There is debate raging in the United States about tax incentives and the Nonprofit Sector. The U.S. government, by allowing donations to be tax-deductible, is surrendering money “owed” to it for the sake of encouraging charity. Many believe that the two – the rate of deductions and the amount donated to charity – are directly linked. Any decrease in the rate of deductions will lead to a decrease in the aggregate amount of charity donated to nonprofit organizations.
A recent study in Israel advocates the same theory, claiming that Israel’s poor standing in charitable-giving is directly related to the Israeli Government’s comparatively lower tax-deductible incentives.
However, by placing the blame squarely on the Israeli Government – instead of sharing the burden with the nonprofit organizations operating in Israel – these researchers are causing the Israeli Nonprofit Sector to leave a huge well of potential-donors untapped. The charities in Israel are failing to engage would-be donors, and it is this lost opportunity that should really be addressed.
Study: Israelis Don’t Donate
A recent article in Haaretz quotes two studies that highlight Israelis’ lack of charitable nature and provides some hard-to-ignore numbers:
Support for nonprofits in Israel — from outside and inside Israel — stands at 1.34% of GDP, second only to the United States (1.85% of GDP). If donations from abroad are not counted, the rate plunges to 0.8% of GDP, less than in most of the West.
In 2006, revenues of nonprofit organizations [in Israel] totaled NIS 6.6 billion, of which only NIS 590 million originated with Israelis, while NIS 3.5 billion came from abroad. The rest came from the income the organizations generated themselves and from the government.
The 6,377 foundations in Israel dish out a combined $150 million a year. Compared to the 1500 foreign philanthropic funds operating in Israel, which donate a combined $1.5 billion a year.
The Johns Hopkins study found that only 6% of Israelis volunteer, slightly more than in emerging markets but well below the roughly 15% rate in the West.
The government provides 51% of the funding to nonprofits. That rate is far above the Western norm: the average proportion of government support among the other 22 nations surveyed stands at 37%.
The Israeli research team, all big names with “facts on their fingertips” – Dr. Nissan Limor, Prof. Benny Gidron, Raanan Dinur, Zvi Ziv, Ahuva Yanay, and representatives of Israel’s Tax Authority – noted that Israel’s tax-deductible policy does not encourage charity.
One way to measure this is the lost tax-revenue from claimed donations to nonprofit organizations; this number stood at NIS 170 million in 2009, which was 0.08% of total tax-revenue of that year. In the United States, the equivalent cost stood at 2% and in Canada at 0.4%. In other words, percentage-wise, less tax-deductible donations are made in Israel than in other countries.
Are We Selling Israeli Donors Short?
The article continues:
Why don’t Israelis donate more? Because the government doesn’t encourage it, says the team. “It isn’t a question of culture, but of policy,” says Limor. “Philanthropy needs encouragement. The Israeli government never did encourage it. Incentives for donors are quite limited.”
In other words, Dr. Limor points the finger solely at the government, not at the Israeli people and not at the nonprofits operating in Israel. If ind it hard to believe that there is nothing more that can be done by the charities to encourage more donations and by the donors to get more involved. Thus, this explanation, sells the Israeli people short. The grim numbers shown above cannot be easily dismissed by blaming it all away on the Israeli government.
Israelis Want to Give, They Just Don’t Know It
I attended an event organized by Shiur Acher [A Different Lesson] on April 25th. This Israeli charity encourages companies to donate manpower to teach classes in schools located in underprivileged neighborhoods.
At their event, Shiur Acher unveiled the findings of a survey sent out to the 1,600 past-and-present Israelis who have volunteered their time to the organization; 275 volunteers, or 17%, responded. (The survey had a dizzying, 40 questions. Additional answers can be found after the post marked *)
59% Reported that they do not volunteer outside of Shiur Acher.
67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved.
89% Recommended or plan to recommend Shiur Acher to others
With only 270 people answering the Shiur Acher survey, it can hardly be seen as decisive proof. However, the evidence shows that the Israeli non-giving culture can be changed when donors are properly engaged.
The study showed that volunteering for the organization was, for a majority of the volunteers, their first encounter with charity. Additionally, a majority noted that volunteering had “awakened in them a desire to become more socially active.” In other words, those that have been successfully engaged, those that had a chance to volunteer at a place that made them excited, actually want to do more charitable acts and want to encourage their friends to do the same.
The Nonprofit Sector in Israel needs to look within itself how to inspire the population to become more socially involved. Yes, the government can improve its tax-deductible incentives. But this will only increase the amounts given to charity. The desire to initially give lies within the donors themselves. So too, the responsibility to stoke that desire, to transfer that yearning into action, lies within the organizations themselves. Let us not be complacent. Donor relations is not a job title, it is a challenge. It is a call to arms.
* Additional highlights from the Survey:
How many years have you been volunteering with Shiur Acher?
- 44% 1 yr
- 44% 2-3 yrs
- 12% 4 or more
Would you recommend volunteering at Shiur Acher to your colleagues?
- 89% Have recommended or plan to recommend volunteering with Shiur Acher to their peers
- 74% Of the above 89% would recommend volunteering with Shiur Acher to their colleagues
What motivated you to volunteer? (Can choose more than one reason)
- 68% The desire to help educate children and help a community in need
- 22% Breakup routine, pleasure, curiosity, interest, satisfaction
- 15% Volunteering is an integral part of working in my company
- 14% Recommendation from a colleague
- 14% Request from the coordinator working for the charity
- 10% A chance to try out teaching
- 7% Existed an expectation in the company that I would volunteer
- 3% Other reasons
Do you volunteer outside of Shiur Acher?
- 59% Reported that they do not volunteer outside of Shiur Acher
- 41% Reported that they do volunteer. Of which 47% of those, belong to neighborhood watch, PTA, youth movement or give charity.
Other Survey Highlights:
- 67% Replied that their time at Shiur Acher awakened in them a desire to become more socially involved
- 77% replied that their volunteer work was very, very important to them.
- 50% Believe that volunteering is important to their company
- 47% Appreciate/value their employer more because of their participation in the Shiur Acher Project
- 57% Reported that participation in the project brought them closer to their coworkers
An in-depth overview to an important issue in Israeli culture and society!
Not being a financial expert, my gut still tells me that most people who give to charities don’t do so only because they can get a tax write-off. I think it is human nature to want to help someone else in need and Israelis are no different.
The Israeli/Middle Eastern culture, however, is not as familiar with the concept of donating to a large organization as Americans, for example, are. The culture in this part of the world is much more about helping friends, neighbors and family and less about people who you don’t know personally.
Parenthetically, I think this idea is actually becoming more prevalent in the West as well, where charity organizations such as the Jewish Federation or religious movements such as the Reform/Conservative/Orthodox movements are finding it increasingly difficult to connect to people because they are face-less, bureaucratic bodies that are very difficult to connect to on an individual level. The key in attracting donors in the 21st century is making the cause relevant to the person giving of their time or money.
Making personal and meaningful connections with people will increase the rate of Israelis who donate. I think that tax incentives can help but we are talking about changing the very fabric of a society. Why should someone want to donate to Magen David Adom? Not because you can save a little bit of money – but because you can save someone’s life. I think this sort of message rings home for many but they haven’t been approached in the proper way.
If organizations focused less on themselves and all of their achievements and more on the people that they help, I think a lot more Israelis would jump on the bandwagon. Give them a reason to feel part of the organization/cause, and they will!
Yes, yes, and yes.
For the researchers to cast the entire findings on the government’s shoulders, to say that it is “not an issue of culture” is to not address the facts on the ground.
For a whole slew of reasons (a separate blog in of itself) Israelis are not donating to nonprofit organizations (this does not mean that they aren’t charitable). Or saying it differently, Israelis don’t feel a connection to the charities operating in their country.
I agree that it all boils down to making the connection. Getting the People involved. Convincing them that it is in their best interest to give back to society. These are the principles that will engage the People and raise the percentages.
Thanks for your comments David. Always good to hear from you.