Institutions seeking financial support from the Jerusalem Foundation will have to require their employees to live in the capital - or at least this will be one of the criteria. The foundation, set up more than 40 years ago by the mayor at the time, Teddy Kollek, supports theater, festivals, dance and schools for the arts with an NIS 8 million annual budget.

One of Jerusalem's major problems, say foundation officials, is that while the capital has an abundance of schools of art, music, drama, photography and cinema, most graduates leave for Tel Aviv and its environs once they get their diplomas.

The foundation recently discovered that in many cases it has been supporting groups most of whose employees live outside Jerusalem. "We have decided to place a greater emphasis on the question of residence as a result of the negative balance of migration from the city," said Eyal Sher, the head of the foundation's arts and culture department.

"The institutions in Jerusalem have a few hundred graduates a year, and the question is what does the city have to offer them in terms of cultural happenings and employment. The decision is meant to give incentives and support to those who choose to stay in the capital."

The foundation stresses, however, that it will not be totally hard-line. "We will not stop the creative dialogue with the rest of the world, but there is definitely a very clear message that the foundation wants to develop culture in the city," said Sher. "This isn't patriotism, it's seeing a problem and trying to solve it."

The new criteria on where employees live will also apply to the managers of the city's cultural institutions. For example, the new executive director of Jerusalem's Khan Theater, Danny Weiss, has been asked to move to the capital within six months.

But most of the theater's actors will continue to live in Tel Aviv, along with artistic director Michael Gurevitch. Some of the theater's rehearsals even take place in Tel Aviv.