by Professor Hillel Schmid and Avishag Rudich

Where are the Israeli philanthropists? Jewish donors from around the world have asked that question over the years.

Although the Israeli economy has grown impressively in the past two decades, Israeli philanthropies are often perceived as lagging behind. It is also true that until the past decade, most philanthropic revenues of Israeli nonprofits came from Jewish communities outside of Israel. Yet, according to new data, this trend may be changing as independent Israeli philanthropy leaps into the 21st century.

According to the John Hopkins Comparative Nonprofit Sector Project, philanthropy accounted for 1.34 percent of GDP in Israel in 2003, second only to the United States (with 1.85 percent of the GDP). While in 1998, philantropic organizations made up 10 percent of the income of nonprofit organizations, in 2008 philanthropy was responsible for 18 percent of all nonprofit income in Israel.

Such development may be due partly to the dramatic growth of the Israeli economy between 1990 and 2000. The increasing supply of available financial resources brought about a cultural shift from a centralist society to a more pluralistic one – and with it, a growing demand for varied philanthropic services.

Israeli donors have responded to this demand with enthusiasm, and, in the past decade, donations have been steadily rising. Fundraising has grown apace and many organizations increasingly rely on funds from Israeli households. According to Israel’s Central Bureau of Statistics, almost 70 percent of Israeli adults, over age 20, donated to nonprofits in 2007. Among them, 13.4 percent contributed over 1,000 NIS (approx. $250). In 2006, the average contribution of an individual formally defined as an Israeli philanthropist was 2.7 million NIS (approx. $68,000), or nearly seven percent of their income.

The nation’s industrial expansion and the increasing privatization of the economy have not only affected the numbers of donors, they have also influenced the public’s philanthropic style. Today’s Israeli philanthropist wants to know how financial contributions are being used and requests that nonprofits exhibit measurable outcomes and adopt businesslike management methods. To that end, the business sector is becoming increasingly involved, both in providing resources such as volunteers and knowledge and through corporate philanthropy, which comprises five percent of the total philanthropic pie.

The Israeli public increasingly acknowledges the positive contribution of philanthropy, including the contributions of Diaspora Jewry; most perceive philanthropy as a complement to the role of the government in funding social services.

As Israel experiences a shift in its culture of giving, Diaspora Jewry is undergoing changes as well. Among Jewish donors worldwide, there has been a decrease in the scope of giving to Israel and to Jewish communal institutions, with more money going to secular and universal causes. Even within Jewish causes, more money “stays at home” and the percentage of Jewish Federation campaign funds going overseas is declining. However, these trends are being countered by innovative new models the Jewish Federations of North America is piloting. Both Israeli and overseas giving have been impacted by the global economic crisis as well. In Israel in 2008, the number of millionaires decreased, down to 5,900 from 8,200 in 2007.

Despite the challenges philanthropists face the world over, it seems clear that Israelis, including those of means, are becoming more philanthropic. Moreover, collaborations with Diaspora Jewish donors, which the Jewish Federations of North America and their overseas partner agencies foster, can only strengthen Israeli philanthropy. This can be accomplished through circles of giving and networks of donors that will enable Israelis to learn from the wider Jewish experience.

We also must continue to track and study the state of Israeli philanthropy. The more we know, the better we can help develop it, and ultimately help Israel itself grow.

Professor Hillel Schmid is the L. Jaques Ménard Professor of Social Work and director of the Center for the Study of Philanthropy in Israel at the Hebrew University of Jerusalem. Avishag Rudich serves as the Center’s academic coordinator.

This article first appeared in TOGETHER: Jewish Giving Today, published by The Jewish Federations of North America. Reprinted with permission.