Impact Investing Meets Social Welfare: How a 99-year-old Israeli Institution Stays Relevant

Keren Hayesod does not set policy, run its own projects or plant forests. Its social capital is just that: capital.

By Alex Traiman

(JNS) Here’s a riddle: What Israeli institution about to celebrate its centennial anniversary, is not officially part of the government, but has a special status not reserved for typical private nonprofit?

The answer: Keren Hayesod (United Israel Appeal), the fundraising arm of the Zionist movement.

Here’s a second riddle: How does a 99-year-old organization that is less prominent than its sister national institutions (the Jewish Agency for Israel, the World Zionist Organization and the Keren Kayemet LeYisrael-Jewish National Fund) stay relevant for a rapidly changing Jewish state and a dynamic diaspora?

The answer: It is an ever-evolving challenge, now being taken on by recently installed Keren Hayesod world chairman Sam Grundwerg.

Grundwerg, born and raised in North Miami Beach, is no stranger to difficult or sensitive tasks, or working for the Jewish people and the State of Israel. After making aliyah and serving as a combat soldier in the Israel Defense Forces’ armored corps, Grundwerg later served in the IDF reserves as a casualty officer, where he was periodically dispatched to deliver the most painful news that can be given to the family of a soldier: that a son or daughter, brother or sister, father, mother or spouse was killed while serving their nation.

As a professional, Grundwerg has held positions in law and finance in the United States and Israel before becoming director general in Israel for the World Jewish Congress. Most recently, he served for 2½ years as Israel’s Consul General in Los Angeles, where he hobnobbed with celebrities to counter cultural boycott efforts and represented the Israeli government across the entire Southwestern United States.

His newest challenging task begins with embracing the mission of Keren Hayesod. “We are the official fundraising organization for the Zionist enterprise,” Grundwerg told JNS. “We want to be the organization that connects not just the Jewish people, but the Jewish people and friends of Israel to the State of Israel.”

There are still deep gaps in society

Keren Hayesod does not set policy, run its own projects or plant forests. Its social capital is just that: capital. It fundraises all over the world, except in Israel and the United States, for projects run by its sister institutions, and to “complement and supplement” the financial contributions of the Israeli government for key initiatives beneficial to the social well-being of the state.

Much of the funds raised are matched by the Israeli government.

That it doesn’t raise funds in Israel (that job belongs to the Jewish Agency) or in the United States (that job belongs to the Jewish Federations of North America) explains why many Americans and even Israelis know little about one of the Jewish state’s oldest and most influential organizations.

Yet in Canada, Mexico, Europe, Russia, South America, Asia and Australia, Keren Hayesod provides what Grundwerg calls a primary “connection to the modern State of Israel and the Jewish people, and gives them their place and expression for Israel.”

“The brand has become more than just fundraising; it’s become about connection to Israel, and it’s a two-way street,” says Grundwerg. “It’s about having a stronger Israel because the stronger Israel is, the more that’s helpful to world Jewry, but it’s strengthening the Jewish community outside of Israel.”

For its efforts inside Israel, Keren Hayesod is one of the world’s largest Jewish social-welfare institutions. Grundwerg explains that despite the unbelievable technological and economic progress Israel has made over the past 71 years, “there are still deep gaps in society, especially outside of the major population centers in Israel’s periphery. Not all of those gaps can be addressed by the government, and that’s why there is such a need like an organization of Keren Hayesod to help address those gaps.

“And the link to the Jewish communities around the world is really such a beautiful thing because it connects those communities to modern-day Israel and particularly where the greatest needs are,” he says.

More than 50 percent of funds raised by Keren Hayesod are earmarked for Jewish Agency projects. And while many recognize the major social contributions of the Jewish Agency, they don’t necessarily realize that the funding is directed via Keren Hayesod.

Grundwerg notes that funding is divided into three key areas. The first are funds are directed towards aliyah and absorption, while the second goes to critical social-welfare projects – some in Israel and some abroad.

“A lot of the projects we do have to do with youth and youth at risk. We also help a lot with the elderly through projects like Almagour, which are housing projects for the elderly, a large percentage of which are Holocaust survivors,” says Grundwerg. “Our efforts help address needs that otherwise have fallen between the gaps, especially social welfare and the weaker members of societies especially in the periphery.”

The third area, Grundwerg explains, is earmarked towards “Israeli experience and Zionist education.” Such projects include MASA and “other programs that bring younger generation members of Jewish communities around the world that experience Israel that come acquainted with Israel,” he says.

Keren Hayesod also funds key institutions and projects not specifically affiliated with the Jewish Agency, including hospitals, universities and even the Yad Vashem Holocaust memorial museum.

Donors want to know what project they are giving to

For Grundwerg, the funds not only benefit the projects and recipients of the donations, they also benefit the donors.

With that in mind, Keren Hayesod not only adapts to the dynamic needs of the programs it supports, but also the evolving preferences of its contributors. In previous generations, supporters of Israel were more accustomed to writing checks and trusting that the funds would be put to the best use. Today, most donors expect much more.

“The world of philanthropy is changing and evolving, and there’s more of a project-based donor approach, where donors want to know exactly what specific project they are giving to. The fact that their dollars are being leveraged to government matching is also very helpful,” says Grundwerg. “And that’s one of the advantages of being a national institution.”

Today, Keren Hayesod is shifting more and more towards the concept of “impact investing, where the younger generation of contributors want to know not only exactly where their funds are going, but also want to track the impact that those philanthropic efforts have – almost like a return on investment,” he explains.

Raising funds for Israel has grown increasingly complicated. One the one hand, Israel’s economic advancement projects an image that there is less of a need for supplemental funding. Another more dangerous phenomenon has been increasing criticism of Israel and governmental policies from diaspora communities. Much of that criticism has come of late from the Jewish community in the United States.

And while Keren Hayesod doesn’t raise money in America, Grundwerg navigated through the current tensions between the world’s two largest Jewish communities while serving as consul general in Los Angeles.

“It’s not really a new phenomenon,” he says. “From my previous experience, there is always an ongoing tension. We’ve always gotten a lot of financial and political help from the U.S. When decisions are being made in Israel, to what extent should the views and opinions of those diaspora communities be taken into account? There is no clear answer. They should, but to what extent, and on what issues. Criticism is legitimate, at least up until a certain point.”

With funding from the United States Jewish community for key projects in Israel potentially at risk if the rift continues to grow in years ahead, organizations such as Keren Hayesod may prove increasingly important.

Regarding that schism, Grundwerg says it is an issue specific to Israel’s relationship with the United States, and it doesn’t apply where Keren Hayesod is most active.

“We are not seeing those types of trends,” he states. “Each country has its own balance regarding Jewish identity versus national identity. In countries where we raise, we don’t encounter that kind of criticism.”