How Difficult Can it Be?

As the Hebrew saying goes, "all beginnings are difficult." This rings true with nascent national movements, especially movements aspiring to real change in Israel. For months, we've been planning to form a recognized amutah (non-profit organization) with tax-exempt status, a step that would enable us to operate with tax exempt cash flow and for donors to receive tax deductible credit. This has not been a trivial undertaking and here's why.

In a 1990 Israeli legal precedent, an organization called "Constitution for Israel" failed to attain tax-exempt non-profit status from the Ministry of the Finance. According to Israeli tax law, tax exempt status can be conferred on four types of organizations: local municipalities, Mifal HaPayis (national lottery), retirement investment funds, and "public institutions." "Public institutions" are dedicated solely to "public purposes," and "public purposes" are defined by tax law as those related to "religion, culture, education, science, health, nourishment, sport, and other causes approved by the finance minister as public purposes."

Constitution for Israel sued the Finance Ministry, however the Supreme Court ruled in support of the then finance minister. "Constitution for Israel," the court opined, was not an institution with "only" cultural and/or educational purposes, not an organization "whose assets and income were used only for the attainment of public goals." According to the court, "Constitution for Israel" also wanted to influence legislation promoting a written constitution for the state of Israel. In other words, Constitution for Israel's public purposes became impure because the political realm was engaged in the service of those same purposes.

The Aharon Barak Supreme Court also rejected the argument that the finance minister was acting with any sort of political bias. No political bias? Many non-profit, public-minded institutions extend their mandates to influence political outcomes, which in turn serve the values of these organizations. The Israel Cancer Society has rightly lobbied and influenced legislation when it comes to tobacco and smoking restrictions. Religious organizations, including yeshivot, become involved with political initiatives when policy affects religious life. Constitution for Israel, however, sought to promote a process that would more clearly define the court's authority and its power in relation to other branches of government. Indeed, the selective denial of tax exempt status to organizations with public purposes could be viewed as a prime example of self-serving political bias. It exemplifies why our political system is a national embarrassment.

Practically speaking, most non-government non-profit organizations require tax-deductible status in order to recruit funding. The Israeli Supreme Court has effectively limited citizens who form the public from choosing, with their wallets, what they think is important for the public. The continued influence of that precedent underscores the gaping absence of public service norms; applied values which our organization seeks to instate. It also indicates the depth of the challenge that we must take on.

We are being advised by legal and accounting professionals to navigate the application processes with the non-profit registrar and the Ministry of Finance. This is a difficult time for us, but we are moving forward. The educational, cultural designation is, in fact, quite appropriate to our organization's mandate and goals. We have maintained, all along, that our goal is to revitalize a culture of citizen participation and empowerment as a bottom-up, grass roots initiative; that the route to real change runs via the Israeli public.

We will meet the challenges ahead of us and continue to organize whatever the immediate bureaucratic outcomes.