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 *)

Highlights:

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

Conclusion

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.

Tizku Lemitzvot,

Shuey

* 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

Summary of US Dollar’s Recent Activity

The peaks in the dollar/shekel exchange rate this past year and a half make me more nauseous that the merry-go-round at the local playground (and they really make me queasy). The dollar tanked and leveled out against the shekel at an 11-year low in late May of 2008, trading for 3.24. As if to prove itself, the dollar then proceeded to rise faster than analysts had predicted, peaking a little less than a year later in Mach of 2009 at 4.25. Since those glory days of March, the dollar has plummeted against all of the world’s currencies. Specifically, the last six months have seen the dollar drop against: the Pound, 7.2%; the Shekel, 8.9%; the Euro, 8.7%; and the Yen, 10.6%. With world markets (and charities financed by donations in US Dollars) hanging on the dollar’s every move, things are, once again, looking just a tad scary. Not monster-in-the-closet terrifying, mind you, but enough to make me bite my nails more often than I should.

Haaretz on Sunday summed up the danger of a low US dollar quite nicely:

The weakness of the dollar is problematic for almost the entire world…a low dollar makes it hard for them [Europeans and Israelis] to export their goods to the United States and other markets around the world that are linked to the dollar…The Americans must guard the dollar’s position as the world’s main currency for trade and savings, otherwise they’ll have a hard time continuing to issue bonds and rolling over their huge national debt.

What Should Nonprofits Be Thinking

What we in the nonprofit world need to realize is that the problems with the dollar are much larger than the USD/NIS rate of exchange. Changes in the dollar affect the world – Israel is just one of many. The Bank of Israel’s moves to buy dollars might be helping a little and the in the short term stemming the decline of the greenback, but Bank of Israel Governor Stanley Fischer is similar to David trying to fight Goliath armed with only a rubber band. Many argue that the problems of the US dollar are larger in scope and strength than anything that Fischer can throw at it.

With the future of the US Dollar unknown, where does it leave nonprofits – local and international – that operate in Israel financed by donors and/or foundations in the United States? Two words: budget low. A director of a nonprofit summed up his policy as follows: “I budget and then cut it by 10%. Then I cut it again another 10%.”

Taking it One Step Further

The primary responsibility of directors of charitable organizations is to ensure the continuation of their organization; they must adequately plan in order to protect their organization’s vital work. A surplus at the end of the fiscal year does not send the message of “mismanagement” to donors.  Conservative budgeting that guarantees the survival is objectively a very good thing and should be at the forefront of every director’s mind.

As a former boss of mine once said, “Charities can’t do charity.” Simply put, doing one favor or helping out one extra family could, literally, tip the balance, sending the organization into debt. Fiscal responsibility and a broad vision are crucial. Sometimes the needs of the many really do outweigh the needs of the few.

Tizku LeMitzvot,

Shuey

As we start the Jewish New Year, I found it quite fortuitous that I ran across the following article and its implied message in the September 15th Haaretz paper.  The title read “Biker combines altruism, cross-country challenge.” In short, an extreme sports enthusiast named Ronen Medina is traveling cross-country, from Metula (Northern Israel) to Eilat (Southern Israel), on his electric scooter, visiting hospitals and distributing packages of candy to patients.

One, lets assume the patients aren’t diabetics. Two, lets ignore the alarming reports that note the increase in Israeli children requiring dental work on their baby teeth. And three, go Ronen! His goal: to make them happy. And his inspiration: I thought, if I am already doing it [crossing Israel on a scooter], why not make patients in the hospital happy. Shouldnt volunteering for and donating to our favorite causes be this easy?

After converting his dirt bike into a motorized scooter, to which he hitched a carriage containing a tent and four batteries plus bags of treats for the patients…Sponsored by the companies that contributed the candy and with the support of scooter and battery companies whose contributions were also solicited for the expedition.

Truly, one person really can make a difference. Or as J.R.R. Tolkien said: “Even the smallest person in the world can change the course of the universe.” (Lord of the Rings)

Because people are naturally skeptical, I’ll provide some additional proof of the power of the individual (and there are a lot more great examples out there):

Eric Halivni (Toldot Yisrael) — Eric (Aryeh) realized that Israel lacked any archive of video testimonies of the people at any and every level involved in creating the State of Israel. Modeled after Steven Spielberg’s Shoah Foundation, Eric has single-handedly spearheaded the only mission of its kind is Israel: preserving these important stories for future generations. Congratulations to Eric upon recently completing his 100th interview.

Rabbi Y.D. Grossman (Migdal Ohr) — At the age of 21, Rabbi Grossman left Jerusalem for the development town of Migdal Ha’emek in the hopes of lending a hand. He soon realized that the residents’ social and economic problems could be traced back to childhoods lacking a warm and loving environment. Over 35 years later, Migdal Ohr services about 6,000 children in a wide array of formal and informal educational programs, schools, and foster homes.

If you think that poor, little you doesn’t have what it takes to spread your important message then listen to this story:

Eli Winkelman (Challah For Hunger) The founder met Bill Clinton on her college campus and told him of her project. Approximately, six months to a year later, Bill Clinton was on television show as part of a panel with other celebrities to promote the ideas of volunteerism and social initiative. While answering the question as to how one can take the first steps in starting his or her own initiative, Clinton answered that one should always “plays to their strengths.” He elaborated by telling the story of Eli Winkelman and Challah for Hunger to an audience in the millions, accompanied by orchestral music and video footage. He capped it off with his own tag-line for the organization, “Jewish girls, baking Jewish bread for Muslim children,” to thunderous applause from the other panel members and live audience. Click here to watch President Clinton.

It can happen. All you need to do is take that first step…

May we all take advantage of the personal strength that lies inside all of us. Shanah tovah and best wishes for a happy and healthy New Year.

Tizku LeMitzvot [May you continue to merit doing good deeds],

Shuey