Revealed: The Israeli Corporations Giving Generously to Charitable Causes - and Those Who Aren't

Israel’s big firms take wildly different approaches when it comes to giving back to the community, with the likes of Israel Chemicals and Bezeq bested by Banks Hapoalim and Leumi

One corporation makes NIS 19 million in annual charitable contributions. On the surface, that appears to be an indication of real generosity that will go a long way supporting nonprofit organizations and, ultimately, the people whom the nonprofits serve. Actually, however, it's small change for this particular company. That NIS 19 million was the amount contributed last year by Israel Chemicals.

Gauging whether we should be impressed or disappointed by the sum requires more objective standards. In recent decades, the general worldwide rule of thumb has been that companies should be donating at least 1% of their pretax profits. The figure has become the accepted guideline - the corporate equivalent of tithing - among companies for whom corporate responsibility is part of their worldview.

On that basis, how does Israel Chemicals' NIS 19 million stack up? It doesn't. Granted, it is a considerable sum of money, but it’s just 0.33% of ICL's pretax profit, placing the company in the lower ranks when it comes to corporate giving. By comparison, over the past year Bank Hapoalim gave NIS 48 million to charity (or 1.25% of its profits). Bank Leumi, meanwhile, gave NIS 32 million - 1.67% of its profits.

The people at Israel Chemicals know that the company's level of corporate giving has been relatively small, relative to other companies with which it would like to be compared. And it’s not easy for ICL to be perceived among the public as a company that makes a lot of money, in part from the country's public natural resources, but gives relatively little back to the community. ICL recently announced that it was taking major steps to change the situation. The company also noted that it is a global corporation and half of its revenues are generated outside of Israel.

"Nonetheless, most of its [charitable giving] is directed to the Negev, and just a small portion of it remains abroad," ICL added. "The company is currently in the process of developing a new corporate-giving strategy that will include a new budget category for community activity and a clear definition of how it is to be apportioned in Israel and around the world. That's in addition to the widespread volunteer activities of the company's employees."

The level of corporate giving in general in Israel is very low, says Momo Mahadev, the CEO of Maala, a nonprofit that promotes corporate philanthropy. "According to Maala's figures for 2012, the average corporate contribution is 1.2%, but it is skewed by the companies that give a lot offsetting those that give much less," he explained.

Food and clothing firms stand out among the companies that have contributed more than 1% of their pretax profits. Strauss was a top giver last year at 2% (a little more than NIS 10 million). Another food manufacturer, Osem, contributed 1.66% of its 2012 profits - NIS 7.9 million.

The country’s largest supermarket chain, Super-Sol (owned by the IDB group), gave NIS 4 million in charitable contributions, amounting to 1.63% of its pretax profits. Its competitor, Rami Levy, contributed 1.29% (NIS 1.9 million). Fashion retailer Fox donated 1.5% of its profits - NIS 1.6 million - while the Castro clothing chain gave 1.4% (just over NIS 1 million).

Some of the contributions by the food companies were given in kind - actual food rather than cash.

Yet for all its importance food is not what powers the nonprofit sector, although it does provide direct support to those in need. It provides the proverbial fish, but doesn't teach the needy how to fish, as they say. At Strauss, which made NIS 10.3 million of contributions last year, NIS 2.7 million was in cash; NIS 5.8 million was in food; and another NIS 1.8 million was in the value of the volunteer hours of it employees. The company's giving policy - set by a committee of six people from various levels of the corporate hierarchy - guides the areas of endeavor to which Strauss donates, and ensures that levels of support don't decline from year-to-year but, preferably, increase.

"We have decided on several fields in which we are working: investment in the advancement of women; diversity; and employment efforts," said Michael Avner, the Strauss Group's general counsel, who is also in charge of the company's corporate-giving program. "We view the organizations to which we contribute as partners in every respect, and encourage employees and managers to volunteer there to foster cooperation and mutual feedback."

In the midrange of the corporate-giving rankings are companies that sometimes contribute sizeable sums - mostly because they are large, profitable firms - but their levels of giving don't reach 1% of pretax profits.

Real estate developer David Azrieli was in the news recently over his annual corporate compensation package of NIS 23 million. Last year, his Azrieli Group made NIS 8.6 million in contributions, which was 0.8% of the group's pretax profits - and just a little more than the NIS 7 million salary of the company's CEO, Menachem Einan.

It should be noted that in its annual financial statement, the Azrieli Group announced that through May of 2015 it would be donating 1.5% of its annual profits to charity, up to NIS 14 million a year. This year could therefore see an increase in the company's charitable giving. In fairness, it should also be mentioned that there are those, even in the nonprofit sector, who object to any comparison between a company's level of corporate giving and the amount the firm's CEO is paid.

Telecommunications company Bezeq (up to about a decade and a half ago a government monopoly) gave NIS 11.7 million to charity in 2012, but that still represented only 0.6% of its profits. (Last year, the company's then CEO, Avi Gabay, had a compensation package of about NIS 4 million.) Bezeq spokesman Guy Hadas, who is responsible for corporate giving for the company's landline division (which constitutes the company's largest field of operations), said that until 2008, Bezeq lacked a clear strategy when it came to corporate philanthropy. The company realized, he said, that its philanthropic program had to go hand in hand with its business operations.

It now gives primarily to efforts to develop educational opportunities, and making communications and technology accessible to outlying areas of the country. A major portion of this effort comes through its support of Appleseeds Academy (the nonprofit known in Hebrew as "Tapuah"), which has built 14 educational technology centers around the country.

"The larger a company is, the harder it is for it to contribute sums required by the 1% rule," Hadas says. "We look at ourselves all the time in relation to both other companies and our financial statement."

The bottom section of the 2012 corporate-giving rankings was a surprise. The country's two largest banks, Hapoalim and Leumi, may be major corporate donors, but the smaller banks are not. Mizrahi-Tefahot gave its then CEO, Eli Yonas, a compensation package of NIS 8.2 million, but the bank's corporate philanthropy program gave away just NIS 6.1 million (0.3% of its pretax profits). The year before, the bank gave even less, NIS 3.6 million. The bank noted, however, that the data does not include the value of its employees' volunteer work in the community.

"The community involvement activity at Mizrahi is based in very large part on volunteering by employees of the bank," the bank explained. "In addition to the sum in our reports, 27,000 volunteer hours were contributed by staff and managers, which is worth another several million shekels."

Corporate giving figures for 2012 from First International Bank of Israel (also known by its Hebrew moniker, Beinleumi), are not overly impressive. While its CEO, Smadar Barber-Tzadik, earned a wage package costing NIS 5.2 million, the bank gave just NIS 2 million to charity (0.35% of its pretax profits). In 2011, the bank gave away more, NIS 3 million, but would not comment for this report. Israel Discount Bank gave NIS 6.5 million (0.54% of its profits). Although that didn't come close to the 1% benchmark, it far exceeded its CEO's compensation package.

Elsewhere in the corporate sector, some companies don't report clearly the extent of their corporate giving. A particularly modest showing among companies that did report, however, was made by Menora Mivtachim, the insurance and investment group. It reported NIS 303,000 in contributions to the community last year, just 0.09% of its pretax profits. By contrast, its competitor Migdal Insurance exceeded the 1% benchmark, giving away about NIS 4 million, or 1.1% of its profits.

The Dead Sea Works potash fertilizer manufacturing plant belongs to Israel Chemicals.
Bloomberg
Eliyahu Hershkovitz