A woman walks near high-rise buildings in the hi-tech business area of Tel Aviv.
(photo credit: REUTERS/AMIR COHEN)
Like millions of other people, I recently celebrated Israel’s 70th birthday. The event gave us all a moment to pause and think about where we came from and, perhaps more importantly, where we are going as a nation.
The creation of the State of Israel was made possible in large part by volunteers and philanthropists.
The volunteers left their countries of birth in the 19th and 20th centuries to come here to build roads and settlements in rocky fields and on desert sands. And the great philanthropists of the time – Rothschild, Montefiore, Hirsch and Strauss – whose names appear widely on streets, squares and traffic circles in Israel today – provided the funding to make it happen.
In those days, philanthropic families made their fortunes in banking and real estate.
Over the past 70 years, a new breed of philanthropists has joined the fold: hi-tech entrepreneurs.
The big hi-tech moguls of the 21st century, owners of the leading global giants in the past decade, made great strides donating their accumulated wealth for the good of society. Mark Zuckerberg announced that he plans to donate 99% of Facebook shares to education reform and fighting disease. Bill Gates donated billions of dollars over the past few years, and Steve Jobs’s widow established a grant and scholarship fund for educational initiatives and initiatives in other fields.
Also here in the Start-Up Nation, many hi-tech entrepreneurs who manage large companies are giving back, using their expertise as well as their wealth to establish community-based nonprofit organizations and associations to benefit underserved sectors of society.
ENTER SOCIAL businesses. Social businesses introduce a new form of capitalism, a business model that does not strive to maximize profits but rather to serve humanity’s most pressing needs. Although the social business is pioneering in its aim, it is traditional in its management.
Instead of just buying goods or donating money, a social business is like giving a fishing rod to the social sector it serves and to the country in general. Social businesses promote a wide range of social goals on the one hand, and on the other hand produce a wide range of useful and affordable products and services, which are appropriately priced and sold.
Many of the social businesses around the world and in Israel aim to provide jobs for individuals whom the labor market is unwilling, or find it difficult, to accept. The social business mobilizes them, provides them with skills and training required for the employment market, and employs them in a respectable and fair workplace. Thus, it removes or minimizes their dependency on National Insurance Institute stipends and welfare services, and reduces the assistance that the family members surrounding them are required to provide.
When I retired from my role at NICE and joined my two partners in establishing IVN, we chose to set up a social investment organization comprised of different investment funds to support a broad portfolio of diverse social businesses. We chose to focus on employment for people with disabilities, youth at risk, ultra-Orthodox men and other disadvantaged populations. After almost 20 years, IVN has supported over 50 social businesses which have benefited over 50,000 people.
Nevertheless, the number of social investment funds is still significantly lower than that of philanthropic investment funds. The direct result is a “fourth sector” that is too small. It is estimated that the total number of social businesses in Israel today is disappointingly less than a thousand.
In the 70th year of the state, philanthropy must take a step forward, and hi-tech entrepreneurs should help Israel align itself with the world, with countries such as England, Australia and Germany in mind, where a fourth sector exists and contributes significantly to solving social problems on the one hand and reducing government spending on the other.
A stable fourth sector requires appropriate regulation, stable investors, incentives and benefits for social businesses – exactly the same conditions that hi-tech entrepreneurs are accustomed to getting from the huge businesses they have established.
I urge my fellow hi-tech entrepreneurs who invested their energies in turning Israel into the Start-Up Nation to divert some energy to closing the gaps in Israeli society. Don’t just give away money; invest in social investment funds and use your business skills to teach social entrepreneurs to build businesses that help develop the economy of challenged regions in the country, provide employment to marginalized populations, and assist in the development and social advancement of the State of Israel, the next Social Start-Up Nation.The writer, one of the founders of NICE, is chairman of Israel Venture Network, a nonprofit impact investment organization leading the development of Israel’s social business ecosystem. He was recently chosen as one of the 70 leading hi-tech entrepreneurs in Israel.