The Interim Finance Committee chaired by MK Oded Forer (Yisrael Beitenu) held a follow up session on Monday to discuss how the third sector is coping with the Coronavirus crisis.
Chairman Forer opened the discussion and noted: “We are witnessing a crisis and an ongoing failure, one of the greatest in the history of Israel. This is manifested in each and every domain, in how to return to school, in the field of freelancers, and the field of non-profit organizations. It is obvious that no one in the government understands the magnitude of the crisis, not the clerks, and not even the Prime Minister. We are just at the beginning, we only have a Tsunami alert. The government’s preparedness is catastrophic.”
Chairman Forer added that “the State of Israel transferred many of its duties to the third sector. However, this is exactly where it should deploy a safety net for this sector. There is a place in the north called Bet Eyal, named after Eyal Shimoni who fell in Lebanon, and it was founded by his mother. The place commemorates the entire period of the IDF’s stay in Lebanon, and provides treatment for people with disabilities. It has not received a shekel from the State, yet in times like these, the State of Israel should extend a safety net for this site that is active in the periphery. It operates in a place where the State does not.”
Isaac Herzog, Chairman of the Executive of the Jewish Agency, said that “this sector constitutes 15% of the country’s GDP, 16 % of the country’s employees, it is the soul and spirit of services and culture. The issue of businesses is justly voiced, but no one is talking about organizations such as Bet Eyal, which you’ve mentioned. This sector entered the crisis in critical condition, given that there was no government for over a year. The whole [financial] support track was barely distributed. All the communications between the NPOs and the government turned extremely complicated, and donations stopped.”
Mr. Herzog continued saying that “as someone who represents the largest Jewish organization in the world, we are anticipating a dramatic decline in revenues from the Jewish diaspora. Several steps were promised in the first discussion that took place here, there were very good technical steps. But direct money, which is [like] oxygen for this sector, was not given despite the guarantees. Out of a sense of responsibility regarding our standing in the world, we set up a NIS 30 million relief fund for the sector, but the money has almost run out. The associations are massing at the doorways, and a number of them are still waiting. This leads to a social disaster. This week it was promised that a new fund would be established. Initially, the sum of money that was agreed upon was NIS 200 million, then the Finance Ministry said that this figure will be added to the relief fund for businesses. However, the criteria have not been published yet. Therefore, organizations cannot apply [for aid]. The third sector is begging for a proactive action to save it.”
Chairman of the Israeli Civic Leadership Association (Civic Leadership), Ophir Katz, said that, “the civil society has not received a single agora from the government’s operations, we did not see a single shekel that came directly to the aid of the organizations. We said all along that the main problem is maintaining the infrastructure. Thus, when a crisis arises, it would be possible to carry on operations, and to employ people so that the organizations can perform their work, and this requires a budget. Two weeks ago, the Prime Minister announced an aid fund for small and medium-sized businesses. Civic organizations were placed on the sidelines of the fund, but were limited to those with at least one-third of independent income, and excluded organizations of NIS 20 million. Hence, many organizations were not included. These associations won’t survive if they remain without support. The third sector is collapsing, and whoever does not understand this, does not know what is happening. The government will surely understand this, when hundreds of thousands of employees will want to go back to their jobs, but will have nowhere to return to. The government will understand when it seeks field services from field organizations, but there will be no organizations left.”
Osnat Avivi from the Ministry of Social Services, said that “communications with the third sector were resumed, and an automatic extension of communications was made. If there was a specific problem of some sort, it was taken care of, but the Ministry continued to function as usual.”
Finance Ministry representative Gal Landau said, “We insisted on including the organizations in the aid track for businesses like everyone else, because we do not see a difference when it comes to aid. The criteria were published in detail, and noted that the applications could be submitted starting tomorrow. It was initially said that an amount of NIS 200 million will be allocated to the third sector, which cannot be breached. The very fact that we have included [the civic organizations] in the Tax Authority fund, according to a formula, constitutes a chance for unlimited budgetary assistance.”
Chairman Forer commented, “I understand that there is a limit of NIS 5.2 billion.”
Mr. Landau replied saying that “it is an assessment, but there is no limit. There are many nonprofits that got into this route, and we are working on a complementary response regarding other nonprofits.”
Chairman Forer responded saying that not knowing what will happen to associations of over NIS 20 million, “is not an answer”.
MK Michael Biton (Blue and White) said, “It is not acceptable that the pace of reaction towards the nonprofits causes discrimination against them. The organizations are carrying the burden during the Coronavirus crisis, and we are not helping them. Like every organization, there are thousands of employees working for the nonprofits, even if the organization operates 100% through donations. I contacted the Finance Ministry with a question related to these issues. I asked how many nonprofits in Israel applied for bank credit, and how many of them received financial aid. So far I have not received an answer. All of a sudden, I hear that the sum of money [that will be allocated for aiding the organizations], will be considered as a general fund, and that nonprofits and businesses will be regarded the same. I asked how would we know if the nonprofits are going to receive NIS 200 million, they said ‘don’t worry, they will get more’. Eventually, there are thousands of nonprofits that are falling through the cracks.”
MK Karin Elharrar (Yesh Atid-Telem), said, “Whoever prepared the outline either does not comprehend or did not want the budget to be used. I would expect two very important things to have been done with already at this point. To begin with, the organizations’ payroll taxes should have been deferred, just like the tax on businesses was deferred. Seven and a half percent is quite a bit of money. Secondly, according to Article 46- an association that has been operating for three consecutive years, should be granted [financial] support without all the regulations.”
MK Elharrar went on to say that the charity workers “who get up every morning to help people with disabilities, battered women, and at-risk youth, will be able to get by. But disadvantaged populations will not be able to manage on their own. So, wake up.”
MK Itzik Shmuli (Israeli Labor) said, “Despite their situation, the organizations went on a mission against the Coronavirus, they did not ask ‘what do we get out of it’, or what would be the aid budget criteria. I know of nonprofits that have switched all of their activities to the here and now, they should not be punished for that. The oxygen needs to reach them very fast. The aim is to actualize the fund, not to set it up. It is impossible to make an equal distinction between nonprofits and small and medium-sized businesses. The Social Services Ministry will not be able to provide social services single-handedly.”
MK Ofir Sofer (Yemina) said, “The work has to be executed much faster, I know that a solution is being devised for nonprofits of over NIS 20 million, and associations that are large employers, as well as those who receive support of less than 30 percent. The process needs to be implemented concurrently and quickly. The nonprofits were not supposed to deal with anything else except doing their jobs.”
MK Mickey Levy (Yesh Atid-Telem) said, “I ask the Finance Ministry to separate the NIS 200 million from the concoction of solutions. The Finance Ministry said three weeks ago that they are ready to start paying, but nothing happened. The State of Israel cannot do without the organizations of the third sector.” Addressing the representatives of the Finance Ministry, MK Levy told them to take on this issue and carry it out, and requested that they report back to the Committee. “The Director-General of the Finance Ministry said ‘trust me, it will be alright’. Well, we trusted you,” added MK Levy.
MK Shlomo Karhi (Likud) said, “Tens of millions of shekels were reportedly paid as fines related to the Coronavirus. I think that a fund should be set up, and the money from fines should be contributed to the relief organizations and to the victims of the Coronavirus.”
MK Saeed Alkharumi (Joint List) said, “I come from a place where efforts were joined to distribute thousands of food portions to the unrecognized villages, places where the State does not go. They came to the situation room, hundreds [of people] worked shoulder to shoulder. Without support, these organizations will not be able to endure.”
Chairman Forer stated that “a dedicated fund of NIS 200 million should be set up. This was the promise of the Finance Ministry to the Committee. In addition, as long as a non-profit organization meets the requirements of the fund for businesses, they can choose to apply to the fund.”
MK Nir Barkat (Likud) said, “Once again we see the perceptions of the Finance Ministry, they see this event as a budgetary event, and how to save up. The correct vision for such an event is related to safety – let’s characterize the scope of the event for each area, and see how to bring back everyone to pre-crisis functioning. This is not a budgetary event, but a safety event.”
MK Miki Haimovich (Blue and White) noted during the session that she donated part of her salary to Bet Eyal, which was mentioned at the beginning of the discussion. “The Coronavirus Committee has tackled the issue of providing aid to welfare organizations several times already. On March 29, I requested to know when the aid fund will start operating, the Director-General of the Finance Ministry replied back then that the Ministry said it’s a matter of a few days. I asked again during a subsequent discussion, and again received the same answer. I would be glad to know the logic behind the 30% independent income criterion. The Ministry of Finance should demonstrate creativity in aiding these organizations. There are many nonprofits that rely on small donations from people, and currently they are being eliminated. NIS 200 million is not enough in my opinion,” MK Haimovich said.
MK Ofer Cassif (Joint List) said that “the problem begins when these organizations are treated as businesses. Regarding them as businesses is flawed, to say the least. That’s an additional blow to the weakest populations, which are aided by these organizations. Third sector organizations and advocacy organizations are an important part of democracy.”
MK Orly Froman (Yesh Atid-Telem) asked, “Where are most of the ministers? Some of them are completely absent from their ministries. The most dangerous thing is losing contact with the field. We are discovering here some sort of indifference. A small team should sit down and decide on the aid.”
Director-General of Latet, Eran Weintraub stated, “Our turnover amounts to NIS 120 million, unlike the business sector, the turnover is large because we provide aid to so many families. Our operating expenses over the last month are way larger, we are collaborating with the Ministry of Social Services regarding the food baskets. We distributed more than a hundred thousand food baskets to families and the elderly throughout this period. We don’t have a single shekel from independent income. As for the VAT, we and other organizations purchased food, hygiene and emergency products, and paid a VAT of NIS 3 million for that, as part of the assistance to the elderly during the Coronavirus. They could have provided oxygen to nonprofits who purchase essential products, at least through this point.”
MK Alon Schuster (Blue and White) said, “The nonprofits embody the entrepreneurial spirit for the sake of the people, and a spirit of solidarity through responsibility for the weak. The health crisis is just the beginning. The great concern is that the social difficulties will lead us to a worsening of the socio-economic inequality.”
Shani Oren, from the Dror Israel organization said that “according to the criteria, a non-profit organization with a turnover of NIS 2 million receives a ‘huge’ sum of NIS 28,000, which is less than its administrative expenses. A nonprofit fund is needed, which runs according to its expenses. A separate fund of one billion shekels [is required]. This is the magnitude of expenses according to our calculations. The tent that operated in conjuncture with the Home Front Command, closed down on Thursday. 250,000 volunteers traversed the tent, each of whom received NIS 10 for protection. The fellows who return from the food distribution for the elderly, they go back home crying. People are in tremendous financial distress, we must help them out.”
MK Samy Abu Shahadeh (Joint List) said that the Finance Ministry should meet up with some of the nonprofits’ representatives, who can lead the discussions with a clear deadline. An agreed plan should come out, and this cannot come from the top down.”
Gal Landau from the Finance Ministry commented, “Regarding the State-sponsored loan fund – from the data that we have at the moment, the nonprofits have not made enough use of the fund.”
Chairman Forer asked: “Can we have the data? When can you give it to us, how many loans did the organizations request, and how much did the nonprofits receive? The data is based on what exactly?”
Mr. Landau replied: “I don’t have the figures. Probably the team that works on it has it. From a check I did a week and a half ago, there were only a few applications to the fund from nonprofits. We issued a direct communique to all the nonprofits. We have seen an awakening in recent weeks. Organizations are turning to accountants at the ministries in order to sign the documents. This means that they are in the process of loan approval at the moment. I am in contact with quite a few organizations, whose loan applications have been approved.”
“Regarding Article 46 – and the VAT indemnification for nonprofits, these are questions that should be addressed to the Tax Authority. As for the assistance on the basis of bringing back furloughed employees from the unpaid leave, which does not apply to nonprofits, such aid has not been published to the best of my knowledge. We are working on allowing the nonprofits to also enjoy this aid, without any limitations” Mr. Landau explained.
Chairman Forer summed up the session and said: “We are fed up with this. Your department, as well as other departments, comes to the hearings of the Finance Committee time and again in such a negligent fashion, without data, and without preparation. If this is how you are managing the crisis, that’s how it will be looking like in the end. It seems that your goal is to give as little as possible to as few as possible. This is the exact opposite of what should be done. You need to take the entire budget that we have allocated for the economy, and get it out as soon as possible. You are working round the clock in fluorescent lights. Take a look at what’s happening outside, how many out of the 1.1 million unemployed people will eventually return to work, how many of these nonprofits who distribute food and provide aid for cancer patients, will survive at the end of the day due to your code of conduct. You are managing the biggest crisis in the history of the State of Israel without an objective, and this is extremely grave.”
Chairman Forer went on to say, “We are trying to guide you, and you either hide the data or you don’t have it. You don’t have a purpose with regards to the educational system, or with regards to how many businesses will get loans, and how many businesses and nonprofits will survive. So according to what are you functioning? Right now, it appears that the aim of the Finance Ministry is to give the money to those who need it, only after they die, so that they come back.”
“I don’t know what will happen in a week or two,” Chairman Forer added. “You promised the money on May 1, and now we are on the 11th of May. You promised that the money for the fund of endangered businesses would be made available by last Tuesday, if we are lucky it will arrive next Tuesday. To the companions who will be in the Coalition, I say that nothing will be approved here if you do not fulfill your promises, which include the NIS 200 million in a separate fund for nonprofits. Pass on the message – whatever comes here, will not have an easy life. Secondly, everything that was promised in this regard during the previous session, did not take place. We are requesting a separate fund for the third sector, and if a nonprofit meets the requirements of the relief fund for businesses, then it can choose where to apply,” he concluded.