Paying the Price: Who Really Represents the Israeli Nonprofit Sector?

By David Samson

Israel has over 42,000 nonprofit organizations. Proportionally to the size of its population, it’s one of the largest not-for-profit sectors in the world. Collectively, nonprofits produce 5.8% of Israel’s GDP and employ over 477,000 people, 13.7% of the Israeli workforce.

If it worked as a collective, the social sector in Israel has the potential to wield tremendous power on decision makers, on legislation, and on matters affecting nonprofits and the people that they serve. But instead, nonprofits exist largely independent from one another, with little effort or expense invested in building a communal voice.

Since the U.S. has the National Council of Nonprofits, as well as dozens of State associations representing nonprofits before local legislatures, I wanted to understand why Israel lacks a representative association uniting and advocating on behalf of its sector. I came up with two answers: the simple, and the conspiratorial.

The simple answer is that the nonprofit sector in Israel is very much an assembly of independent associations, rather than a sector with a united identity. Setting up a nonprofit in Israel is simple and quick, and done by a collection of 7 individuals to achieve just about any social goal that doesn’t conflict with Israel as a Jewish and democratic state. But since 99% of nonprofits do not receive government or institutional funding, the competition over the donated dollar is vicious, and nonprofits are apt to see each other in opposition rather than in collaboration.

North America Jewry did not help the situation much. While it has supported the infrastructure of Israeli civil society through organizations like the JDC’s Elca institute, the focus of Federated giving in Israel has been a single nonprofit organization, the Jewish Agency for Israel (JAFI), which for 70 years has served as a contractor for the projects and vision of North American Jewry. The other 41,999 organizations of the Israeli nonprofit sector have received little support from the North American Federation system.

But over the last 25 years, a number of major nonprofits aimed at serving the nonprofit sector as a collective have sprouted up. These organizations focus on promoting philanthropy (Matan, Sheatufim), on strengthening volunteerism (Ruach Tova), and on strengthening the infrastructure or professionalism of nonprofit organizations (Kimron, Nova Project). And one organization called Manhigut Ezrachit (Civil Leadership) claims to be the “umbrella organization of all nonprofits in Israel.”

Great news right? I would have thought so, before I looked a little deeper. And that’s when I realized that there were two, perhaps not incidental, features of almost every single one of these umbrella organizations: all are funded from the top-down (rather than being funded by the nonprofits that they represent and serve). And almost always, the funder is from outside of the sector, often being a single wealthy individual, or a for-profit corporation.

Ruach Tova and Matan for example, were set up by Shari Arison, the owner of Bank Hapoalim, the largest bank in Israel and also in past years one of the principal funders of Manhigut Ezrachit, which now receives almost 40% of its funding from a single company, Migdal, one of the largest insurance and finance companies in Israel.

Israel is of course not the only country where philanthropists and corporations help to fund the activities of the nonprofit sector. But the levels of funding that umbrella organizations of the nonprofit sector receive from interested, corporate parties cannot make me help but wonder what impact this has on their ability to act fairly and freely and, if need be, counter to the interests of their funders. Are these nonprofits pushing an agenda – or avoiding pushing an agenda – because they want to avoid isolating their main sources of funding?

Some umbrella bodies are transparent about their funding sources. Shatil, a resource platform for Israeli nonprofits, is principally funded by the New Israel Fund, a left-leaning American foundation. Because of this connection, some nonprofits have avoided working with Shatil. But being transparent about the identity of their funders gave the nonprofits the information they needed to make that decision.

Other bodies are much less so. Recently I was considering joining the Alyn Wheels of Love Ride, a fundraising event benefiting Jerusalem’s Alyn Hospital. The registration and fundraising platform was hosted by JGive, a nonprofit fundraising platform that’s built a market by offering low fees, subsidized by their philanthropic funders. Wanting to know who those funders were (because the platform’s website is not transparent with this information), I discovered that over 2/3 of their funding in 2016 came from a company called Harei Zahav. Harei Zahav is one of the leading developers of new settlements in the West Bank. Whether that ideology affects the operations of the fundraising platform, I do not know. But donors deserve to have this information available to them and not hidden from view.

If nonprofit organizations that represent and serve the nonprofit sector are to be transparent about potential conflicts of interest, they need to be upfront about who’s funding them. Or even better, instead of accepting funds from inevitably interested parties and then claiming to represent the nonprofit sectors, collect membership fees or payments from the nonprofits that you serve. We Americans fought against taxation without representation. Israeli nonprofits are getting representation without taxation – but might be paying the price.

David Samson blogs about the nonprofit sector.