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If the recommendations currently being drafted by the Aridor Commission examening state assistance to public institutions are accepted, state support for nonprofit organizations will be limited to 60 percent of their budgets. This means that for every NIS 3 an association receives from the state, the nonprofit would have to raise NIS 2 on its own.

If an NPO audit shows it received state funds in excess of this limit, the organization would have to return the overage. This revolutionary recommendation it to be implemented slowly over a three-year period, from the moment the recommendations are put into effect.

Many NPOs are created by political parties specifically for the purpose of receiving state funding. The most well-known of these is the Shas party's El Hama'ayan, but there are many others, such as Agudat Israel's Torah Veyahadut La'am and Ma'aleh, which is associated with the National Religious Party.

If the 60 percent limit is instituted, it would force the political NPOs to either institute comprehensive changes in their operations and raise massive sums from donations, or to charge for their services. Those that do not adapt will not survive.

In February 2004, the Ministerial Committee on State Audit Affairs decided to create the Aridor Commission to examine the way some NIS 5 billion is transferred to nonprofit associations each year. This decision followed a series of highly critical reports from the State Comptroller regarding allocations to associations.

The commission is headed by Yoram Aridor, who served as finance minister during the 1980s, and its members are senior officials involved in determining allocations, including Registrar of Associations Yaron Keidar and Amnon De Hartog, who heads the department in charge of support for public institutions in the attorney general's office. Despite the importance of the commission's assignment, it has operated very quietly.

The commission plans to submit its conclusions in late October. Haaretz has learned that the recommendations will call for drastic changes in the way allocations are determined. Even certain commission members feel that some of the recommendations are too extreme and will be impossible to implement. They believe these recommendations will probably be toned down to achieve broad consensus.

Blue book, green book

According to another far-reaching recommendation, "Any change in an nonprofit association's goals as approved in the [annual] Budget Law will be subject to the approval of the Knesset Finance Committee." In order to understand the rationale behind this recommendation, one has to refer to the letter sent to the Aridor Commission by Finance Committee economic advisor Smadar Elhanani. Elhanani wrote that the law on which the budget is based states that "government expenditures in support of public institutions shall be stated in every budgetary clause as an overall sum for each type of public institution." In other words, every budgetary support clause must appear separately in the state budget.

Despite this law, many sums allocated to nonprofit associations are not specified in the budget "blue book" approved by the Knesset, appearing only in the "green book" book of budgetary regulations that the MKs do not see. For example, some 20 budgetary regulations funding cultural activities are not submitted for Knesset approval; the education minister can redistribute the funds at will.

The goal of the recommendation prompted by Elhanani's letter is to ensure that it is the MKs who approve each allocation and any changes. If this happens, it would significantly strengthen the Knesset at the ministers' expense.

At present, reception of budget allocations is subject to confirmation of proper fiscal management. However, the Registrar of Associations does not really check the management of most NPOs, but only that they submitted their documentation on time. Meanwhile, the associations complained to the commission that they are required to undergo countless examinations and audits by various bodies.

The commission will recommend granting associations a "green seal," an approval based on an in-depth examination that would enable an association to receive support without separate checks by every ministry. An association that does not receive a green seal would be ineligible for assistance from any state or municipal source.

Not owned by the government

Another recommendation would prohibit elected officials, civil servants and local authority employees from sitting on the board of an NPO that receives funding from the ministry or authority in which they work. This recommendation seems so commonsensical that it is hard to believe a different situation exists today, that officials and senior bureaucrats can actually be board members in the associations to which they allocate funds.

According to a similar recommendation, "The state shall not be the controlling body in a nonprofit association, except in special cases and with the approval of the attorney general."

Nursing companies told the commission that NPOs that operate as commercial enterprises in every way compete with them and that this is unfair competition. The commission will recommend that within three years, associations that receive state funding will no longer be able to be involved in significant commercial activities.

The commission suggests setting up an Internet site to provide information about the NPOs, to be operated by the Registrar of Associations. The site will include information on all the funding the associations receive from government ministries and local authorities. The are also plans to publish all contributions of monetary value that an association receives, such as the use of land, buildings, an exemption from municipal taxes or the allocation of young women enrolled in National Service programs. This is quite ambitious, as the calculation of the monetary worth of such assistance is quite complex.

One of the main goals of an on-line NPO database is to enable ministries allocating support to take into account the other allocations that each nonprofit association receives. The law would forbid the state from transferring any type of support before notifying the Registrar of Associations.

A ship without a captain

One of the Aridor Commission's problems is that the man who appointed it, then-chairman of the Ministerial Committee on State Audit Affairs Uzi Landau, has since resigned from the government in favor of leading the rebels in the Likud faction. Experience has shown that the chances of a commission's recommendations being implemented are much slimmer if the man who appointed it has left his post. Even if Landau had remained, it is no simple matter to pass recommendations on such sensitive issues.

Landau was replaced on the committee by Minister without Portfolio Haim Ramon. Asked if he was aware of the commission's existence, he replied, "Not really," but added that the fact that someone else appointed it should not interfere with the implementation of the recommendations.

"If there are recommendations and they are reasonable, which I believe they will be," said Ramon, "I will recommend their implementation. In the meantime, there are no recommendations, so I cannot respond."