"There are very few real philanthropists in Israel"

Eli Elalouf, CEO of the Rashi Fund thinks the government is not doing enough to help needy escape a life of poverty. He told "Globes" why.

Eli Elalouf, 62, CEO of the private family fund The Rashi Foundation for the past 13 years, is a sort of small-time education minister. The fund he manages, which is the most active and dominant in education in Israel, invests hundreds of millions of shekels (together with private investors and the government) in projects across the country.

Of this sum, NIS 4 million is invested ever year in nutritional projects, the fund's flagship venture, which provide hot meals to tens of thousands of needy children. But this is just a small part of the fund's investments in education, welfare, and health, since 30% of its budget, the portion contributed by government ministries (Education, Welfare, Health, local authorities and the Ministry of Defense), is invested in its entirety in these areas. The rest of the budget comes from funds and donations. Elalouf estimates that up to 300,000 children benefit from Rashi's investments.

Elalouf, who was appointed to his post through his acquaintance with the Rashi Foundation's founder, Gustave Leven, a French Jewish businessman whom he met while serving as a Jewish Agency emissary in Geneva, has an interesting life history himself. He arrived in Israel from Morocco 40 years ago, as the ninth of ten children of a widowed mother who brought up her children on her own. He arrived in Beersheva in the mid 1980s when he was sent there to set up the Jewish Agency's neighborhood regeneration project, and has lived in the city ever since out of ideology.

The Rashi Foundation offices are located in a refurbished building in the Ben Shemen Youth Village, whose restoration was given a European touch costing hundreds of thousands of dollars. Elalouf's office, which focuses principally on initiating projects and finding partners to back them, is located where the laundry once was. The idyll of the youth village is shattered by the noise of aircraft from the nearby airport, and Elalouf's strong views on the little that has been done to tackle child poverty. "We should realize that a child means endless investment, our system is not investing enough in development," he says.

Using proceeds from gaming to build schools. An educational message?

The central problem that Elalouf points to is young people who join the army with no matriculation certificate, a problem that affects 50% of high-school pupils in every school year. "Most of the time, our investments are for the short-term," he explains. "A child who leaves school with no matriculation certificate will have a low income. In other words, if we simply increase the number of pupils leaving school with matriculation certificates, we will also increase the level of income. This is not just a matter of people having more money, but of making them abiding citizens.

"Today, to help more children graduate with matriculation certificates, we are investing $7,000-10,000 per child. Children who never dreamt they would complete their matriculation are doing just that. This can be expanded on. It is an economic investment in every respect, since an investment of no more than $10,000 can free a young person after army service from dependence on support systems such as National Insurance, and instead turn him or her into a part of the system that generates resources. Failure in studies makes a person totally dependent on the state. Spending on National Insurance support payments has already exceeded NIS 50 billion, and this sum will just keep rising at an alarming rate."

Globes: What should be done differently?

Elalouf:94% of government budgets in education and welfare are earmarked upfront for salaries and standing commitments. This does not allow any development, not even to cover natural population growth. Nearly 50% of the development budget for classrooms comes from lottery proceeds (Mifal Hapayis. D.B.). Is that the educational message we want to give? That we need gaming so that we can build educational instutions in the country? The development budget of the Ministry of Welfare, which has to assist an ever increasing number of people, is virtually nil. There is no development budget. We have set up three boarding schools, with almost no funding at all from the ministry's budget for building, but there are no maintenance budgets either."

Given the current economic realities, isn't Mifal Hapayis a legitimate source of revenue?

"I never gamble. I did think that it would be a good idea to have a subscription to the Mifal Hapayis, as a contribution to the community, but not to have the entire educational and cultural system based on it and nothing else. In any case, the management of it is very biased. Even the scandals connected to the Mifal Hapayis have not yet been rooted out. I cannot understand why the Mifal Hapayis should be building classrooms. That is a terrible message.

"In the US, for instance, gambling is not state sponsored but a matter of private initiatives. The Monte Carlo casino keeps the whole region going and that's fine, but these are not suitable values for the Jewish state. I know that what I'm saying does not make sense financially."

How widespread is your activity? Has the dollar crisis affected you?

"Our budget runs into hundreds of million shekels and it is growing at a rate of 20-30% a year. We have faced considerable difficulty this year, since the dollar has plummeted and we lost several million dollars. The rise in costs of building inputs has also been a tough challenge for us, as has the need to scale back or postpone projects and find additional partners. Despite all this, we have always met our commitments."

"Every child is at risk, including those in North Tel Aviv."

At a recent conference of business executives, writers, and educational and cultural leaders initiated by Dov Lautman, the participants discussed the gaps between central Israel and the outlying regions and between the top ten percent of the nation and the bottom ten percent. In his speech to the conference Elalouf touched on a problem that many would rather not discuss - neglect and mental despondency among youth who grow up in up-market regions.

"Things happen in Ramat Aviv that bear a resemblance to Sweden," Elalouf explained. "Boredom, lack of values, and neglect of children by their parents have led to more child suicides and drug use. These are no longer latchkey children but mobile phone kids, most of whose contact with their parents is conducted over their mobile phones. In Israeli society, every child is at risk, even those in North Tel Aviv. But while a large part of the problems among the affluent are resolved with private money, in the outlying regions, where there isn't any private money, it is up to the government or private institutions to provide it.

"I could move from where I live now to somewhere more prosperous economically, but I don't because what keeps where I am at present, in an average Beersheva neighborhood, is the safety of the children. The environment is much safer here than in Ramat Aviv, or in communities near Beersheva, such as Omer, for example."

You mean "high-tech kids" whose parents work until eight in the evening?

"And then go out to eat sushi. Education is not just a problem in outlying regions, but everywhere. People sometimes talk about the traditionally underprivileged out of a sense of paternalism and benevolence, but there problems in education even in the country's poshest neighborhoods. The developing companies, high-tech industry and others all require parents to work very late, and this must be addressed."

"Philanthropy today is less paternalistic and based more on the business world."

When it started out 24 years ago, the Rashi Foundation initially focused on raising money for grants. It gradually switched to promoting activity, and carrying out programs together with partners.

Do you feel there is a difference between philanthropy then and today?

"Back then, people would donate without knowing where the money went. The philanthropy of today is that of business executives, who see the donation from the business perspective, with timescales, income vs expenses, transparency, profitability, and reputation. In other words, the behavior today is less paternalistic, but more serious and based on the business world.

"This means that we don't look for donors but partners, we don't ask for donations without providing detailed, transparent plans, with an entry process, and a controlled exit process, if at all. Every financial investment is a project in itself. The government, or institution, sends us money that is earmarked in advance for investment in a certain project. Our management expenses never exceed 3%. What I mean to say is that fund as a fund decided that the partners' money should be invested in its entirety in a project with no overheads."

Such as, for example?

"The student dormitories project at the Tel Hai College now under way, costs $7 million. We brought in partners, and that required the United Jewish Appeal in France to raise more resources. Today, their investment amounts to less than 20% of the entire project. Every one of our projects always has partnerships at some point, it's the fund's job to find partners. Partnership means raising money, bearing responsibility, and then taking the credit. 99.9% of the fund's projects operate like this, save for assistance to people on a personal basis."

Is there anyone in this field that you have a special respect for? What about Shari Arison and Nochi Danker, for example?

"There is a feeling in the business world that they should be doing something for society, and this is a tremendously important process. I think that the highest form of philanthropy is that of someone who gives his or her own money without personal gain, to further the social, public, and educational causes he or she has chosen to support. Unfortunately, very few people in Israel are genuine philanthropists, I know of perhaps two. Avi Naor (the former president and CEO of Amdocs, and now CEO of the Or Yarok road safety awareness foundation, among other things), is number one in Israel, as for the others, I'd rather not comment. He really does give generously, honorably, and responsibly."

And what do you think of the philanthropy of Arcadi Gaydamak?

"For me, that is the wrong sort of philanthropy. You have to understand that sometimes, giving donations is inappropriate. Some donations have got entire institutions into trouble. Money is not just a tool to serve an interest, it can sometimes be lethal as well"

Published by Globes [online], Israel business news - www.globes-online.com - on June 26, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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