Investing, Not Donating: Updating How American Jews Give to Israel

Should American Jews think differently about where they send their money in Israel now the Jewish state is far less the 'poor relative?'

When I think about the stories I've heard about my great grandmother, an immigrant from Russia who settled in New York in the late 19th century, as well as my memories of my grandmother, philanthropy was a dominant part of their life. The stories were never focused on whom they helped or what cause they funded but rather on the practice of giving and the social events surrounding that giving. Their philanthropy, their giving, was a "given" - a major part of life.

As a child growing up in Israel, our meetings with the American side of the family upon their visits here usually coincided with their "missions." Only as a young adult did I realize that these Jewish-community organized tours were a modern manifestation of my great grandmother's and my grandmother's philanthropic ventures.

After a few years of trying to get a rational explanation from my U.S. cousins about why they still bother to continue their involvement with Israel, what it is that brings them and the next generation to Israel time and again, I realized that the explanation is probably best expressed in the voice of Tuvya singing the song about "Tradition" from "Fiddler on the Roof." Though this realization made me proud of my family, it also troubled me that their behavior was not entirely rational.

When I insist on rationalizing Israel-oriented American philanthropy, the best explanation I can come up with is that Israel as the Jewish state, the Jewish homeland, reflects greatly on the way Diaspora Jews are perceived. In the days of my great grandmother and grandmother this meant helping to achieve the Zionist dream, incorporating the basic notion that if you have very poor relatives and you do not help them it reflects upon you. Inertia alongside "tradition" probably plays a major role in why Jewish communities continue to support Israel to this day - even though Israel is no longer that poor.

Most American Jewish philanthropy is spent in America on U.S. needs and causes while some goes to third world countries. Though only a small percentage of the total reaches Israel, it is still a lot of money. It is likely that most of the donations are funneled through the well organized and experienced Jewish Federations system.

On top of that, $35 billion is invested by American Jews in Israel Bonds that have a 3-5 year lockup period. This is not a bad investment, but it is perceived and marketed as a "social investment." Once upon a time, long long ago, when Israel was hard pressed for foreign currency, this was a "social Investment." Nowadays, when Israel's government has no problem raising the funds it needs on the open market, it is not really clear why this is a good practice. It probably makes sense for Israel to keep the momentum going even just for the sake of a possible rainy day, but why would my cousins chose to park their money there?

If you compare Israel Bonds to an investment such as Hadasit (owned primarily by Hadassah Women) it's easy to see the difference. Investing in Israel bonds supplies funds to the general budget of the State of Israel, while investing in Hadasit or its subsidiaries makes funds available to start-ups developing new medical devices and pharmaceutical products in Hadassah Hospital in Jerusalem. Both investments help the State of Israel. But whereas Israel bonds carry very low risk, alongside a very minimal rate of both financial and social return, investing in Hadasit has a high impact on development of biomed products, providing better hospital care in Jerusalem and offering the possibility of a very high financial return even while being a very high risk investment.

My rational self, an investment professional at that, would argue that as far as logic goes wouldn't it make a lot more sense for someone sitting in the States - sending money to Israel either as philanthropy (with no financial return) or as a social investment via Israel Bonds (low return/low impact) - to prefer investing in Israel via its multiple startups in areas such as biomed, cleantech, security, advanced telecom technology and so on, helping to strengthen Israel's economy, create jobs, advance the Jewish dream of a start-up nation while generating a personal financial profit?

My emotional self, a fourth-generation philanthropist, would argue that though this is rational, it is not part of our heritage. But what about the acknowledgement that the reasons for giving have to change now that Israel is a member of the OECD and no longer a backward third world state?

Some might choose the rational outlook of investing in the "start-up nation," some might keep trusting the Federation system to make sure their dollars are funneled to worthy causes. Some wish to keep Jewish orthodoxy alive and kicking by giving tzedaka to yeshivas and similar institutions, while others might want to invest in organizations such as NIF that are dedicated to upholding Jewish humanistic values and strengthening its democracy.

Both my rational and emotional selves are proud that my family together with so many other American Jews are part of this tradition that preserves our common ground for generations down the road.

Elah Alkalay is the VP Business Development for IBI Investment House Ltd. and serves on the board of directors of The New Israel Fund and a business incubator dedicated to helping women economic independence through the creation of small businesses.  

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