of activities. Obviously, an organization that accepts donations for a specific purpose but actually uses the money for entirely other purposes does not meet the rules of proper administration.

Nonprofit Organizations in Israel

Problematic Family Relations within the Amutah

The issue of family relations within associations which may cause a conflict of interest is discussed in the 2016 booklet of guidelines for the proper management of Israeli nonprofit organizations. The members of the association cannot be employed by the organization and cannot receive benefits through the organization. There is a ban on family relations between members of an NGO’s board and the organization’s employees. Also, there is a prohibition on a family relation between members of the organization’s board (va’ad amutah) and the members of the audit committee.