Below we provide information and answers to questions that are frequently asked about the financial side of Points of Contact (POC).

Accounting:

Does POC have an accountant?
Does POC issue audited financial statements?

Yes to both.

Our financial statements are prepared and audited by BDO Ziv Haft, the Israeli branch of BDO, a large international accounting firm.

BDO is particularly prominent in the nonprofit sector in Israel.

Why was BDO chosen?

At the moment, BDO is giving us very favorable terms because they know we are a new nonprofit. There is also a big advantage to using an accounting firm that is well-known and trusted by the tax authorities and other government regulators. In a few years, we can review our options and choose to remain with BDO or move to another firm.

Click here to view POC’s 2024 financial statement in Hebrew, or click here to view our 2023 financial statement in English.

Fundraising:

How are POC’s fundraising goals set?

One of POC’s most important goals for the near future is to be legally recognized as a public institution (mossad tziburi). Our fundraising targets were chosen with this in mind.

How does that work?

To be recognized as a public institution, POC has to meet several requirements, one of which is to show that it has a sustainable, dependable income stream from donations in cash of at least 30,000 shekels a year.

If we achieve the fundraising goals that were set, we should be able to fulfill this requirement in 2025 and to show that we have a good prospect of fulfilling it in 2026.

Once POC is recognized as a public institution, the Israel Tax Authority will allow us to issue receipts for donations that say we have “approval from the Tax Authority regarding donations under Clause 46.” With such a receipt, the donor can claim a tax benefit in Israel. But that is only one of several reasons why Clause 46 approval is important.

Aside from tax benefits for donors in Israel, why is it important to get Clause 46?

When a government office or a private business asks us: “Do you have Clause 46 approval yet?” what they really want to know is “Have you met the stringent requirements to be recognized as a public institution?”

Obtaining Clause 46 approval is the “Good Housekeeping Seal of Approval” for an Israeli nonprofit. It is the most effective way of showing others that we are a serious and dependable organization.

There are forms of government and private support that we can only apply for once we have Clause 46 approval. Some goods and services vendors will not do business with an Israeli nonprofit that does not yet have Clause 46 approval, and some potential donors will not give to one, even if they do not need the tax benefit.

It also affects our ability to raise funds abroad. We would normally need to have Clause 46 approval to do so. As a new nonprofit, we are exempt from having it for a limited period, but we are expected to work toward meeting the requirements for Clause 46 approval during this time. If we stop moving forward with this process, we will soon lose our ability to raise funds in the US and the UK.

Aside from wanting to meet the requirements to be recognized as a public institution, does POC actually need the money?

Absolutely. Please see the next section for details.

Where do the donations go?

First of all, please note that POC has no salaried employees. Everyone involved, whether as a Point Person or in administration, is a volunteer. Our Directors receive no compensation for the time they put in. 

Donations go to pay the suppliers of good and services that we receive or to pay down debt covering the cost of goods and services that we received in the past. 

What kinds of goods and services are the donations spent on?

There are four major categories:

Risk management includes whatever is needed to keep the organization and the people who work in it safe. Some examples include drawing up legal contracts and taking out liability insurance. 

Compliance includes whatever we need to do to be within the law in all areas.

Administration includes the basic costs of running an organization. Some examples include our annual registration fee charged by the government, bookkeeping services, required annual reports, bank fees, etc.

Development includes money spent to raise the money that POC needs to keep going and money spent to develop POC’s public image in a positive way. 

Notice that it’s not always clear what category a particular expenditure falls into and also that the same service provider may be working for us in more than one area.

The same online service that keeps records of our donations (administration) also sends out email acknowledgments and receipts (development).

The same accounting firm that prepares our annual financial reports (administration) and files them with the government (compliance) will be helping us attain Clause 46 approval (development).

Tax benefits:

Before we get started, an important note: Nothing below, or anywhere else on this website, is meant as tax advice. If you need tax advice, please consult an accountant or a licensed tax advisor in the relevant country.

For people who live in Israel:

In Israel, some nonprofits are able to give a receipt that entitles the donor to a tax credit. When you donate to such an organization, the receipt you are given will say something like, “This institution has approval from the Tax Authority regarding donations under Clause 46 of the Income Tax Ordinance.”

Under certain conditions, you may be entitled to claim a tax credit for 35% of the total amount of donations for which you have such receipts, up to a certain ceiling. This credit can be used to reduce the amount you owe if you pay income tax in Israel.

When will POC have Clause 46 approval?

Receiving approval under Clause 46 is a complex, lengthy, and expensive process. We have begun this process, but to complete it, we need to fulfill various conditions as described above. We also need enough money on hand to pay the necessary fees and expenses. We are optimistic that we will be able to complete it within another year or two if all goes well, but we cannot promise that it will happen by then.

Where can I learn more about how to claim the Clause 46 benefit on my Israeli income tax, for my donations to POC after it has approval or my donations to other organizations that already have approval?

If you file an annual tax return with the Israel Tax Authority (for example, if you are self-employed), the accountant or tax advisor who prepares your tax return can tell you about it.

If you are an employee and do not have to file a return (most people who work for someone else are not required to), the person in charge of salary payments at your place of work should be able to tell you what you need to do.

If you are comfortable reading about taxes in Hebrew, you can also learn more here. (This is an external website, so we take no responsibility for anything you may encounter there.)

For people who live in the United States, the United Kingdom, or elsewhere:

In the United States, some nonprofits have been approved by the IRS to issue a receipt that may allow the donor to claim a tax deduction under Section 501(c)(3) of the Internal Revenue Code on their annual income tax return.

Similar arrangements exist in the United Kingdom, Canada, Australia, France and other countries.

Does POC have IRS approval for donations it receives to be deductible on US tax returns even though it does not have Clause 46 approval in Israel?

Obtaining approval under Section 501(c)(3) in the United States is also not a simple matter. However, when you make a donation in US dollars by using the form on this website (but not by any other means), your donation is routed through an organization in the United States called America Gives, which does have 501(c)(3) status.

In effect, you are donating to America Gives, which provides you with a receipt recognized by the IRS, and America Gives then donates the same amount, less certain fees, to Points of Contact.

What if I live in the UK?

A very similar process to the one described above for donations in US dollars is used when you donate in UK pounds. So you should receive a receipt for your donation that can be used in the same way as receipts for donations you make to other UK-based charities.

What if I live somewhere other than Israel, the US, or the UK?

What if I want to donate in a currency other than Israeli shekels, US dollars, or UK pounds?

Unfortunately, for all countries other than these three, setting up an arrangement such as we have for the US and the UK is either too expensive to be worthwhile or not possible at all. Therefore, we only accept donations on our website in Israeli shekels, US dollars, and UK pounds.

If you want to make a substantial donation, and you can only do so in a currency other than these three, and you do not care about getting a tax benefit, then let us know, and we’ll see what we can work out.