Non-Profit Organizations

Background of the third sector in Israel

In the State of Israel, there are over 38,000 societies (known by their Hebrew name “Amuta” (plural – “Amutott”) and charitable corporations that belong to the “third sector”. This sector includes non-profit organizations, most of which exist to promote a certain ideology or a desire to assist the public and populations that require assistance and/or protection. The activities of these organizations are funded primarily through contributions as well as government allocations and are carried out in many cases by volunteers.

Organizations that are part of the third sector are active mainly in the fields of education, research, social welfare, culture and leisure.

Registration as a public institution for income tax purposes and as a non-profit organization for VAT purposes requires an in-depth examination and professional accompaniment when dealing with the tax authorities with regard to the public activity of the organization. We, at Fahn Kanne, accompany the registration activity with all of the tax-related authorities in Israel, up to and including the opening of the file with the relevant tax authority. This process may take quite a long time and the extensive experience and know-how of Fahn Kanne in accompanying Amutot and Charitable Corporations in the third sector enables us to render to these entities a variety of project-related solutions to assist in the promotion of their activities and in achieving the goals and challenges they face.

Fahn Kanne’s uniqueness

Fahn Kanne’s Not-for-profit department is one of Israel’s leading and experienced departments in this field. The department renders accounting services, internal auditing services and tax services. The department is staffed by CPAs (Isr.), tax consultants and economists which have amassed extensive experience and goodwill. The staff members are all dedicated to this field and they have the expertise to assist you in building and improving your organizational framework.

How exactly can we be of assistance to your organization?

As mentioned above, our firm has a dedicated department that specializes in rendering services tailored to the non-profit sector, providing your organization with professional accompaniment which focuses on the complex challenges that characterize this sector.

Our basket of services includes the following:

• Financial statement auditing services
• Financial statement preparation
• Preparation of income tax returns
• Participation at meetings of the various committees of the not-for-profit organization when necessary
• Ongoing consultation regarding accounting issues and various topics
• Handling the requirements of the Registrar of Amutot to ensure compliance with the conditions set out in the relevant laws, obtaining certification of proper bookkeeping records, etc.
• Obtaining certification from the income tax authority with regard to article 46 of the Income Tax Ordinance
• Internal auditing, including the fairness of fundraising, classification of expenses and contributions, proper bookkeeping records, regulatory matters, etc.
• Accompaniment of the financial activity of the organization
• Budgetary control
• Accompaniment and supervision over transfer and allocation of funds
• Consultation regarding the drafting of procedures and monitoring the enforcement thereof
• Rendering opinions on matters dealing with accounting, taxation and other professional areas
• Generating confirmations and special reports required by the entities that budget the organization
• Information systems services, including installation of systems for use in managing a not-for-profit organization, data analysis, business continuity plans and disaster recovery plans
• Accompaniment in respect of obtaining government incentives and grants
• Corporate governance – how corporate governance in the business world intersects with not-for-profit organizations – recruitment of resources from the business sector

Global capabilities

1. The department works closely and fully cooperates with not-for-profit experts located in member firms in the Grant Thornton International network around the globe.
2. Through working relationships and cooperative endeavors, we provide services that meet the high international standards of our network, including the obtaining of updates on new legislation and standards worldwide. In addition, these relationships promote cooperative projects with entities that are interested in transferring contributions to Israel.
3. A partial list of not-for-profits with whom we work includes: Local Israeli Health Services, cultural institutions, educational institutions, as well as universities and colleges, social welfare institutions, charitable organizations, etc.