In Israel, Corporate Donations to Nonprofits Lag

NISBy Tali Heruti-Sover

How generous are Israeli companies in helping the nonprofit sector?

The global standard is for corporate donations to equal 1% of pre-tax profit. A survey by The Marker found that a few companies met or exceeded it but many others came up short or gave nothing.

In the U.S., Giving USA, which monitors charitable giving, estimated that U.S. companies gave away 1.32% of pre-tax profit in 2012.

At the top of the list was Teva Pharmaceutical, which gave 383 million shekels ($97.4 million), or 8.8% of its pre-tax profit, in 2013 to charitable causes. The donations include cash plus in-kind donations.

The Marker’s survey included only financial contributions, not the volunteer time companies donate. But while many companies donate their employees’ time to nonprofits – which boosts morale and creates personal connections – those efforts may not be as effective as cash contributions.

courtesy Takdim, the Ramat Hasharon Community Foundation
courtesy Takdim, the Ramat Hasharon Community Foundation

“We love to volunteer. In the business sector they send employees over to paint an old-age home once a year, but they don’t understand that it takes money to give the residents better services,” says Orni Petruschka, an entrepreneur and philanthropist.

Two banks make the standard

Only two of Israel’s six big banks exceeded the 1% floor for giving. Bank Hapoalim gave 46 million shekels, or 1.2%, making it the most generous of the lenders in 2013.

At the bottom of the list was First International Bank of Israel, whose 3.6 million shekels in contributions amounted to 0.37% of its pre-tax earnings. CEO Smadar Barber-Tsadik’s total compensation costs that year were 5 million shekels.

FIBI said in response that its employees donate “significant” time, notably the Turning Point program for youth at risk in which the bank is taking a leading role.

Food and consumer companies were among the most generous, with all four surveyed by The Marker exceeding the 1% level.

Strauss Group, the maker of coffee, dairy products and prepared salads, was the most generous, giving away 2.4% of pre-tax profit in 2013, or close to 12 million shekels.

Osem, famous for its Bisli snacks, was next, donating 7.7 million shekels, or 1.5%. Contributions in 2013 by household-products firm Sano declined as a percentage of pretax earnings but rose in shekel terms by 500,000 shekels to 1.75 million.

Supersol and Castro were the most generous companies in retail. The supermarket chain, even though it is struggling against competitors, gave 1.72% of pre-tax profit, or 5 million shekels, to charities. That exceeded the 3.8 million shekels it cost the food retailer to employ its CEO, Itzik Abercohen, that year.

The apparel chain Castro boosted its charitable giving to 1.7% of pre-tax profit in 2013 from 1.4% the year before, although the shekel amount was little changed at 1.1 million shekels.

Among seven of Israel’s biggest insurers, only a few met the 1% target. Ayalon was the champion in the category, giving 1.1 million shekels, or 1% of pre-tax profit. That was down from 2% the year before.

At 1.2 million shekels, Direct Insurance gave twice as much in 2013 as it did in 2012, but that amounted to 0.6% of pre-tax profit. For comparison’s sake, the compensation costs for the insurer’s CEO, Raviv Zoller, came to 11 million shekels in 2013.

Harel Insurance & Finance gave the most in shekels terms in 2013, but the 4.2 million shekels came to 0.41% of pre-tax profit, down from 0.56% in 2012. Migdal Insurance gave 3 million shekels, the second highest, but that equaled 0.31% of pre-tax. The year before Migdal dug deeper, contributing 4 million shekels, or more than 1.1%.

‘Committed to the community’

Clal Insurance, whose CEO at the time, Izzy Cohen, had a salary cost of 16.5 million shekels, donated just 0.06%, or 600,000 shekels, to the nonprofit sector. Clal said the figure doesn’t reflect the full extent of its contribution.

“The company is committed to the community and contributes in other ways that don’t appear in its financial reports, like the many volunteer activities involving hundreds of the company’s employees and thousands of hours and contributions in kind worth hundreds of thousands of shekels,” Clal said.

Among Israel’s financial-services companies, the three surveyed by The Marker showed a somewhat higher level of generosity. Meitav Dash gave away 2.2 million shekels, or 5.24% of pre-tax profit in 2013.

Excellence Investment House gave 0.43%; at 3.6 million shekels, the cost of employing its CEO, Uzi Danino, was seven times what Excellence gave to charity.

A stingy sector was high tech and telecom. Bezeq gave the most in 2013, 13 million shekels, which was 0.53% of pre-tax profit.

Still, that was much more than the cost of employing CEO Stella Handler that year, which was a little above 8 million shekels.

Energy companies were the stingiest of them all, with most reporting no charitable contributions at all. Yitzhak Tshuva’s holding company, Delek Group, whose interests include energy as well as insurance and real estate, gave away 9 million shekels in 2013, or 1.18% of pre-tax profit.