in the Shadow
The NGO Crisis: “We haven’t received any funding, not even one shekel”
In the US tax payments have been postponed until next year and NGOs have been given preferential terms for loans and fast bridging loans. While other countries have found creative ways to assist the third sector, NGOs in Israel keep checking in vain whether the promised assistance package has arrived. The third sector in Israel is on the brink of collapse. A Shomrim follow-up
Zeela Kotler Hadari
April 27, 2020
Marek (real name withheld) wrote to ERAN’s online chat operator on the seventh day of the Passover holiday: “I have a concern and I don’t know who to consult. I’m frightened that I have caught the coronavirus and I’m not sure what to do. I live in an assisted living facility; it’s a really nice place. Three elderly residents like me have already been hospitalized, and no one knows if they will be released back here, because no one is giving us updates. I think I might have been infected because I don’t feel well. I think I have a slight fever – in the morning it was 37.8º and I don’t usually have a fever. I have also been coughing for the past few days. If I ask the nurse to come to my room in the morning, I might be taken to hospital. I really do not want to be hospitalized, because I will definitely catch the virus there, if I haven’t already.”
The volunteer online chat operator encouraged him to speak openly about his feelings. Marek continued writing: “It’s a tough dilemma. A few months ago, I was in hospital for a long time and it was very difficult. Being hospitalized is no simple matter. I only have one child, and he lives in a kibbutz. He is not coming to visit me so that he doesn’t infect me. So, I am here on my own. I fear for my life. I have to weigh up my emotional versus my physical wellbeing.”
The operator encouraged Marek to contact the nurse for medical advice. He wrote back to her: “I cannot even imagine being hospitalized. It will end badly for me.” Her reply: “But there are many stories of both young and old people who were hospitalized and then released two weeks later after they had recovered.” She was trying to lower his stress levels by reassuring him that older people also recover.
“As ERAN’s CEO, Ibegin my day with two tasks: first, Isend an update to the Ministry of Health about the night’s activities andsecond, I check whether any money has been deposited in our bank account. One million shekels is a huge amount of moneyfor a NGO, and it is not a simple challenge. We didn’t put any of our employees on unpaid leave because there is ahuge amount of work and they are doing amazingly despite the difficulties.”
Marek: I am very frightened.
Operator: I understand your fear.
Marek: Forgive me, I am overwhelmed by my emotions.
Operator: Don’t apologize, dear Marek, I am here with you. It is legitimate to be overwhelmed by emotions. Feel free to be angry, sad, and frustrated.
Marek: I don’t know what to do. I’m just going for a moment to wash my face.
The operator waits while he goes off for a few minutes.
Marek: “Things are very difficult for me at the moment. I am not angry with anyone. Just sad and hurting.”
Ronen (real name withheld) also contacted the ERAN call center. He had received a message from the Ministry of Health that he had been in close contact with a confirmed coronavirus patient. He shared his fears with the volunteer online chat operator that he had caught the virus and that once he self-isolated, he would no longer be able to help his elderly parents. Rina (real name withheld) told the ERAN volunteer that she was married with children and feels all alone with a heavy emotional burden. Staying at home drains her of all her energy. She talked of tension with her husband, of non-stop crying, and of difficulty coping with her children. Oded (real name withheld) was fired from his job and “all his dreams went up in smoke.” Tal (real name withheld) is a soldier who contacted ERAN to say that she was about to go into lockdown on her army base and didn’t know how she would survive, especially as she was distressed by a recent breakup.
Last weekend alone, 4,000 such calls were made to ERAN’s online and phone helplines. Dr. Shiri Daniels, ERAN’s national professional director, reports that since the corona crisis began six weeks ago, ERAN has received 60,276 calls through its various channels – phone calls, online chats, group forums, or emails – and 545 of these were from people with suicidal thoughts. “There have been days when we went into suicide emergency mode 4 or 5 times a day, which is highly unusual and not a feature of usual emergency situations during which people are busy with survival. During the corona crisis, a new parameter has been added – loneliness. If the Israeli public did not have ERAN to turn to, I have no doubt that it would have cost many lives.”
Financial assistance is not forthcoming, our expenses continue to grow
Shomrim published a lengthy investigative report by Roni Singer in April describing the emotional distress of callers to ERAN during the corona crisis. ERAN is a nonprofit organization founded in 1971 which offers emotional first aid. As with many other NGOs in the third sector, it is having to deal with a crisis of its own: financial insecurity.
Since the outbreak of the corona crisis, the thousands of NGOs in Israel’s third sector have been on the verge of economic collapse, with more than 3,000 organizations having ceased operation, putting thousands of workers on unpaid leave. Shomrim reported on this extensively at the beginning of April.
The government announced that as part of its economic package, it has allocated NIS 200 million to helping NGOs. This is dramatically smaller than the NIS 1 billion that the NGOs believe is needed to help them keep their heads above water. However, to date, not even one shekel of the NIS 200 million package has been received. In response to Shomrim’s query, the Ministry of Finance stated: “As part of the economic plan that has been formulated, many steps have been taken to help organizations in the third sector. These include a relief fund worth NIS 200 million to enable the NGOs to continue their activities and to support their organizational infrastructure. Criteria for eligibility will be published shortly.” (See the end of this report for the full ministry response).
It can only be hoped that by the time these criteria are published, there will still be NGOs around to receive the financial assistance. Their expenses have not stopped for one moment; in fact, for many of them – for example, ERAN, which has become the almost exclusive address for emotional first aid during this crisis – their expenses have actually increased.
Every morning, David Koren, ERAN’s CEO, sends a report to the Ministry of Health’s control room with details of the number and type of calls received by ERAN’s hotlines, just as the hospitals and all other parties dealing with corona do. So far, there has been a 300% increase in the organization’s activities. ERAN operates 24/7 and has expanded its network of volunteers and invested in online support platforms for them. Koren estimates that preparing these platforms and adapting the support for Russian, Arabic, and Amharic speakers, as well as setting up a helpline especially for the ultra-Orthodox community, has cost ERAN almost NIS 1 million.
“When the corona crisis began, it was clear to us and to the health ministry that we would be working together closely. During the first week, we spoke about funds that the ministry would transfer to ERAN to support our activities. However, as time moved on, we found out that they would first have to issue a call for funding or put out a tender for the services. The bottom line is that ERAN, like many people in the country, has not yet received any funding, not a single shekel.”
Where does an NGO like ERAN suddenly find one million shekels?
As ERAN’s CEO, I begin my day with two tasks: first, I send an update to the Ministry of Health about the night’s activities and second, I check whether any money has been deposited in our bank account. One million shekels is a huge amount of money for a NGO, and it is not a simple challenge. We didn’t put any of our workers on unpaid leave because there is a huge amount of work for them and they are doing amazingly despite the difficulties.”
At the beginning of the month, Shomrim investigated funding for NGOs and found that their predicament is two-fold. Even without the corona crisis, the funding that was expected at the beginning of 2020 was not transferred because of a funding bottleneck caused by three consecutive elections. Have you at least received this funding?
Shortly after the start of the corona crisis, the Ministry of Health transferred the money they owed us for 2019; they told us that this payment, at least, would be transferred immediately. The transfer was delayed by four months, and is, of course, insufficient, but at least they paid what they owed us from last year.”
What about donations?
Some of the philanthropic bodies understand the position we are in and have led us to believe that they will donate funds, but the money has not yet arrived because it too is a process. As a result, we have not yet received any funding from any source.
Other countries found many creative solutions
The crisis that NGOs and the third sector are currently experiencing is not unique to Israel. For example, last weekend a unique video clip was released on social media. Many artists, including Chris Martin and Dua Lipa, performed a cover version of Foo Fighter’s hit song “Times Like These.” Each artist recorded their part in their homes in scenes typical of the corona lockdown. The BBC initiated this project and proceeds from the recording will go to charities at the forefront of the UK battle against corona.
To understand the possible options for the financial support of Israeli NGOs during the current crisis, it is worth looking at other countries. Surprisingly, the country that is offering the most generous assistance package to NGOs is the most capitalist country: the United States. American NGOs are entitled to financial support and loan terms similar to those of small and medium-sized businesses from an enormous federal government $2 trillion stimulus package. NGOs apply directly to the government for these loans, thus bypassing the banks. The maximum loan is $2 million, which is given with preferential interest (2.75% for a 30-year loan) and without fees, additions, or prepayment penalties.
David Koren: “Thestate has responsibility for its citizens’ emotional health. We are not playing in our own private playground,likewise all the other NGOs. Only 20% of ERAN’s annual budget comes from thestate. In other parts of the world, at least 50% of the budget of similarorganizations comes from the state.”
Civic Leadership, the umbrella organization of NGOs in Israel, mentions an additional lifeline available to American NGOs in the hope that the Israeli Ministry of Finance will take note. They are eligible for emergency grants to tide them over until they receive the loan. For example, a grant of up to $10,000 will be transferred to a NGO within three days of approval and can be used to pay for sick days, salaries, rent or mortgage payments, or debts that cannot be repaid because of the crisis. American NGOs have, in addition, been granted a postponement in paying employer taxes for 2020, which can now be payed in two installments at the end of 2021 and 2022.
The United States stands out as a shining example of assistance, but it is not the only country. The Australian government published an AU$ 40 billion (NIS 90 billion) economic program for small and medium-sized businesses. NGOs with an annual turnover of less than AU$ 50 million are also eligible for assistance. Similarly, 30,000 Australian NGOs have been given a tax exemption of up to AU$ 100,000 to enable them to continue operating during the crisis and keep their workers employed. The nonprofit sector in Australia consists of one million employees, most of them women. The government committed to the immediate transfer of AU$ 100 million to more than 300 NGOs and an additional AU$ 100 million over the next six months. The Australian government is giving an additional benefit to NGOs that continue to employ people during the corona crisis: AU$ 1,500 per employee per two weeks. NGOs that can prove a 15% decrease in income during the corona crisis are eligible for this benefit.
Donations from the public have also slumped
Like Australia and the United States, Israel also took the positive step of including NGOs in the financial benefits given to small and medium-sized businesses during the corona crisis. For example, last Friday the government published its NIS 8 billion economic package for freelancers and small businesses. In theory, NGOs that are defined as an “eligible public institution” are also included in this package; however, for the third sector, this is only a partial solution. According to Civic Leadership, the call to compare NGO terms to corporate sector terms is not being answered.
The NGOs expect assistance in the form of the postponement of employer’s tax (the equivalent of VAT in the third sector). Whereas businesses in the corporate sector have been given a postponement of VAT payments for the current period, the Tax Authority has not approved a postponement of employers’ tax, claiming that this is a benefit for the third sector that is not given to the corporate sector.
Koren explained that ERAN is a member of an international organization of NGOs from 190 countries that provide emotional help to the public. “This service is provided by volunteers all over the world. In other countries, the government provides more financial assistance than here. Only 20% of ERAN’s annual budget is funded by the government. This percentage was increased from 10% during Litzman’s tenure as health minister. The remaining 80% comes from donations from the public and the corporate sector. However, there are some countries, for example, in the former communist bloc, where this service is fully funded.”
According to a report published last week by Dr. Hagai Katz from the Department of Business Administration at Ben-Gurion University together with Galia Feit of the Institute for Law and Philanthropy at Tel Aviv University, the corona crisis has damaged the philanthropic behavior of the Israeli public resulting in a dramatic slump in donations. “The economic significance of an 18% decrease in donations by households to NGOs translates into a reduction of hundreds of million shekels of overall income for NGOs in the third sector.” According to the report, the dramatic 35% decline in the number of volunteers also has deep economic significance for the NGOs, which are in danger of losing 166,000 jobs.
The report states: “these are severe economic implications that need to be considered by the government, especially when taking into account the importance of third sector organizations in providing social services along with or instead of the state.”
Shomrim will continue following this issue.
Response from the Ministry of Finance:
“As part of the economic plan that has been formulated, many steps have been taken to help organizations in the third sector. These include a relief fund worth NIS 200 million to enable the NGOs to continue their activities and to support their organizational infrastructure. Criteria for eligibility will be published shortly. Other steps include a cancellation of municipal taxes, a postponement of other taxes, state-guaranteed loans, and other regulatory and bureaucratic mitigation measures. In addition, many NGOs are working together with government ministries during the corona crisis and are being funded accordingly by the government.”
The decision was made that grants given to businesses will also be given to organization that provide services.
The Ministry of Finance is working nonstop to help organizations in the third sector and civil society get through this period, and we hope for a speedy return to normal.”