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The Shekel Before the Storm GA Magazine / Shallow Pockets By Ruth Sinai Tags: GA, jewish world, Israel news Full coverage of the 2008 GA conference The annual conference of Civic Leadership, an umbrella organization for Israel's third sector, was supposed to take place next month at Kfar Maccabiah, as it does every year. But after executive director Yaron Sokolov was unable to get concrete commitments for funding there, he decided to move it to Tel Aviv University. "Most of the groups are putting things on hold," says Sokolov. "Businesses I'm in contact with are not making decisions. They aren't saying that they won't give, but they're waiting until the situation settles in early 2009. Among other things, they want to see whether the crisis has already hit rock bottom." Advertisement Many of the third-sector groups that rely on donations - about 20 percent of voluntary or nonprofit groups - are saying the same thing. Local nonprofits expect a decline of 15 percent to 20 percent in the number of donations and grants in 2009. The nonprofits most vulnerable to the financial crisis are those that rely solely on donations and those that depend on foreign funding. Social advocacy groups are especially exposed, since their main source of funding is foreign foundations. Some NIS 5 billion of donations to nonprofits comes from the United States, NIS 1.2 billion comes from private donors in Israel, and between NIS 8 billion and NIS 9 billion comes from foundations and businesses, according to the Bank of Israel. Eighty-eight percent of Israeli nonprofits view foundations as the best source of funds, according to a survey by the Israel Center for Third-Sector Research at Ben-Gurion University.But most foundations have suffered from the financial crisis. Cash flow problems After several years of growth and prosperity, the nonprofits - about 10,000 of them, according to the center's estimate - have been confronting one crisis after another in the past year and a half. The first was the decline in the dollar exchange rate. Nonprofits that rely on donations from abroad planned their 2008 budgets according to a rate of NIS 4 and even NIS 4.2 to the dollar. In fact, the rate declined to below NIS 3.5. "Some of the organizations deluded themselves into believing that the crisis was temporary, because they had never experienced such a decline in the dollar ... When it turned out that the crisis was not coming to an end, they found themselves with a serious cash flow problem," says Sokolov. Even nonprofits that receive most of their income from the state coffers, such as those that care for people with disabilities, were harmed. This was due to an increase of 20 percent or more in the prices of food and fuel, for which they did not receive state compensation. The fact that the state budget for 2009 will probably be approved only after the elections will not make things easier for any of these organizations. Many of the nonprofits will end 2008 in the red and are liable to find themselves starting next year without enough money to pay salaries and rent, or to fund services and projects. Most of the foundations have promised to meet their obligations for this year, but are refusing to commit themselves for 2009. "The uncertainty is difficult and organizations are being forced to freeze projects and to plan reductions," says the deputy director of Yedid, the Association for Community Empowerment, Yuval Elbashan. "For example, we don't know whether to sign a leasing contract in a certain place. When I explained that to the donor, he said that he understood, but wouldn't know anything before January." The fears and uncertainty are making it difficult for nonprofits to deal with the increase already being seen in the number of those in need. At Yedid, the number of requests increased by 20 percent in July and August. In a letter to the ministers of justice, housing and finance, deputy director Ran Melamed wrote that an increasing number of those turning to them are people who have received eviction notices because they did not meet their mortgage payments. Turning to the wealthy Dudi Zilbershlag, the founder and director of Meir Panim, one of the largest nonprofits in the country, which helps donate food and arrange children's clubs and employment, was forced this year to cut NIS 16 million from a budget of NIS 47 million and to dismiss 34 employees. After the publication of an article about these difficulties, two bank directors contacted Zilbershlag and informed him that they were reducing his credit framework in light of the figures. The crisis will put pressure on Israel's wealthy to open their pockets. Atar Razy-Oren, the director of the Center for Philanthropy at Sheatufim, The Israel Center for Civil Society, says at least 8,200 millionaires live in Israel, but there are only about a dozen family foundations. Civic Leadership proposes setting up a joint foundation with the government, like the one established in the U.S. after Hurricane Katrina - anyone who contributed to it would receive a higher tax exemption. Such a foundation would make it possible to give interest-free loans and grants to organizations in financial straits. Full coverage of the 2008 GA conference Bookmark to del.icio.us   The King is dead Archeologists find new evidence for King Herod's tomb site. Al-Hasbara Israel launches Arabic YouTube channel to bypass Arab media.

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