Transforming Donor Culture in Israel

by Jo-Ann Mort

The days are long past when organizations in Israel can simply come to America with their hands out asking for funds from donors. As one prominent grant maker recently remarked to me, “Israel is no longer a scarcity society. Problems are often a result of government decisions, not lack of funds.”

This means that American donors are demanding more and more of Israeli NGOs, even when the NGOs are not up to the challenge. It’s not that they aren’t doing great work. Many of them are doing extraordinary and necessary work in Israel. But the expectations – especially among US donors, have shifted, employing a more rigorous process to their grant making.

This calls for a massive change of thinking among Israeli non-profits. Furthermore, it means that Israeli philanthropists need to step up.

For the NGOs, one of the most immediate needs is to restructure their boards and to make different use of their voluntary leadership. Traditionally, Israeli non-profit boards have had little expectations attached to them. The members have been more window dressing to give credibility to the organization by lending their name as a bona fide.

When a prominent figure joins the board of an American non-profit, there is a serious expectation that the person will either give or get funds to support the non-profit, but no such expectation is traditional to Israel’s NGO sector. Increasingly, though, US donors want to know who is engaged with an Israeli NGO and what they are giving to the NGO in their country. This means that the nonprofits in Israel need to retool to put leadership in place to become donor partners for overseas philanthropists. This cultural shift could go a long way toward strengthening Israel’s civic culture while also fostering philanthropic partnerships between the Diaspora and Israel.

One of the reasons that this expectation exists on the US side, is that Israel today, with all of its inequities, lists more than 10,000 millionaires with over $52 billion USD in disposable wealth. Therefore, the combination of wealth in country and government decisions that, just like our own US government, impact on rich and poor alike, are taken into account by philanthropists in the US when they look at how and what to fund in Israel.

This is a healthy occurrence, offering the chance for funding partnerships between Israeli donors and US donors that can only deepen the strength of Israel’s third sector.

Fortunately, Israeli philanthropists are engaging more and more in public, strategic fundraising. At the recent Jewish Funders Network conference held in Tel Aviv this past March, Israeli philanthropists launched a new initiative to significantly increase private philanthropy among Israelis and “to change the culture of giving among the country’s affluent.”

The website for this group of twenty Israelis is called Committed to Give. They hope to “create a critical mass of donors and donations, to strengthen and complement the government’s responsibilities, and to create partnerships between philanthropists.”

Meanwhile, the Milken Global Conference, chaired by US philanthropist Michael Milken, and held two weeks ago in Beverly Hills, California, included several sessions devoted to philanthropic giving in Israel attended both by philanthropists from Israel and the Diaspora, including the US and the UK.

At the Innovation Lab that took place coincident with the Milken Conference, the Milken Institute’s Israel Center convened a group of experts among stakeholders from Israel, the UK and the US, specifically to discuss ways to improve Israel’s philanthropic environment, in order to make good use of the new expectations that international donors have. (The proceedings will be made available to the public in the future).

At that conference, there was significant attention paid to PRIs, Program Related Investments, something that is becoming increasingly popular in the US and should be promoted to Israelis as well. It is a perfect model for a “start up society,” with so many entrepreneurs anxious to make their mark.

Large donors such as George Soros have been using PRI to supplement their grant making for years, but now the Obama Administration has changed the U.S. Treasury regulations, so that PRI investing can become even more robust.

President Obama’s director of the Office of Social Engagement and Civic Participation Jonathan Greenblatt, discussed the Obama Administration’s new regulation at the Milken conference at a session devoted to public-private partnerships moderated by Glenn Yago, the Milken Israel Center’s senior director.

In short, this is an exciting time for philanthropy, precisely because a partnership is evolving between Israel and America that takes into account the talent and commitment on both sides of the ocean. It’s also a good time for philanthropists to work with their grantees and the non-profit sector to aid the sector in Israel especially to cultivate new models for board activism and much more.

The proposed rule issued by the Treasury Department and IRS would make it easier for philanthropies to deploy PRIs for private investment like equity investments, loans, loan guarantees or more, based on the charitable mission of the foundation. They are an incredibly effective way to supplement strategic grant making.

This type of investing could be of particular interest to partnerships between American and Israeli philanthropists, because so many of them come from the business sector and are engaged with issues related to workplace development and education.

Jo-Ann Mort is CEO of ChangeCommunications, a strategy firm based in New York City.