Regulations and Israeli Nonprofit Assets
Rules and regulations for Israeli not for profit organizations or Israeli NGOs (amuta or amutot) clearly state that all nonprofit assets (i.e., funds, equipment, etc.) must be used to promote the objectives of the registered Israeli amuta.
This Series of Posts
Our law offices at Cohen, Decker, Pex & Brosh have experience in Israeli not for profit law and Israeli NGO law. This short article is one in a longer series discussing some important aspects about the proper functioning of Israeli not for profit organizations (amuta in singular and amutot in plural).
For more information on the Israeli Corporations Authority which oversees Israeli not for profit organizations, see the government website. For more articles from an Israeli lawyer and legal advice for Israeli not for profit organizations related to the topic of this article, see our articles about the Israeli Corporations Authority, reimbursements and the amuta’s name, logo and objectives.
Funds Designated for a Particular Purpose
Every recognized Israeli not for profit organization has a registered name, by-laws and objectives. Any and all funds given to the organization must be used to support these objectives. If a donor designates funds to promote a particular objective, the Israeli not for profit organization or Israeli NGO must use the funds for that particular purpose. Funds designated for a particular objective may not be used for other objectives, even if the other objectives are also the objectives of the Israeli not for profit organization. Even if an Israeli not for profit organization changes its objectives with the Registrar of Amutot, funds that were designated for the not for profit organization’s previous objectives need to be used for the purposes and objectives they were originally specified for.
Inactivity in the Israeli Not for Profit Organization
In the event that an Israeli not for profit organization or Israeli NGO is not active, it cannot receive a certificate of proper management, and the Registrar of Amutot may consider liquidating the organization. This is because an organization or corporation is considered a legal entity with financial activity, so if there is no financial activity, there is no purpose in it existing as an organization or corporation.
Prohibitions on Accumulating Nonprofit Assets
An Israeli not for profit organization or Israeli NGO that accumulates its nonprofit assets for a long period without using them to further the not for profit organization’s objectives will not be able to obtain a certificate of proper management. The not for profit organization is entrusted with the good faith of its donors to use its funds to promote the organization’s objectives and, as a result, accumulated assets must be used. The not for profit organization may however accumulate assets to maintain its activities, to save money for future investment in a project, to buy real estate for the office or operations, or to set aside funds in the event of an economic downturn.
If assets are given to an Israeli not for profit organization or Israeli NGO as capital, funds may be held without using them, although the not for profit organization will need to determine if such an asset is an endowment and the not for profit organization the trustee. In this event, the endowment must be registered with the Registrar of Endowments.
If you have any questions or concerns about your Israeli not for profit organization as it relates to the accumulation of assets or any other rules and regulations of Israeli not for profit organization laws, feel free to contact us.
One of our partners, Advocate Joshua Pex, specializes in Israeli not for profit and Israeli NGO laws, and he would be happy to assist you and your organization.
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