Israel’s Social Business Sector is Going Mainstream and Offering New Philanthropic Opportunities

Photo credit Noam Preisman

By Allan (Chanoch) Barkat

Impact investing can transform the world of Jewish philanthropy, and Israel is becoming its key hub.

When the Jerusalem-based kosher dairy restaurant ANNA, which opened in 2016, received a rave review in The New York Times last July, its success represented the intersection of a number of exciting trends: new philanthropic dollars being directed to the development of social businesses; nonprofit – government partnerships to pursue a valued social goal; a growing movement by prominent Israeli entrepreneurs to become hands-on in building new social businesses; and an increasingly supportive regulatory and business environment that is turning philanthropic investments in social businesses into a mainstream phenomenon.

In ANNA’s case, an attractive space made available by the Israel Museum at the Beit Ticho gallery made it possible for the Dualis Social Investment Fund, a nonprofit that directs philanthropic funds to social businesses in Israel, to collaborate with Hahut Hemeshulash, a nonprofit that serves at-risk youth, together with Jerusalem’s social welfare office, in order to create a social business that trains, mentors, and helps find future employment for vulnerable young people – all under the professional umbrella of the Mona group, including Chef Moshiko Gamliel, one of Israel’s leading culinary celebrities. The Mona group, like other business entrepreneurs partnering with Dualis, has the know-how to make a restaurant succeed and the heart to invest its own funds and expertise in an enterprise that yields both financial and social returns on investment. This may sound like a lot of moving parts, but Dualis’ grand experiment is working, as The New York Times witnessed and reported – and it is serving as an inspiration and a model for a much broader program in seeding social businesses throughout the country.

For funders who want to direct their money to help facilitate social change, and particularly for younger donors who value hands-on connections to those who benefit directly from their philanthropy, impact investing is becoming a highly desirable strategy. By investing in the accelerator entities that are facilitating this trend, philanthropists are playing a central role in the growth of the field. And a recent $6.5 million matching grant by the Israeli government to support the growth of the social business sector is serving as a catalyst for Dualis to raise matching philanthropic support for this purpose.

The social investment model is an outgrowth from the venture capital world, with a twist. It defines desirable investment outcomes as those that sustain the business financially but also bring social benefit to participants and the community as a whole. While profit is certainly part of the model, it takes second place to the social goals of the business. Small businesses that are part of a growing social business portfolio receive philanthropic support to build sustainable businesses that train, mentor, and employ people from vulnerable populations who might otherwise spiral into severe poverty. In collaboration with Israeli social welfare authorities and nonprofits, and through business ties with leading Israeli social entrepreneurs, Dualis is providing at-risk youth, low-income single mothers, young adults with disabilities, and others on society’s margins with on-the-job vocational training and intensive psycho-social supports, all within an inclusive work environment.

The growing social business and impact investment sector in Israel has been encouraged by a number of recent headlines:

  • An announcement by Larry Fink, founder of the world’s largest investment management firm, BlackRock, encouraged corporate entities to engage in social purpose and not just financial gain.
  • An announcement by The Ford Foundation that one billion dollars of its $12 billion corpus would be devoted to mission-related investing.
  • In the Jewish world, Jewish Federations and foundations are taking the lead in supporting the trend in impact investing and in supporting social businesses. UJA-Federation of NY helped lead the field by creating a social impact fund and a committee that supports impact investing in Israel (i4 Committee). Among foundations with a Jewish mission, The Max and Marjorie Fisher Foundation is granting 3.6% of its assets to make program or mission-related investments. The Foundation’s very first Program Related Investment (PRI) in Israel was directed to Dualis and is helping to support the growth of social businesses.
  • Israeli regulators are also coming around. Dorit Selinger, Israel’s Commissioner of Capital Markets, announced that institutional investors are now expected to invest responsibly and provide an explanation of how their investments not only result in financial benefit but also promote desirable social impact.

While these developments point to increasing acceptance of the social business model, it is critical to invest in a new generation of business leaders who will effect necessary structural change in the Israeli business sector. For this reason, Dualis has partnered with the Rothschild Foundation and the College of Academic Management Studies – Israel’s largest MBA program – to offer a new social business track. The social business MBA program, now in its second year with over 30 students, includes an incubator for aspiring social entrepreneurs.

Dualis’ secret sauce is its emphasis on the importance of providing and nurturing both vocational and life skills in a real-life work environment, together with personal mentoring, as the key components that can lead at-risk individuals to a future path of successful employment. Even as we seek to scale up our social business models to impact many more people at risk, the program very consciously focuses on the needs of the individual and the support strategies that will lead to his/her success. Thriving social businesses elevate not only their employees; the businesses themselves benefit from outside investment and the achievements of a motivated, inclusive work force.

By raising the philanthropic support needed to create more social businesses, scaling up successful social business models, and ensuring that each participant receives the psycho-social support they need to succeed, the social business and impact investment sectors are on the path to fulfilling this vital social mission.

Allan (Chanoch) Barkat is the founder of the Dualis Social Investment Fund. A businessman and entrepreneur, Barkat served for ten years as Managing Director of Apax Partners Israel, one of the worlds’ leading private equity investment groups. For more information, visit: