Nonprofit organizations and educational institutions manage a multi-layered financial system. Revenues from donations, subsidies, tuition, and parental participation intersect with expenses for payroll, transportation, catering, facility maintenance, scholarships, and suppliers. In Haredi educational institutions, the complexity often increases due to the operation of multiple frameworks under joint management, relationships with donors in Israel and abroad, and the integration of funding sources with varying conditions.
The central question for management is to what extent the financial data reflects actual operations. A bank account balance provides only a partial picture. Some of the funds may be earmarked for scholarships, construction, or a specific educational program, while commitments to employees and suppliers already exist. Management based on funding sources and their designated purposes makes it possible to understand which amounts are available for use and which amounts require separation and tracking.
Another sensitive issue is the allocation of expenses among frameworks. An employee may teach at several institutions, a transportation supplier may serve multiple activities, and a single building may be used by an association, a yeshiva, a seminary, or a talmud torah. A general allocation of expenses may distort the cost of the activity and affect support requests, donor reports, and financial statements. Therefore, it is important to establish a consistent attribution method based on clear data, such as working hours, number of students, area in use, or scale of activity.
Receiving support also requires precise tracking. Budget approval does not guarantee that the amount will be received in full or on schedule. A change in the number of participants, a missing document, or failure to meet the support conditions may affect the payment. A cash flow forecast must take into account the dates of submission, reviews, and fund transfers, especially when employee salaries and operational expenses are paid monthly.
In donations, it is important to maintain alignment between the fundraising appeal, the receipt, the designation of the donation, and the bookkeeping records. Starting January 1, 2026, public institutions with approval under Section 46 are required to report donations and donation cancellations through the Israel Donations system. This obligation requires an orderly process for issuing receipts, completing donor details, handling checks, and canceling receipts. Discrepancies between the donation system and the bookkeeping may create difficulties for the institution and for donors seeking to claim their tax credits.
In the areas of payroll and vendors, control over the decision-making process is required. Salary increases, expense reimbursements, hiring family members, or engaging with a vendor connected to an office holder require approval, documentation, and a review of the terms of engagement. Well-organized documents protect the institution and enable management to explain how each decision was made.
An accounting firm familiar with the operations of the third sector and educational institutions can connect the budget, cash flow, payroll, donations, and reporting. The guidance includes mapping funding sources, examining allocation methods, building controls, and preparing the institution for audits and support requests.
Barzilai Firm supports nonprofits and educational institutions in addressing the financial and reporting issues that accompany ongoing operations. We would be glad to meet, learn about your operational structure, and examine how we can strengthen control and provide management with an accurate picture for decision-making.
