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Preparing Financial Statements in an Israeli NGO (Amutah)

Joshua Pex
Joshua Pex

Every Israeli NGO is required to submit financial statements on money received and NGO expenses.  This short article gives you a brief introduction into what Israeli NGO financial statements include.

This Series of Posts

Our law firm practice Israeli NGO law among our various specializations.  This short article is one in a long series focusing on what you need to know about NGOs or charitable organizations (an amutah in singular and amutot in plural) in Israel.  This series addresses various rules for proper management of NGOs in Israel in order to better help you administer your Israeli NGO.

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 record keeping, donations and rehabilitating an NGO.

financial statements

Financial Statements and the Executive Board

The Israeli NGO’s Executive Board is responsible for preparing the Israeli NGO’s financial statements. Every Israeli NGO is required to prepare and submit financial statements no matter how small or large its financial turnover.  While preparation of the Israeli NGO’s financial statements may be outsourced, the Executive Board is still responsible for ensuring that the report is prepared properly and in accordance with legal regulations.

General Information about What to Include in the Financial Statements

The financial statements must include a balance sheet and an account of the Israeli NGO’s income and expenses.  This means that detailed accounts of payments made and received by the Israeli NGO must be provided.  This includes details about loans, securities, retirement conditions and other benefits for the five highest salary earners in the Israeli NGO.  The five highest salary earners can include non-salaried individuals who are giving services for compensation to the Israeli NGO as contractors.  Additionally, when detailing the breakdown in expenses, the Israeli NGO must distinguish between expenses for activities and expenses toward general and administrative work.

The Parts of the Financial Statement

The financial statement of all Israeli NGOs must include the following:

1) Balance sheet – This must detail all the assets and liabilities in categories and based on their liquidity level. The three types of net assets should be listed and differentiated: a) net assets that are not restricted for particular uses, b) net assets that have temporary restrictions and c) net assets that are permanently restricted (i.e., donated to the Israeli NGO on the condition that they are only used for a particular purpose).
2) Activity report – This includes income and expenses over the period of the report.
3) Report on changes in net assets – This will show changes during the period that is being accounted for, including a surplus of income over expenses.
4) Cash flow report – This report details the cash flow.
5) Notes to financial statements – All notes recorded must abide by the following formats: Opinions of the Institute of Certified Public Accountants and Standards of the Proper Accounting Standards Institute.  Among other things, the notes most reference the Israeli NGO’s objectives, loans given or received, and dependence on particular bodies or government ministries.

Contact Us

If you are interested in starting a non-governmental organization (whether an amutah or cheletz) in Israel, in ensuring that you are managing it according to updated laws and regulations or have any questions regarding your Israeli NGO’s financial statements, please contact us.

Advocate Joshua Pex specializes in Israeli NGO law and would be happy to discuss the needs of your NGO with you.


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