Social impact businesses are transforming the Israeli landscape, making money and doing lots of good

By Maayan Hoffman
eJewish Philanthropy

Last week, I met a colleague for a business meeting over a delicious blue-cheese salad with the perfect combination of toasted pecans, colorful veggies and a reasonable price. My visit to Harutzim Bistro, however, was not just a whim to satisfy my afternoon craving. It was research into one of Israel’s latest trends” social businesses that give people with disabilities the chance to work and develop careers in Israel’s thriving restaurant or other industries.

Harutzim Bistro, located in the heart of Jerusalem’s Talpiot industrial zone, was born out of Community Services for People with Special Needs’ (SHEKEL) vision to include people with disabilities within the wider community as a contributing part of the Israeli workforce.

This model of great food, pleasant atmosphere, first-rate social value is popping up all over the holy land, according to Tamar Levine, head of marketing and PR for Dualis Social Investment Fund, a nonprofit organization that achieves social impact in Israel by investing in for-profit social businesses. Levine said these establishments employ a range of what would be considered people at risk – single mothers, ex-convicts, folks on welfare and people with special needs – all with the goal of getting these individuals on their feet and transforming them into productive and contributing members of society.

Liliyot Restaurant in Tel Aviv was one of the first models. It employs and trains 20 high school drop-outs every year-and-a-half. Under the supervision of a full-time social worker and an award-winning chef, the youth receive vocational training. A similar social-impact restaurant, ANNA, which serves Italian cuisine, just opened in the historic Ticho House in the Center of Jerusalem.

A Tel Aviv and Netanya-based program helps women-at-risk enter the beauty services field. A national program employs individuals on the autism spectrum in data-entry roles.

“The idea is to make money and do good,” said Levine.

Social businesses are rooted in Jewish tradition, according to Yuval Arbel, founder of Buy for Good, an online store for social impact products made in Israel. The Rambam (Rabbi Moses ben Maimon commonly known as Maimonides) taught that there are eight levels of charity, each one higher than the next. The greatest level, above which there is no greater, is to support a fellow Jew by finding him employment so that he will not need to be dependent upon others.

As a young entrepreneur, Arbel launched Buy for Good in December 2016 when he realized that he “wanted to do something that would have meaning,” while still bringing home a paycheck. His idea is to sell products created by Israeli social businesses direct to consumers. Arbel is careful to ensure that the products he sells are of the highest quality. These include Judaica, home décor, natural soaps, scented candles and teas, all made by people with mental and physical disabilities or on the autism spectrum.

“The way I look at it, the social impact comes last,” said Arbel. “Because the products are high quality, beautifully designed and sold at commercially competitive process – even in comparison with Amazon and Etsy – we have a sustainable model … There is a very small percentage of people that can pay really high prices to have a social impact. But every purchase from Buy for Good is making a social impact.”

Levine said the social impact industry in Israel surfaced shortly after the 2008 economic downturn, which led to a deficit in philanthropic investment. Back then, there were roughly 10 to 15 social businesses in Israel. Today, there are around 200, and Levine expects to see upwards of 1,000 within the next few years.

The Israeli government has likewise recognized the value of this growing trend and this year hosted a prime minister’s office roundtable about social businesses. Currently, there is discussion about new legislation that would define social business and offer tax breaks and other incentives to companies that qualify.

Additionally, Dualis, in conjunction with the Edmond de Rothschild Foundations, whose core investments in Israel have been in higher education, recently opened the first-ever MBA program focused on social entrepreneurship at the College of Management in Rishon LeZion.

“We are trying to build an ecosystem of impact investing in Israel,” said Elli Booch, the foundation’s director of philanthropy, who noted that the program includes an opportunity to enter an accelerator program that supports entrepreneurs in building social businesses.

“It is not new if you go to major universities abroad,” said Booch. “But it is the first one in Israel. We hope that eventually more and more academic courses will be offered at the MBA level, so students can learn the value of impact investing and implement it.”

Impact First Investments is putting money directly into the already-existing social businesses from yet another lens.

“Our focus is to invest in companies with global social impact – but all technology based,” explained Cecile Blilious, founder and managing partner of Impact First. “You can look at it from a Jewish perspective: tikkun olam meets startup nation.”

Impact First invests annually in four to five Israeli companies that have measurable social impacts, while creating financial returns like other high-tech companies in the startup arena.

“I don’t think you have to compromise on making financial returns to have high impact,” Blilious said.

For example, the Impact First invested in AngelSense, a GPS tracker and voice-monitoring solution designed for children with special needs. So far, the company, founded by two parents of children on the autism spectrum, has sold more than 6,000 units worldwide to other parents who are also looking to ensure their autistic children are safe from bullying, abuse and neglect.

“The impact investing market is becoming a huge market worldwide, but none of that money is coming into Israel,” said Blilious. “With our investments, we are building a nice portfolio of Israeli companies that will change the world.”