Written by Shahar Botzer and Yoel Cheshin for the JFN Convention in Israel, March 2015

With the reduction in the welfare state and the ability of Israeli governments to solve social issues in the past decades, new forces have emerged in civic society trying to address these issues. Over the past decade, the social sector has experienced such dramatic growth that it now has a turnover of over one hundred billion shekels. It employs 430,000 employees, and to a great extent, it has replaced the government of Israel in entire areas of social welfare and responsibility, and in promoting social rights and maintaining the values of social solidarity and mutual support.

To understand the danger the social sector is nonetheless facing, we must remember a significant proportion of the capital that drives this sector is philanthropic. Philanthropy is based on charity and grace, or the citizens’ good will. Philanthropy does not have the required commitment, stability and range to solve social problems as the state’s welfare system once did. The social sector requires continued investments over many years, but philanthropy only provides a short term, erratic cash flow. The incompatibility between the social sector’s funding needs and reality is the leading impediment to the social sector’s ability to operate efficiently and consistently, and to continually expand its scope.

The solution for this state of affairs is developing mechanisms to provide independent income to social organizations, either by providing services to state authorities or by establishing social businesses. Such moves, that liberate the social organizations from the need to raise funds in favor of creating fixed sources of income, should be welcomed, but the data indicate that this is not enough. While in the USA and Scandinavia, which represent diametrically opposed social-economic worldviews, the social organizations’ rate of independent income is about 60%, in Israel it is only 32%. These figures leave no doubt: we social entrepreneurs must develop more and more mechanisms and more and more businesses to transfer capital to social causes sufficient to lower and reduce the social organizations’ reliance on philanthropy. We social entrepreneurs must very seriously think business.

Seeking a strategy to penetrate the realm of business thinking and action, we have established 2B-Community, an investment fund that will provide the initial equity to create what we call community corporations. These are corporations that will allocate their profits to social causes and recruit consumers to make choices based on their social commitment. Our role will be to generate synergy and a competitive edge to entrepreneurs, social organizations and investors, who will gain both financial and social returns. Our vision is that in a few years, the business world will include dozens of stable and profitable community corporations allocating a substantial part of their profits to promote social causes. We believe that realizing this vision will lead not only to the needed change in the social and business sector, but to the creation of a major global social movement.