The Modern Donor…

By Natie Shevel

Gone are the days when some people gave charity because it was something they or their family had always done. Israel is increasingly less viewed as a miracle nor as a fledgling State in need of Diaspora support.

We know that the engagement of young diaspora Jews with Israel cannot be taken for granted. There are multiple factors at play that must be acknowledged that have made Israel engagement substantively different to previous eras. Firstly, Israel itself has changed and can no longer demand the sort of attention and support that was prevalent a generation ago. As attractive as Israeli society is for some sections of our community, it has also proven to be alienating others. Furthermore, Diaspora Jewry itself, regardless of Israel, has become increasingly occupied with its own internal educational and welfare concerns as well as those of global social justice.

In addition, Israel’s remarkable accomplishments extend way beyond demographic growth. However, despite remarkable technological achievement and economic growth, social and economic disparity is among the highest of the O.E.C.D. countries. The greater Tel Aviv metropolitan centre is not an indicator of how Israel’s social and geographic periphery lives nor its lack of access to equal opportunities for social and economic mobility.

We must accept that Israel and the world around us has changed. Reflecting this change donors are now asking more questions and demanding answers as to where their charitable donations are going.

Professor Doug White, Director of Colombia University’s Fundraising-Management Graduate Programme has observed that donors are asking for tighter control. He states, “Donors are becoming savvier, [and] they are becoming more engaged in how their money is being used.”

We have definitely seen a shift over the last ten years in how people are choosing to give money. Charities can no longer rely on donors feeling they have a duty to give a donation, instead they must prove the need and show results. Donors do not want to feel their donation is simply disappearing into a black hole. If donors are willing to engage with charities and the cause past writing a cheque that is something that should be embraced and nurtured.

This notion of a fundraising black hole is clearly a pertinent issue in the Not-for-profit world with the Institute of Fundraising dedicating a section of its website to advising charities on ‘Communicating Achievements’ and The Wall Street Journal reporting that “charitable donors are increasingly requesting their money back, concerned that their funds have been misused or put toward causes they do not support.”

So what is the answer?

Social Impact Investing; a modern, efficient and engaging way of philanthropic giving.

The UK has been a pioneer in the development of the social impact investing market and Israel’s nascent market is now also beginning to emerge. The UJIA Social Impact Investing Initiative, UJIA Si3, is a cutting edge approach to philanthropy in Israel, providing an alternative method to driving social change away from traditional grant giving. Through using a model of returnable financing, each pound can be reinvested to enable scalable solutions in tackling UJIA’s mission of improving education, employment and community development in Israel.

Schemes such as UJIA Si3 will leverage every philanthropic pound to go much further by attracting charitable investments that offer economic and social value; improve beneficiary organisations sustainability and impact, and enable UJIA to scale its ability to achieve its social mission in Israel.

Evaluation and measuring the performance of social impact investments is essential to; ensure financial health and illustrate intended impact.

Monitoring performance not only ensures alignment with the charity’s objectives but importantly it communicates expected and achieved impacts to the donor. It allows for performance measurement over time and helps identify the right questions for investors to ask.

What is more, assessing the financial performance of an investment is relatively straightforward and focuses on such measures as profit, cash flow, and balance sheet strength. Investors may track financial ratios including those that measure net assets, liquidity, and asset quality. This is giving donors the transparency they desire.

Measuring social impact is more difficult but there is a definite move towards effective impact measures and promoting transparency.

When the capital from investors is used in social enterprises that bring true value-added that is the moment that we can conclude that impact investing is bringing a new, exciting way of giving that demonstrates transparency, security and benefits to both sides.

Natie Shevel is UJIA Israel Director.