The Israeli Registrar of Amutot and Dedications has changed its policy on the granting of certificates of proper management to Amutot and public benefit companies (PBC). From now on, any Amutot and PBC that meets particular criteria will be entitled to receive a certificate of proper management valid for two years, instead of for one year, as was the case until now.

This change is part of an overall two-pronged strategy: to provide relief to Amutot and PBCs with long track records of proper management and to increase enforcement efforts against Amutot and PBCs operating improperly. This strategy has not yet been implemented but will be updated later by the Registrar of Amutot.

According to the new policy, Amutot and PBCs are eligible to receive a certificate of proper management valid for two years, if they fulfill the following criteria cumulatively:

  • The Amutah/PBC held a certificate of proper management in the five years preceding the submission of the application, without any comments (such as deficit, appointment of an accounting officer, etc.);
  • The aforesaid certificate was signed in the previous year (for example, a certificate of proper management for 2019 was signed in 2018);
  • The Registrar of Amutot did not institute a proceeding for the rectification of shortcomings against the Amutah/PBC in the five years preceding the submission of the application; and
  • When examining the application, no other indications were found that would disqualify the applicant from obtaining a certificate.

Amutot and PBCs will automatically receive a two-year certificate by submitting a regular application for a certificate of proper management.

The receipt of a two-year certificate does not exempt Amutot or PBCs from filing their current reports by the dates prescribed by law, and proper report filings will constitute a condition for the continuing validity of the certificate for the second year.

At this point, it appears that most Amutot and PBCs do not meet the criteria to receive a two-year certificate of proper management, and so very few third-sector organizations are currently eligible to benefit from this new policy. Thus, in practical terms, the new policy does not appear to have much impact at this stage.

Nevertheless, a two-year certificate of proper management may in the future constitute another “quality standard mark” for Amutot and PBCs wanting to market themselves to potential contributors. This is similar to the public institution certificate pursuant to section 46 of the Income Tax Ordinance, which, already today, in addition to granting tax benefits, provides a positive indication of the mode of operation of the Amutot and PBCs holding it.