The Strong Shekel Is Weakening Israeli Nonprofits – and the Problem Isn’t Going Away

The greenback has gone from 4 to nearly 3 shekels in recent years, but many donors don’t notice when they write their checks to Israeli nonprofits in dollars

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$100 bills with 200 shekel notes: Unlike in the image, the shekel has been on top for a while.
$100 bills with 200 shekel notes: Unlike in the image, the shekel has been on top for a while.Credit: grafnata/

Racheli Edri popped a champagne cork and celebrated when the New Israel Fund, a high-profile civil society group, pledged to raise its annual support for her small nonprofit organization from $40,000 to $50,000.

That was in early 2020. By the end of 2021, her happiness had turned to disappointment and worry.

By the time the money had made its way to the group she leads – the Movement for Freedom of Information – the dollar’s value against the shekel had fallen so low that she was receiving less support from the New York-based New Israel Fund than she had the previous year.

This punch to Edri’s gut wasn’t unique. As leaders of Israel’s extensive network of nonprofits closed out their 2021 budgets, the ramifications of the shekel’s impressive run against foreign currencies – particularly the dollar – became clear. Fixed annual dollar donations, or even slight increases, that were pledged months or years earlier translated into substantially less money in shekels.

The dollar last topped 4 shekels in early 2015, and by last autumn had fallen to 3.1, where it has remained this winter, buoyed by Israel's high-tech economy. Hopes that it would level out have been foiled, and those who planned based on the greenback are feeling the pain.

“It’s simple math,” said Don Futterman, founder and CEO of the Israel Center for Educational Innovation. “The philanthropic support we get comes in dollars but then gets translated into a shekel budget. We’ve been constantly readjusting our budgets and income projections vis-à-vis our expenditures. It’s something we’re forced to monitor so that we don’t find ourselves in a deficit.”

Such problems come as nongovernmental organizations are already coping with the fallout from the COVID-19 pandemic, which squeezed donations while in many cases needs increased and expenses rose.

“We have five workers on salary – every shekel counts,” Edri said. “I really don’t want to have to fire an employee because of the value of the shekel.”

The New Israel Fund supports a long list of NGOs in Israel. Its director in Israel, Mickey Gitzin, said that groups used to budgeting in dollars are now forced to “immediately move their entire budgets from dollars to shekels, and ask foundations and others to think in shekels instead of dollars when they make their grants.”

Racheli Edri, who heads the Movement for Freedom of Information. Credit: Tomer Appelbaum

Hedge your bets

Conversations about this bite into income is going on everywhere in the Israeli nonprofit world, said Dan Tadmor, CEO of the Museum of the Jewish People.

“We certainly have felt the crunch,” he said. “In recent memory the dollar was close to 4 shekels and is now nearing 3. That’s a steep drop in a short amount of time.”

The museum is lucky, he said, because it has already received most of its funds for a major revamp.

“If I were launching a big development project now dependent on a dollar donation, and a 10 to 20 percent drop in value was something I couldn’t afford, I would do something to hedge my bets,” he said.

True, there are insurance policies that can hedge for large nonprofits, for which currency fluctuations can mean hundreds of thousands of dollars. But these policies are beyond the budgets of small organizations, and Tadmor says he would feel uncomfortable spending money on pricey financial tools. “We’re not foreign exchange traders, after all – we’re a museum,” he said.

Futterman noted that organizations that were around for the global financial crisis in 2007 and 2008 are better equipped for the current challenge. Since then, his group has made sure to maintain rainy day reserves “so when things like this happen, we can cover the shortfall.”

In fact, the 2008 experience was more traumatic. “It happened much faster – it was far more sudden and unexpected and felt like a crisis,” he said. “By contrast, the currency valuation drop has been taking place slowly over a longer period of time. It has just been creeping down.”

The fact that it set in during the coronavirus crisis actually has its positives, Futterman says. Many donors have shown extra largesse because of the greater needs during the pandemic. And unlike in 2008, the stock market has remained strong so donors can be generous.

New Israel Fund Director Mickey Gitzin.Credit: Tomer Appelbaum

Liora Asa, an NGO consultant and lecturer on philanthropy and fundraising at the University of Haifa, agrees. “In 2008, the foundations were really in pain,” she said.

“This time around, they’re more equipped to help: the foundations are in a much better place. The stock market is strong, the donors’ foundations are feeling good – they were asked to give more during the coronavirus and most responded and did so.”

Still, Futterman noted, resources in the Jewish community are stretched and Jewish philanthropy dollars are staying in the United States “because of the huge increase in needs there. So there is less to go around.”

Asa said her best advice for the organizations she works with is to keep their expectations low. “I tell them to be very conservative regarding their expected income, to plan on the lowest exchange rate, and not to be optimistic,” she said. “They will have less money to work with than they thought.”

The smaller and more dependent a group is on foreign donations, the more it feels the pinch, she added. On the other hand, the smaller organizations are more flexible and used to sufficing with less money and lingering uncertainty, while some of the larger and more established groups have gotten “accustomed to a certain amount in their budget.”

“The smarter organizations started to make the adjustment a year ago, but others waited, expecting the rate to bounce back. And many got a rude shock when looking at their year-end reports and are realizing they’re at a deficit,” Asa said.

Hopes of the dollar rebounding are beginning to wane, executives say.

“Even in 2008, after the initial shock wore off, people realized they could just wait it out – the dollar could go back up,” Futterman said. “Now we’re not so sure that will happen.”

Tadmor has a similar take. “This is something we’re going to have to get used to: it doesn’t seem as if the shekel is going to weaken anytime soon,” he said. “This problem is likely to be with us to stay.”

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