by Robert I. Evans and Avrum D. Lapin
As the principals of a leading global fundraising consulting firm for Israel-based as well as Jewish organizations, we routinely take a broader view of giving to Israel to best understand the market and be able to provide accurate data on this sector. Our latest effort, a study published today called American Friends: US Philanthropic Support for Israel, confirms that American giving to Israeli causes reflects similar trends as does American giving overall, but in a much more pronounced way, demonstrating higher peaks and lower troughs.
Specifically, giving to a sample of 80 leading organizations that actively fundraise in the US for specific programs in Israel decreased by 16% from 2006 to 2009, mirroring their US counterparts. Our previous study, published in 2008, examined giving to a similar set of organizations, finding that giving to Israel focused entities increased 64% from 2001 to 2006.
To update our 2008 study of this subject, our team examined the patterns of charitable giving from 2006 to 2009, using a representative group of 80 American organizations that raise funds for a specific set of services in Israel, typically focused on a specific organization. The study examined four sectors identified by Giving USA: Arts and Culture; Education; Health; and Human Services, allowing for direct comparison with domestic US counterparts.
The study compared the performance of certain “American Friends” organizations, based on data collected from their IRS Form 990, with that of giving overall in the US, based on statistics from the Giving USA Foundation, which publishes GUSA, the annual report on American philanthropy, also largely derived from IRS data. In 2007 and 2008, American Friends giving outpaced giving in the US with a larger increase and a smaller decrease, respectively. However, American Friends giving fell substantially in 2009, largely because of decreased giving to higher education, possibly due to the Great Recession. Giving in other sectors began to recover in 2009, as did US giving overall. All told, giving to the American Friends organizations in our sample decreased 16% from 2006 to 2009 but giving to those four sectors overall in the US only decreased by 1.52%.Giving to American Friends organizations in the four sectors identified above and giving to the same four sectors overall in the US increased and decreased together, but not to the same extent.
American Friends organization in the Arts and Culture sector experienced the smallest decrease in giving, while Health related groups experienced the largest decrease. However, the size of the Education sector, larger than the other three sectors combined, meant that the performance of the Education sector largely determined the aggregate performance of all four sectors.
The high increases in giving in 2007 compared with the decreases in subsequent years lead us to our belief that the Great Recession was a significant if not the major cause of the decline. As the US economy soured, donors decreased their giving and more carefully considered where their gifts would have the most immediate and direct impact. During this period, the Israeli economy was far more stable and performed better than that of the US, creating a scenario where donors, particularly major donors, may have shifted their giving temporarily to the US.
Nonetheless, giving to American Friends organizations remains in the hundreds of millions of dollars, reaching $725 million even at its low point in 2009, a substantial source of foreign support that any country’s nonprofit sector would envy. The organizations included in this study represent only a portion of total American charitable giving to Israel, which easily exceeds $1 billion annually.
However, not all organizations performed equally. Some saw major declines in giving in this period while others were able to double or even triple their giving year to year, demonstrating that even in tough economic times, fundraising success remains possible.
Due to the scarcity of philanthropic dollars and the proliferation of new nonprofit organizations, American Friends organizations face an increasingly competitive fundraising environment. Furthermore, today’s American donors tend to be more entrepreneurial and have achieved significant wealth at an earlier age, and do not automatically prioritize Israeli causes. Therefore, it behooves American Friends organizations to aggressively and innovatively engage new donors and develop a sophisticated menu of giving opportunities that allow donors to understand exactly the impact their gift would make.
Additionally, what seems to be critical in the “new normal” that has emerged in the wake of the Great Recession is that US donors are looking for organizations that not only make a difference in Israel but create partnerships stateside where their often “cutting edge” knowledge and innovations have relevance. These partnerships are directly connected to expanding the pool of major donors.
Organizations should actively build and maintain relationships with potential and current donors, demonstrating clearly the impact their gift could make and provide full financially transparency. Finally, various technological solutions help organizations research donors, keep track of their donations, and maintain relationships with their donors.
We believe that giving to Israel will continue to follow the patterns for US giving overall, so giving to Israel in 2010 and 2011 should continue to recover. Nevertheless, Israeli nonprofits that want to continue to thrive must quickly adjust to operating in the new normal of fiercer competition for philanthropic dollars.
(For a copy of the full report, please contact EHL Consulting at [email protected])
Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, of suburban Philadelphia, and are frequent contributors to eJewishPhilanthropy.com. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and non-profit business practices. Become a fan of The EHL Consulting Group on Facebook. Twitter: @EHLConsultGrp