The Jewish community is highly committed to philanthropy, which is the reason why the many Jewish nonprofit organizations that exist today operate from donations. It’s important to note that many Jews donate regardless of their economic status. According to the data from Giving USA, the average Jewish household donates about $2,500 a year to charity.
With support like this, it’s no wonder that Jewish nonprofits work in a broad spectrum of causes. However, some of the Jewish community leaders of today advocate the addition of impact investing to the ‘traditional charity model.’ Simply put, they encourage some of the sponsors to invest their money in foundations or businesses that promote causes they support personally. This shift in the community’s approach to charity can make a big impact on the world as a whole.
A Look at the Philanthropists Supporting Jewish Nonprofits Today
At the moment, the majority of organizations that preserve Jewish heritage and promote Jewish values are fueled by philanthropy. This means they receive all (or most) of their funds from donations. Even the Jewish Museum in NYC was built and is now maintained by sponsors, patrons, and members’ donations. The names of those who made a contribution and joined their Heritage Society are immortalized on their Wall of Honor.
Judging by the condition of this memorial, the current system works quite well. A variety of Jewish nonprofits in the US can offer more proof of that. This means that there is no pressing need to change the charity system of today. More importantly, even the advocates of the change openly state that impact investment isn’t a replacement for donations. There are some causes supported by nonprofits, which are unviable for businesses. This means that philanthropy is the only way to fund them, and those causes must be funded as they provide support where it’s needed most badly.
Impact Investment for Making More Good with the Nonprofit
Instead of being a replacement for charitable donations, impact investments should be considered as a new way for the Jewish community to become more active in bettering the world. These investments can give money to the businesses that promote causes, which are worthy and lucrative both. For example, making an investment in green energy or contributing to foundations that provide loans to disadvantaged populations. The purpose of impact investment is to make an impact that will further the social good.
Today, Jewish nonprofits could be using a part of their endowments to make this type of investments over traditional ones that aim to generate more income. This way, the money that goes to charity makes an immediate difference in the areas where it is needed. And while this kind of investment might bring lower returns, it will be making an impact regardless. Therefore, the nonprofit will be doing good for several causes.
This is the idea behind revolutionizing Jewish nonprofits as they operate today and begin diversifying them. However, it’s yet to gain momentum due to a number of challenges. The biggest ones are educating the Jewish community on impact investment and developing effective investment strategies.
One also needs to understand that impact investing cannot be a solution for all Jewish communal problems. However, it can definitely provide a great boost to the younger generation through funding of startup businesses.
This method also offers an outlet to philanthropists who seek to take a more active part in changing the world. This is where they can see how their donation/investment makes an impact immediately and the changes it makes on a global scale. This is also a great opportunity for like-minded individuals to come together and literally revolutionize some industry with their combined investments and donations.