Earlier this month, it was announced that Israel currently has 71 billionaires, placing it second in the world in the number of billionaires per capita. The increase in the number of the affluent is directly affected by the transformation of Israel into a “unicorn” superpower, with about 60 companies worth over $1 billion. Today every 10th “unicorn” company in the world is born in Israel.
The number of local donors in Israel has grown in recent years, but this but it is not proportionate to the dramatic increase in the number of wealthy people in the country. While the socioeconomic gaps in Israel are widening, it seems that there are still not enough philanthropists who are willing to actively go under the social gurney and help promote under privileged communities, helping to create social mobility and an overall better social and physical environment to all.
Beyond social responsibility and global philanthropic trends, which Israel should join, the question arises: what can help incentivize Israel’s wealthy to take part in improving and advancing the society in Israel? From studies, it appears there are two main barriers that stop philanthropists from investing in social causes: trusting the state and the public overall perception of philanthropy as serving the interests of the financiers.
On the issue of trust with the state, financiers often perceive the government and its officials as brokers, acting slowly and in the service of political interests. In actuality, however, many third sector organizations in Israel seek to use the donation funds to impact exactly where the state finds it difficult to help or acts too slowly. Moreover, there are currently 15 municipal funds operating in Israel, which work for social advancement in municipal authorities, endowed with the knowledge and ability to manage land, education and welfare infrastructures. These foundations know how to use the donations to answer the exact needs of the residents and give a power multiplier in the form of urban “matching,” with every shekel donated by the local authority adding a shekel from its own budget.
Regarding public perception, every philanthropist should use their money to advance personal goals that are important to them, but of course, in ways in which he or she may influence and truly create immediate and long-lasting change. The developing impact world has measurable tools for the success of investments and social donations, which can help any foundation or individual verify that their funds can make a real difference.
The state, for its part, needs to develop tools and tax benefits that will encourage more affluent Israelis and those newly wealthy to help with funds that will be donated to Israeli civil society. For example, Finance Minister Avigdor Liberman’s initiative to impose inheritance tax can also contain tax benefits relating to the transfer of some of the inheritances for the public good. It is also appropriate that those who donate will be commended for doing so.
The previous decades, which have been devoted to making Israel the Start-Up Nation, are now yielding benefits and Israel’s new rich are becoming the leaders of the new economy. Alongside their leadership in innovation and development, I suggest it is also their time to take part in affecting and developing social change, helping create a more equal, pluralists society where mutual responsibility leads the way.
The author is the CEO of the Tel Aviv Foundation and founder of the Urban Funds Forum in Israel.