Financial Management and Record Keeping in an Israeli NGO (Amutah)
Israeli laws for NGOs (non-governmental organizations or nonprofit organizations, amutah in Hebrew) require that account books be kept and maintained, accurately reflecting the financial situation of the Israeli NGO. All financial transactions of the Israeli NGO must follow the regulations for Israeli income tax and bookkeeping.
This Series of Posts
Our law firm specializes in a number of fields, including Israeli NGO (Israeli non-governmental organization) law. This article on financial management is one in a long series addressing essential information for Israeli NGOs or charitable organizations (an amutah in singular and amutot in plural) in Israel. This series addresses the rules for proper and legal management of NGOs in Israel in order to help you manage your NGO effectively.
For more information on the Israeli Corporations Authority which oversees Israeli NGOs, see the government website. For more articles from an Israeli lawyer and legal advice for Israeli NGOs related to the topic of this article, see our articles about in-depth audits, rules for transferring funds and rehabilitating an NGO.
Principles of Financial Management
Israeli law requires that all Israeli NGOs follow legal financial accounting standards in general, and as these organizations exist for the public benefit and not for profit, they are held to a very high standard. Proper accounting must be maintained either within the amutah or by another person who does so on behalf of the NGO. Additionally, every financial transaction must be recorded, and any relevant documentation must be organized. This includes, among other things, withdrawal and receipt for money taken out or received, and all invoices and receipts. Furthermore, other documents relevant to financial transactions must be kept. The NGO must ensure that someone is responsible for bookkeeping and continually updating the NGO’s financial transactions. It is also important to note that only those entrusted with the authority to sign their signatures for the NGO (amutah signatories) are allowed to withdraw money from the NGO.
Record Keeping for an Israeli NGO
Israeli NGO record keeping must abide by section 35 of the law, which discusses the various aspects of the NGO accounting system. All of the items discussed must be recorded. This includes, among other things, donations, gifts, and receipt books detailing what the Israeli NGO received from others (including governmental organizations).
Any Israeli NGO that turns over more than 750,000 NIS a year must follow a double entry bookkeeping method.
If you are interested in starting an Israeli non-governmental organization (whether an amutah or cheletz) or have any questions about financial management and record keeping, give us a call!
Advocate Joshua Pex specializes in Israeli NGO law and would be happy to discuss the needs of your NGO with you.