Israel: Update Of The "Proper Management Rules" Of Israeli Charitable Organization (‘Amutah')

Last Updated: 14 February 2017
Article by Asaf Shalev
Most Read Contributor in Israel, October 2017

Approximately two weeks ago, the Israeli Ministry of Justice issued a new revised edition of the booklet "Guidelines for Amutot conduct", as well as a new and revised edition of the supplementary guidelines booklet regarding the "Registration of Amutot, Name, Objectives and Regulations". These booklets include a number of revisions and clarifications to the previous drafting.

Link to the new booklets:

The main revisions in the new booklets are as follows:

  1. The Internal Auditor
  • New provisions have been added dealing with the manner of calculating the amutah's financial turnover for the purpose of determining whether the appointment of an internal auditor is required. It should be noted that pursuant to amendment number 14 of the Non-Profit Organizations ('amutot') Law, an amutah whose turnover exceeds NIS 10 million must appoint an internal auditor. The revision clarifies that the turnover in this regard is an amutah's turnover according to the latest financial report that the amuath had to submit to the Amutot It is further noted that if the amutah included revenues in cash equivalents including volunteer value, usage value, donations in cash equivalents etc. in the financial reports, then these revenues will be included as part of the turnover regarding the obligation to appoint an internal auditor.
  • It is also established that in borderline cases, it is advisable for the amutah to appoint an internal auditor. Furthermore, a provision has been included that recommends to an amutah whose turnover is expected to exceed NIS 10 million in the year following submission of its last financial report to prepare well in advance to appoint an internal auditor.
  • An amutah may appoint an internal auditor voluntarily, even if its turnover is lower than NIS 10 million.
  • The amutah must make a decision regarding the appropriate way of carrying out such an appointment, which may include publishing a job advertisement, an invitation to submit offers, or contacting a number of internal auditors, as it sees fit.
  • For the purpose of assessing a person's suitability for the role of internal auditor, all of the eligibility conditions stipulated in the Internal Audit Law (education, experience, etc.) need to have been met.
  • The internal auditor is designated to be an additional internal control mechanism in amutot whose turnover exceeds NIS 10 million, and they are subordinate to the amutah's executive board chairman or CEO in accordance with the amutah's by-laws, or as determined by the executive board if not formalized in the by-laws.
  • The audit activities of the audit committee (or the audit body) and of the internal auditor are separate from one another, performed independently by each one of them and are enshrined in a separate work plan, but there is no impediment to there being a relationship between them and in the booklet it is occasionally stated that the relationship is required as part of carrying out the audit activities by any party.
  • The type of audit according to the internal auditor's work plan depends on the nature of the anutah and its needs, for example the scope and type of its activity, the number of workers it employs etc. The amutah must appoint an internal auditor to suit the needs of the internal audit according to its characteristics as stated, inter alia, concerning the number of working hours required, special expertise as required etc. at its discretion.
  • It is advisable to convene discussions on the findings of the internal auditor's audit report, with the participation of all those who were presented with the internal audit's findings. However, this is a decision entrusted to the amutah, so as to ensure the effectiveness of the internal audit as an internal management tool. It is further stated that since the CEO is the most senior position in charge of the ongoing administration, it seems that there is room to get his reaction and comments when formulating the audit report before its submission as a final report.


  1. Kinship and Conflict of Interest
  • Employing a number of relatives in an amutah, even when it does not involve the relatives of committee members, members of the audit committee or the CEO is sufficient to indicate conduct contrary to proper administration which requires the employment of workers or purchasing of services according to objective criteria, taking the best interests of the amutah into consideration and not according to nepotistic considerations.
  • Amutot must also avoid employing a number of relatives in senior positions or employing relatives in subordinate roles in light of the conflicts of interest inherent in such employment.
  • The more public characteristics an amutah has, the greater the need to avoid situations where there is concern about a conflict of interests.


  1. Surplus Rights
  • New provisions have been included which stipulate that in certain cases the Amutot Registrar will allow surplus rights to another person or entity, regarding the appointment of executive board members, provided that they are not serving as executive board members or a party subordinate to the executive board, such as the president or chairman of an amutah with executive powers.
  • Furthermore, it is stated for the first time that in light of the principle whereby the role of an amutah's institutions must not be rendered meaningless and in light of the cogent provision in the law which stipulates that the executive board will be elected by the General Meeting – there may be instances where the nature of the amutah will require a different approach, such as an amutah with numerous members, an amutah which is an umbrella organization, an amutah which is a dual-entity etc. In such cases, the Registrar will insist that the General Meeting elect the executive board members, including by requiring a change to the amutah's by-laws.


  1. Audit Committee / Audit Body

A reference has been added to the fact that if an amutah chooses the option of an audit committee (as opposed to an audit body), then it must comprise more than the minimum number prescribed by law of two executive board members in light of the cogent provisions of the law regarding the obligation for a minimum appointment of two committee members. The composition of the audit committee requires at least two amutah members and an executive board member is prohibited from serving as an audit committee member.

  1. Taking out Loans
  • As has previously been established, an amutah may borrow funds. However, in cases where the lender has a tie to the amutah (inter alia a member of the amutah or its institutions, an office holder in the amutah, a party who solicits donations for the amutah etc.) – the amutah must guarantee that the party registered as the lender is the party who provided the funds directly and that he is not a conduit for transferring funds from another external party, whose identity is unknown. To this end, the amutah must obtain a declaration from the lender that the loan's funds are from his personal sources and not funds received from any third party whatsoever.
  • An additional provision has been included in the new booklet relating to the fact that occasionally a third party is not interested in lending money to an amutah directly, but rather to an officer in the amuath only, even though the loan's funds are meant for the amutah's use to promote its objectives. In such a case, in order to ensure the monitoring of the loan's source on the amutah's books, and to avoid possible problems when repaying the loan to the third party, in the absence of evidence of providing the loan, the officer must sign a loan agreement between the third party and the officer in the amutah. This agreement will include the details specified above as well as the declaration that the loan was granted to the officer only and that the third party will not have any claims against the amutah in respect of the loan. In addition, a loan agreement will be signed between the officer and the amutah, with the loan agreement signed by the officer and the third party being attached thereto.
  1. Financial Reports

A clarification has been added in the booklet that there is no impediment to submitting financial reports in US dollars, pursuant to the principles of Accounting Standard 13 of the Israel Accounting Standards Board. However, pursuant to the conversion rules set forth in the aforementioned Standard 13, conversion of the financial report into NIS may have an impact on various sections in the amutah's financial reports and consequently also on the surplus/deficit balance accumulated. Therefore, it is recommended that non-profit organizations submitting financial reports in USD should attach notes about converting the financial reports into NIS. It should be stressed that the above does not allow compiling financial reports pursuant to accounting principles in the USA or in another country and not pursuant to the Generally Accepted Accounting Principles in Israel.

Presenting financial reports pursuant to accounting principles that are not in accordance with Israeli Standards can result in a significant change in the operating results and the amutah's net asset balance (accumulated surplus/deficit), thus influencing the Registrar's decision regarding the tests required vis-ŕ-vis a non-profit organization.

  1. Transferring Funds from the Bank Account

Transferring funds from the amutah's bank account to another account, whether belonging to the amutah or to an external party, will be done by fax only (and not over the telephone), with the signature of the authorized signatories.

Originally published on January 25, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.