A special administrator appointed as part of a procedure to rehabilitate an NGO due to deficiencies and irregularities demanded that officers of the NGO will disgorge funds they received as salaries because such were not approved by the NGO’s institutions and exceed the amounts allowed under law.
The Court obligated the NGO committee members to disgorge most of the funds. An NGO is a corporation that is not intended for distribution of profits and which main purpose is not to make profits, and therefore Israeli law prohibits the distribution of the profits of the NGO to the members of the NGO. In addition, the law imposes a duty on officers of the NGO to act for the benefit of the NGO within the framework of its objectives and prohibits an officer from receiving salary except with the approval of the NGO's institutions and subject to the restrictions set out in the law regarding wages and terms of employment. Here, the members of the committee acted against the goals of the NGO when they caused its profits to be transferred to them under the guise of salaries to which they were not entitled, because they were not duly approved and are in contradiction to the limitation under law. Therefore, they were obligated to return all funds that were given in breach of the law.