Overview of the Philanthropic & Nonprofit Sector in Israel
Overview Of The Nonprofit Sector And Philanthropy In Israel
Israel is a country with a vibrant non-profit sector. The Israeli NPO sector, known locally as the “third sector” (the first two sectors are the business sector and the public sector), has 36,000 active registered non-profit organizations. These organizations work in all areas and populations of Israeli society and address a vast range of issues: religion (25%), education and research (20 %), culture and recreation (17 %), welfare (15 %) environmental protection (1%), human rights and international aid .
The Israeli NPO sector has grown dramatically since the early 1990s. Much of this growth has been fueled by the privatization of public services, which has led to a transfer of responsibility for the provision of social services to the business and nonprofit sectors. Israel’s non-profit organizations have become major suppliers of social services, taking on many roles and activities that were traditionally performed by the government. These organizations often go beyond traditional welfare related roles. Some have become leading players in researching new approaches and methodologies, and in pioneering innovation around service provision.
The Israeli NPO sector is considered to be one of the largest in the world in terms of contribution to the nation’s GDP and the number of people employed. The NPO sector added over 67 billion NIS to the Israeli economy (5.3% of GNP) in 2015. The total income of the NPO sector amounted to 137.4 billion in 2015, with the majority of the funds originating from the public coffer. Half of the total income came from government transfers, mostly to organizations in the fields of health and education. A third of the total income came from the sale of services to the government and private sector.
Nearly 15% of all income to the Israeli NPO sector in 2015 came from donations from Israel and abroad. Historically, Israel was perceived as a collective responsibility of the Jewish people and funds were contributed by Jewish communities throughout the Diaspora to help build the infrastructure of the Jewish State. Most of the funds were collected by local Jewish Federations in the US and distributed to Israel through intermediaries such as the United Jewish Communities, the United Jewish Appeal and the Jewish Agency for Israel .
While the majority of donations from abroad still originate in the United States. in the last few decades a direct engagement model emerged alongside the federated giving model. A younger generation of American Jews developed new frameworks for funding that expressed their own priorities. They espoused a realistic rather than idealistic orientation toward the Jewish State  and a more strategic philanthropic approach. They also introduced a management culture that sought clearly defined objectives and the ability to measure the effectiveness of their investments.
In addition to the funds that arrive in Israel through the Jewish federated systems, there are now an estimated 1,500 foreign foundations directly funding nonprofits in Israel. These include hundreds of Jewish foundations whose main funding activity is in the US, with some donor-advised giving in Israel, and a number of international foundations and governmental bodies, such as the European Union and USAID, that specialize in cross-country support. Amongst Israel’s largest philanthropic foundations are endowment-based foundations such as Yad Hanadiv and the Rashi Foundation, which are formally registered abroad, but primarily active in Israel. Several major organizations, such as JDC, Taglit-Birthright and the Avi Chai Foundation, both finance and develop their own projects, while partnering with local nonprofits, corporations and government agencies.
With regards to Israeli philanthropy, the Merrill Lynch Wealth Index estimates there are 10,000 households in Israel with at least one million USD in liquid assets. Research from the Boston Consulting Group ranks Israel in the tenth place among the 15 countries in the world with the most millionaires as a percentage of the number of households (84,000 millionaire households, representing 3.8% of the population). However, only 1,500 Israeli funders donate more than $25,000 annually. Philanthropy is not a defining characteristic of the Israeli elite and the tax incentives for giving are minimal as compared with the U.S.
According to Committed to Give, an organization which seeks to promote Israeli philanthropy, while the rate of private philanthropy in Israel barely reaches 0.6% of the GNP (compared to 1.7% in the U.S.), Israelis’ rate of giving is greater than what is commonly thought. The share of philanthropic activity funded from Israeli sources has significantly grown in the last decade and the lack of substantial private donations is compensated by an abundance of small-scale donations from the general Israeli public. In 2006, 33% of philanthropic funding came from Israeli sources and the rest from abroad. By 2013 this number grew to 40% and in 2015 over 50% was provided by Israelis. 65% of domestic Israeli giving is from households that give less than 100,000 NIS ($26,000) per donation, with an average of $85 per gift.
There are over 6,000 foundations registered in Israel whose main function is funding, of which only about 60% are considered to be active. It is more common for foundations registered in Israel to give grants to individuals (scholarships, financial assistance) or a particular institution (hospital, university, museum), whereas foreign foundations have a greater tendency to support social change organizations and causes that fall outside the national consensus. Foreign funders are the driving force behind nonprofits that work to advance the rights of minority populations, religious pluralism within Judaism, women’s empowerment, LGBT rights, peace building, etc. As most of Israel’s human rights organizations rely heavily on external funding (often as much as 90% of their income comes from donations, mainly from Europe), recent regulatory initiatives such as the bill to restrict foreign funding of politically-active organizations which are critical towards government policy are creating new challenges for these organizations.
Career Paths and Areas of Employment:
According to the Central Bureau of Statistics, 470,000 people, representing 13.9% of the entire Israeli workforce, were employed in the non-profit sector in 2015.
The third sector workforce is relatively young and well educated. Most employment is concentrated in the central region (Tel Aviv and Jerusalem). Non-profits generally offer lower salaries than parallel positions in the corporate world. Studies estimate the average nonprofit CEO salary at NIS 17,047 gross. However, a survey of the top 90 earners by Guidestar published in Haaretz shows some managers earning a salary that is competitive with the business sector (between 1 to 1.8 million NIS gross in 2013).
Senior non-profit positions are highly competitive, and opportunities are advertised relatively infrequently. Most senior non-profit positions are procured through connections, word of mouth, and executive recruitment services.
Breaking into the non-profit sector for an English speaker often involves various aspects of fundraising. This field is in great demand and offers relatively high remuneration packages for experienced professionals. An experienced Director of Development can earn a salary similar to the senior managers of the organization. Grant writing is another field with high demand for English speakers. Writers can usually work either in salaried positions or as freelance consultants.
In recent years, the Hebrew University, Haifa University, Ben Gurion University and various colleges have started offering career-focused graduate programs in non-profit management. General MBA degrees are also an asset as many funders demand, both from themselves and from their nonprofit partners, transparency and reliable measurement and evaluation processes that are customary in the business world.
Guidestar Israel – Financial reports and top five salaries of most Israeli NPOs
Midot – Analyzes and rates NPOs
Sheatufim – Knowledge index with resources on various topics (Hebrew)
Shatil – Resources for and about social change organizations (Hebrew site has more resources)