ENCOURAGING PHILANTHROPY IN ISRAEL

In its early years, Israel’s relationship with the Diaspora – in particular the US – was one of “rich uncle, poor nephew.”

The fledgling Jewish state depended on the largesse of American Jews to support elementary needs such as the building of hospitals and universities, the planting of forests, even the development of armed forces. Diaspora Jews supplied the funds and Israelis did the work; each had their role.

But over the past few decades, that outdated paradigm has been changing. Israel’s prosperous, robust economy has come into its own. A whole new generation of entrepreneurs and innovators in the fields of hi-tech, industry and real estate are on the rise. Forbes magazine’s 2012 list of billionaires included 13 Israelis. Many of these – such as Shari Arison, Nochi Dankner and Idan Ofer – are very active in philanthropy. So are many of the less famous Israeli millionaires.

Today the philanthropic relationship between Israel and America is more one of partnerships and cooperation. This changing relationship is abundantly evident at a conference taking place this week in Tel Aviv. Organized by the Jewish Funders Network, the conference brings together about 400 philanthropists to create synergies and advance common agendas.

Organizers say this year’s conference – meeting at Tel Aviv’s Hilton Hotel – is the largest yet, with a particularly large contingent of Israelis who make up over half of the participants. Many of those attending are heavy-hitters who have met the requirement of donating no less than $25,000 a year (most donate much more) or working with a foundation, fund or organization that does.

Particularly striking was the large number of Israelis from the business world – particularly hi-tech and investment capitalists – who, in an ironic twist, are now applying their capitalist acumen for tikkun olam.

“Sustainability” is one of the buzzwords. It means that a philanthropic project reaches the stage where, like a business, it can support itself. Restaurants that employ high school dropouts but also make profits, like the ones run under the auspices of the Dualis Israel Social Venture Fund are just some of the many examples.

“Capacity building,” another term used by the new generation of Israeli “social entrepreneurs,” refers to training heads of not-for-profits to run their organizations efficiently – like a business.

But while Israeli philanthropy is growing fast, individuals and corporations here still give less than their counterparts in America. According to a recent study by Hillel Schmid, head of The Center for the Study of Philanthropy at the Hebrew University of Jerusalem, Israeli philanthropy constitutes about 0.74 percent of the GDP, compared to 2.1% in the US.

Why don’t Israelis give more? One of the reasons might be societal differences. In the US, philanthropists understand that one of the prices of smaller government is the need for more voluntary activity to fill in the vacuum. In contrast, in Israel, until about a decade ago, Israel maintained a large welfare state which was expected to take care of the poor, the sick and the needy. Private businessmen felt it was not their job to donate money to activities that should be state-funded.

Our tax policies might also be one of the barriers to more robust philanthropy. At present, there is a ceiling of NIS 4.5 million on donations that are eligible for a 35% tax return (though a two-year temporary provision that expired last year had the ceiling at NIS 7.5m.). Also, of about 30,000 non-profits, only around 4,000 are recognized for tax deduction purposes.

Government officials should recognize – via tax breaks, “matching” funds and cutting red tape – the amazing contributions being made by our own homegrown group of innovative philanthropists. The state saves millions of shekels thanks to their activities.

When philanthropic projects succeed in attaining their objectives and prove they are being run efficiently the state should get involved as well, when appropriate. The current government has engaged in a dialogue with philanthropists.

At the beginning of last year, a joint government/ third sector/business sector “round table” chaired by Prime Minister Binyamin Netanyahu discussed ways of encouraging philanthropy in the Jewish state.

But there is still a lot of work to be done before Israel’s fast-growing and highly innovative philanthropic enterprise begins to realize its full potential.

For more on grants and grant writing, visit Grant Pros.

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