4 Reasons Why NOT to Establish an “American Friends of” Organization

Israeli charities (amutot in Hebrew) rely on donations from overseas – no secret there.  Many foreign-based charities choose to create an American based nonprofit, more commonly referred to as a “Friends of” organization so donations can be tax-deductible vis-a-vis the American Federal Government. (In a previous post, I spoke about IRS trends when a “Friends of Organization” is applying for tax-exempt status.)

However, it could be that establishing a “Friends of” organization is not in your charity’s best interest. The following are some considerations that elaborate on:

Why not to establish a U.S. registered “Friends of” Organization to help fundraise? Continue reading

PayPal has Come to Israel and Nonprofits Yawn Their Indifference

PayPal is coming to Israel, reported Haaretz on September 13th. While this is great news for those individuals buying up those priceless items on eBay, nonprofits should be a little less enthusiastic. Continue reading

Can my Israeli Nonprofit have a Credit Card?

The Answer

The answer should hopefully be “yes,” nonprofit organizations can use credit cards.  Credit cards have become an integral part of running any kind of business; whether it be a not-for-profit or a for-profit corporation.   Credit cards are safer than cash and are the preferred method of payment when shopping on the internet.  Not to mention, the ease of an itemized monthly billing statement.  Nonprofit governing agencies should love credit cards and promote their use whenever possible.

But, alas, in Israel the answer is no…kind of.  Cryptic, but true. That is to say that in my experience as a banker, I have both ordered credit cards for charities that wanted them and canceled credit cards for charities that were told it was “illegal” to have them. Continue reading

The New Jersey Scandal, Pt. 2: The Israel Fallout

Even before the dust settles in the States, Israel and her charities will already start to feel the effects from last week’s scandal.

First, we can expect that donors’ skepticism of Israeli charities will increase, which is understandable. The current proliferation of nonprofits already casts doubt on their authenticity: Israeli charity-representatives hound communities weekly; American Friend organizations exist in abundance; internet and email advertisements appear on every Jewish website broadcasting Israel’s fight for its physical and spiritual survival. In short, this scandal has cast a shadow on a situation already wrought with suspicion, doubt, and misconception.

Second, we can expect the relationship that exists between Israeli amutot [nonprofits] and money changers to come under fire. Charities need their donation-checks to clear as soon as possible. As opposed to banks, “cash houses,” or money changers, can exchange cash for checks (for a one to two percent fee) with a wait time of zero to two days. Thus, Israeli charities regularly deposit large sums of cash received from money changers into their bank accounts. Continue reading

Understanding Credit in Israel, Pt 2: Bridge Loan vs. Line of Credit

In a previous post, I mentioned that a loan and a line of credit serve the same purpose.  While that may be true in a broad sense, they actually can be quite different.  Hence, the different names.  The bank will look at both types of credit the same way, evaluating the amount of credit requested against the amount and type of collateral offered.  The customer, however, only cares about one thing, which option is cheaper. Continue reading

Understanding Credit in Israel, Pt 1: Types of Credit

It is logical to assume that if a bank wants to appeal to the nonprofit community then it has to understand the nonprofit organization’s way of thinking (that’s where I come in).  The opposite should also be true.  If a charitable institution wants to appeal to a bank then it must understand the bank’s way of thinking. This is especially the case when using or applying for credit from a bank.

In the past two months alone, four organizations have turned to me trying to understand why their bank was acting a certain way when it came to credit. A few examples: Continue reading