The Emerging Identity of Israeli Philanthropy

[This article is the first in an overview of Israeli philanthropy today. The series will cover topics including Israeli initiatives to promote a culture of giving, corporate philanthropy and trends in Israeli philanthropy.]

by Frayda Leibtag

The good news is that Israeli philanthropy is gaining momentum and is on the rise. The bad news is that giving in Israel is still very low compared to global standards. According to a 2011 study conducted by the Center for the Studies of Philanthropy in Israel at the Hebrew University of Jerusalem, philanthropy in Israel represents 0.74% of the GDP, compared to 2.1% in the United States. The proportion of Israeli philanthropy from households and businesses rose from 33% in 2006 to 38% in 2009 and the proportion of philanthropic funds from abroad (primarily the United States) declined from 67% in 2006 to 62% in 2009. Along with the decrease in Diaspora giving came a challenge from Diaspora philanthropists to wealthy Israelis to give more and an expectation that Israeli nonprofits should raise more money in Israel and from Israelis. Yet in 2011, only 4% of donations in Israel were from affluent Israelis giving more than NIS 100,000 out of their own pockets, out of an estimated 10,000 individuals with the means to do so.

Historically and culturally, Israelis are not “givers,” at least not in the classic philanthropic sense. Israel was founded on a socialist ethos, according to which the government was expected to take care of citizens’ needs. The Zionist enterprise was largely built with funding from abroad, with the expectation that the Israelis would roll up their sleeves and get their hands dirty while Diaspora Jews would write the checks. These legacies have an enormous impact on the type of giving occurring in Israel today.

In the United States, giving is encouraged through generous tax benefits. In comparison, in Israel, there is a lack of philanthropy-conducive tax incentives combined with high individual and corporate taxes. Alongside the financial incentives for giving in the U.S. is the reality that many American philanthropists are the second and third generations of affluent families who have been raised with the ethic that with wealth comes the responsibility to give back. They were born into an American culture of philanthropy that is based on tradition and professionalism. In contrast, much of Israel’s economic elite is newly wealthy and the culture of giving is not prevalent among the affluent. Many Israelis have simply not been educated to give. Compulsory army service and the high income taxes in Israel also leave many citizens with the feeling that they have already paid their dues to the country.

According to a 2008 public opinion survey on philanthropy in Israel carried out by Hillel Schmid and Avishag Rudich-Cohen, 67 percent of the Israeli population is “suspicious, cynical and skeptical of philanthropists and their donations.” The public perception of NGOs in Israel is equally negative and has been bolstered by cases of public corruption and media reports of the high salaries of CEOs of NGOs, especially as compared with the salaries of most employees in the nonprofit sector.

In spite of all this, philanthropy in Israel is gaining momentum and Israelis are giving more with greater sophistication and awareness. While there is not any government body in Israel that collects data on philanthropic activity in Israel on a regular basis, professionals in the field agree that Israeli philanthropy is expanding. There are several factors that explain the rise in giving. The ideological shift in Israel away from the welfare state paradigm has been accompanied by the creation of a growing economic elite within Israel. As the government in Israel continues to decrease allocations to social services, the gaps are being filled by volunteer and philanthropic activity. Since the 1990s, the hi-tech sector began creating and continues to produce a new sector of wealthy Israelis who have the resources to engage in philanthropic activity.

In parallel to the emergence of a wealthy economic elite, inequality in Israeli society has jumped to unprecedented levels. According to a May 2013 report issued by the Organization for Economic Cooperation and Development, Israel is one of the countries with the largest income inequalities, ranking fifth, with only the U.S., Mexico, Chile and Turkey having larger income gaps. According to the same report, Israel is also the most impoverished of the 34 economically developed countries. The annual Bank of Israel report presented similar conclusions. Economic inequality in Israel is the source of increasing anger and criticism from Israel’s shrinking middle class, as demonstrated by the social protest movement that began in the summer of 2011. Philanthropy is one way that the wealthy elite is attempting to mitigate the hostility and cynicism. Individuals such as Raya Strauss Ben-Dror, co-president of Strauss Investments Ltd. who donates approximately $4 million annually, and Avi Naor, one of the founders of Amdocs who donates more than three percent of his net worth annually (approximately $8 million), are agents of change in a process of creating a culture of responsibility and actively promoting philanthropy in Israel.

What does philanthropy in Israel look like today? The classic Jewish traditions of tzedakah, charity, and giving anonymously are evolving into an integration of strategic personal and public giving. The biggest givers in Israel are notable not only for the percentage of their wealth that they are donating, but for their involvement with the causes they support. Many of Israel’s new philanthropists are businessmen in their mid-30s to mid-40s who built their fortunes in hi-tech, electronics and venture capital. They consider themselves part of a nascent global breed of philanthropic entrepreneurs who apply principles from the business world to their philanthropic endeavors. They think in terms of vision, setting goals and evaluating and assessing the return on their investments. These philanthropists are not just writing checks; they view their philanthropy as an investment and are actively involved to ensure that their money is being used to effect significant social change in the specific area that they have invested in. Initiatives such as Tmura and Committed to Give have sprouted up, attempting to harness the giving power of these new philanthropists.

The idea that Warren Buffett donated his money through the Bill and Melinda Gates Foundation is still very foreign to the Israeli mentality. In Israel, the “MONGO” (my own NGO) model continues to prevail, with many philanthropists giving to organizations that they themselves have established. Orni Petruschka, cofounder of high-tech company Chromatis Networks, which was acquired by Lucent Technologies in 2000 for $4.5 billion, founded and supports “Round-up”, a nonprofit organization which encourages routine micro-donation. In 1997, following the tragic death of his son in a road crash, Avi Naor founded the Or Yarok Association for Safer Driving in Israel. Since founding Or Yarok, Naor has served as chairman and continues to financially support the organization.

There is also an increased awareness of the difference between personal and corporate giving. In addition to the increase in individual philanthropy, Israel is also taking part in the global trend of corporate philanthropy. Many Israeli companies now boast corporate responsibility programs and there are organizations such as Matan (United Way Israel) and Maala that are working to promote corporate philanthropy by building bridges between the profit and nonprofit sectors. In the category of personal giving, Israeli philanthropists are increasingly publicizing their contributions. Several Israeli family foundations such as the Agnes and Beny Steinmetz Foundation, the Azrieli Foundation, the Ted Arison Family Foundation and the Zvi and Ofra Meitar Family Fund have websites that proudly outline the foundation’s goals and funding priorities.

The increased visibility of philanthropy in Israel has not engendered an improved public perception of philanthropists. The Israeli public remains skeptical of philanthropists’ motives and continues to question the state’s responsibility to fund welfare and social services. This stems from the lack of education toward giving in Israel. The next article in this series will focus on initiatives that are working to promote a culture and ethic of giving and philanthropy in Israel.