Who gives and who gets? The challenges of following the money from the U.S. to Israel
Philanthropy serves as a means of influence and as a tool for public image management. In the case of U.S. donations to Israel, individual and organizational donors become international actors, expanding their reach beyond domestic borders.
U.S. nonprofit organizations have sent billions of dollars throughout the decades to Israeli nonprofits. Where is this money coming from? Where is it going? These questions are especially relevant considering the months-long protests Israelis have been sustaining against Prime Minister Binyamin Netanyahu’s proposed judicial overhaul. It turns out U.S. philanthropists fund the organizations behind some of these proposals. As the protests last and funding revelations come to light, Israel’s supporters are being asked to face the impact of their donations.
Philanthropy serves as a means of influence and as a tool for public image management. In the case of U.S. donations to Israel, individual and organizational donors become international actors, expanding their reach beyond domestic borders. For example, Birthright Israel aims to help young adults outside of Israel build a connection to the country, with the hope that program alumni will bring their perspectives back home as active Jews in their community.
Cross-border philanthropy’s scope is challenging to measure because multiple stakeholder groups give across individual and organizational channels. Previous estimates of U.S. Jewish organizational philanthropy to Israel put the total outflow at approximately $2 billion annually.
This $2 billion figure has been a relatively consistent ballpark figure, but also an aggregated sum. We set out to determine if we could break down the total outflow to identify trends. One way to do this is by tracking the money. In the United States, the Internal Revenue Service (IRS) is the government agency responsible for tax collection, nonprofit status determination and oversight of tax-related disclosures. By law, organizations with nonprofit status granted by the IRS must submit tax returns via the Form 990 (most nonprofit organizations) or Form 990-PF (used by private foundations).
We began this endeavor in 2019, with data from 2015 (the most complete information available at the time we started this project). We knew that the Israeli nonprofit sector reported a total income of $35 billion. Donated income accounted for $4.4 billion, $2.8 billion of which came from sources outside of Israel. We worked with GuideStar, one of the most comprehensive sources of nonprofit tax data, to design a query that would capture organizational donations to Israel.
The challenge here is that the data we have is only as good as the questions asked, measured and answered. We quickly realized that IRS 990 PF form does not require details related to international grantmaking, so we could not measure any data from these organizations. Even though the vast majority of nonprofit organizations who file tax returns use the regular IRS 990 Form, this utility was limited. The IRS Form 990 only asks for the grant recipient’s region, not specific country, and this question was often left blank. The forms do ask for individual and organizational names, but these fields are also often left blank or incomplete.
Despite these challenges, we were able to identify some trends among the U.S. philanthropic organizations who support Israeli nonprofits (2015):
- 1,179 organizations granted $1.8 billion in 5,597 separate grants.
- Organizations fell into 3 structural categories: Centralized (major Diaspora funders such as Jewish federations that aggregate donations from multiple donors), Friends of supporting one unique grantee (e.g.: American Friends of Tel Aviv University), and Family Foundation whose funds and assets are governed primarily by one family (e.g.: the Saban Family Foundation). Those organizations not immediately identifiable by these traits were sorted into an Other category.
- By number, Friends of funders accounted for the largest share of grant dollars ($752 million, 41% of total grants).
- Centralized organizations were the smallest group but accounted for $707 million (39% of total grants).
- A quarter of granting organizations were Family Foundations, but their reported was only $87 million (5% of total grants)
- The top 10 funders account for almost half of all funds identified ($792 million, 44%). Six were centralized but 4 were Friends of organizations, demonstrating the rise of the latter funding structure.
- Top recipient causes based on IRS information include Jewish-religious, higher education, and health efforts.
- Because our search did not focus exclusively on Jewish organizations, we were able to identify 56 organizations sending $56 million to Christian causes. This represents a 10-fold increase compared to previous attempts to measure Evangelical giving.
Cross-border philanthropy’s impact ripples beyond borders. Transparency is critical, especially in this moment of the U.S.-Israel relationship. The news out of Israel is everchanging. Even as we write this, Prime Minister Netanyahu is agreeing to pause the judicial overhaul while granting concessions to far-right Minister of National Security Itamar Ben Gvir, so the story is far from over. We have begun to paint a clearer picture of US donations to Israel from both Jewish and non-Jewish supporters. We are in the beginning stages of this long term, replicable project, and plan to have new data about 2017 and 2019 in the upcoming months. However, our knowledge is limited, in part by the utility of the IRS forms and in part because of organizational failures to provide the requested/required information. We know more than we did in the past, but less than we would like to in the future.
Jamie Levine Daniel, Ph.D., is an associate professor at the Paul H. O’Neill School of Public and Environmental Affairs at Indiana University-Purdue University Indianapolis; Adv. Galia Feit is the executive director of Tel Aviv University’s Institute for Law and Philanthropy; Osnat Hazan Ph.D., is head of the philanthropy data lab at Tel Aviv University’s Institute for Law and Philanthropy.