Wednesday, April 28, 2010

What Israel Needs is MORE Unemployment

Amid reports of political turmoil, trying to jumpstart the peace process, and the widening scope of growing corruption, an important news item was largely overlooked this week. Buried at the end of an article about the Israeli economy, I found a bit of good news. But had it been any more under reported, one could have blinked and missed it. “There were 197,600 unemployed people in March, down 0.5% from 198,500 in February. The unemployment rate in February remained steady at a preliminary 7.3% of the civilian labor force, after gradually declining since May last year when unemployment reached a high of 7.9%, ...” On the surface, this is very nice. It is a credit to the Prime Minister and Finance Minister, the Governor of the Bank of Israel, and I am sure others who deserve credit, and yet more who’d like to take credit. Best of all is that there are more people working, taking home a salary, paying taxes, and investing in the economy. By all measures that’s a good thing. However, I was puzzled as to why this was so under reported. Perhaps, though I am no economist, it’s because what Israel really needs in the long term is MORE unemployment. I am looking forward to thousands of Israelis losing their jobs. Outrageous? Crazy? Treasonous? Not really. Allow me to explain. In the early part of the previous decade, when Israel was subject to an unparalleled terrorist war, Israel’s economy suffered, as did its people. As a response to the trend of bus bombings, cafes turning into blood baths, malls turned into morgues, and pizzerias into slaughter houses, Israeli society undertook an “investment” that is simply not known in any other place in the world. In order to overcome a sense of fear, and instill a sense of security, the Israeli economy created tens of thousands of new jobs in one of the least glamorous but most important areas possible – security guards. Of course, Israel always had increased security at government offices, airports, military facilities and the like. But what changed then is something people living outside Israel cannot comprehend. Think about it. In most places in Israel, a person going about his or her day to day life will encounter multiple security personnel. These people first have to eyeball and profile a person coming their way, ask or assess if they have any weapons, wand them and check their bags, and only then let them enter. But where are they entering? A maximum security facility? The Knesset? A government building? An airport or major train station? No. Average Israelis find these security checks in the most mundane of places. For instance, in the course of an average week, I went to the mall and was checked going in to the parking lot AND going into the mall itself. Think about an average mall, how many entrances there are to the parking, and the building, and multiply that by full time coverage of one guard per entrance. People living in Atlanta, New Jersey, Toronto, Melbourne or any city in Europe could never comprehend much less tolerate this. On city buses, it’s common to see a young man or woman, armed, riding “shotgun.” They have to keep terrorists off the bus to let passengers arrive safely. I went to the bank. I was checked going in, not to prevent me from stealing money, but to prevent me from bringing in a bomb. I met a friend for coffee. Checked again. I drove to a lunch meeting nearby. I was checked entering the parking lot, and the restaurant. Dinner out? Getting “checked” happens when you go in, not when you want to pay the bill. I met with a hotel manager. At the entrance, “checking your bags” has a whole different meaning. I went to the post office to mail a package. Checked, checked, checked. I even had my car checked driving into the strip mall where I take my dry cleaning. Visiting a patient in the hospital one is checked at the parking lot, and at the entrance to the building. When I drop off my son at his pre-school, I greet the armed guard by name. When I pick up my other children from elementary school, another armed guard. This is not like in inner city American schools where violence and crime are rampant. It is just to keep the bad guys out, and the kids safe. I am reminded of my visits to the Soviet Union in the 80s. The USSR boasted that there was zero unemployment under its enlightened (now extinct) communist system. Of course this was another Soviet lie, but it was true that the government paid countless thousands (perhaps millions) to spy on one another. This Soviet over-employment served to give people work as well as to spy on its own citizens, not to protect the average citizen as we do in Israel. Underscoring the need for MORE unemployment, it’s quite clear that security guards are not Israel’s most glamorous career. Any random sample will find a disproportionate number of new immigrants among them, in what is sometimes a most dangerous job. Some are entirely uneducated. Others are decidedly overeducated. But work is work. Doing away with the need for this security-on-steroids and slashing a whole industry of security guards will do a great deal for the economy. Israelis will no longer have to absorb the cost of these guards as an expense passed along in virtually every service industry imaginable. The government and Israel’s free market economy will be challenged to create new industries to integrate the newly unemployed. It will require training and lots of work, but better that we should have a little growing pain in a country that no longer needs the “security” tens of thousands of guards, who can rather devote their efforts to building and contributing to the economy, instead of “just” keeping Israelis feeling safe enough to spend 12 shekels on a cup of coffee, taking their kids so school, or an outing to the mall. Israel has faced and overcome many challenges in its 62 years. Integrating tens of thousands of unemployed will be relatively small, but a challenge indeed. Yet for Israel to prosper to its fullest capability, doing away with the security guard industry will be a great achievement. Unfortunately, this depends largely on external factors over which Israel has little control. May Israel reach a point in my lifetime when security guards can turn their wands into plowshares, and where Israel’s most precious resource – its people – are able to contribute to the country and economy productively, rather than defensively.

Sunday, April 25, 2010

Fund Raising Out of the Box

I read an article recently about the record sale of Andy Warhol’s painting “200 One Dollar Bills” for $43.76 million which suggests that as bad as things are for many financially, that’s not the case for everyone to be sure. This reminded me of an amazing experience I had professionally a dozen or so years earlier, and how that relates to the need for non profits to be creative in general, but especially in the current environment; fund raising out of the box. Fund raisers, sit down. In a previous job, I had the opportunity to befriend an elderly couple, wealthy Holocaust survivors with no children or heirs. Oh, and they were art collectors. Not just nice pieces of art, but magnificent ones. This is the kind of relationship about which most fund raisers usually only dream. I don’t recall how I met them, but once I got to know them, we became good friends. When they were not feeling well, I’d bring them chicken soup and visit. They liked my visits, and eventually I’d make the occasion to bring my kids. Even though they lived full and rich lives, the void of not having children and grandchildren was palpable and they looked forward to our visits. Our relationship had a professional dimension to be sure, but over and above that we just became good friends. On one visit, I brought my kids and showed them one of their most special paintings. I asked the kids what it looked like and they all knew instantly, Moses receiving the Ten Commandments. Indeed, they were gazing at the original “Ten Commandments” by Marc Chagall. At one light moment, I told the couple that I didn’t want anything from them, but if they wanted to leave me the “Ten Commandments,” I wouldn’t mind. Paintings, sculptures and other collectables graced every room in their lavish home. Some by famous artists like Chagall whose names I knew. Others probably no less famous, just not known to me. I will never forget the two pieces of art that greeted visitors as they walked into the home. Side by side they had two original Andy Warhol portraits, of themselves. Yes, they had Andy Warhol paint their portraits. How cool was that! One day, I arrived at their home with a fresh new fund raising idea. The Israeli based non-profit institution I was working with had just announced a multi-million dollar project to build a new building. I brought the architectural renderings. As we sat and discussed the project and I did my best to sell them on it, I came up with an idea that they loved. In asking them to consider a significant naming opportunity, either the whole building itself, a wing, or the lobby, it occurred to me that as much as I thought it was cool to have Warhol portraits of them, when they were no longer alive with no heirs, while the art was original work by one of the most famous contemporary artists, I had a hard time imagining who would want these. So I blurted out my idea. “In addition to your donating millions of dollars for the building, why don’t you also donate the Warhols so that we can put them in the lobby and your images will forever accompany your names prominently in the new Jerusalem building.” This pushed all the right buttons and they were ready to do it immediately. Excited to the point of almost bursting at having all but secured a commitment for a million plus dollar donation, I raced back to my office to write this up for the people in Jerusalem to see in the morning. I was sure that they’d be thrilled that almost as quickly as the building project was announced, I had found them a major donor. We had not closed on which gift, but a major lead gift was a virtual sure thing. While they liked the project anyway, there was no doubt that the idea to display their Warhol portraits in perpetuity, in Jerusalem, was a clincher. Yet, when I woke up the next day, excited to get what I expected would be an enthusiastic response, I was shocked to see the immediate response was not one of mutual excitement, but pushback from the painting idea. E-mail is an imperfect means of communication so I was unsure that I was reading it right and I called. My call affirmed that I was reading their response right, that they did not see the merit and sense of this opportunity and offer. This began a protracted conversation that dragged on for far too long; all the while I was keeping the couple interested and stalling an answer, sure myself that this would be a sure thing. Eventually, the pushback became a roadblock, and a dead end. I don’t recall the reasons given why they wouldn’t entertain displaying the Warhol portraits, but in the end, I had to go back to the couple and try to put a positive face on this reversal of my idea. As happy as they were with my initial idea and proposal, they were upset and felt used rather than appreciated, and the deal never took place. While I did my best to maintain a relationship with the couple, especially following his death, this incident also gave me a clue that I was working with people in Israel who were unable to think outside the box. I took a new job where I really didn’t have anything to offer the widow. We kept in touch and eventually she died, and what could have been a multimillion dollar gift, and a likely bequest, in addition to two Warhol portraits, never materialized. I suspect that these portraits would never have sold for $43 million, but they were certainly valuable. In this case, neither the tangible value nor the leverage of using these for a major donation was appreciated. As much as the recent report of the record Warhol sale reminded me of this incident and the warm relationship that turned into a missed opportunity, it reminded me of one of the fundamentals of the fund raising business. Fund raising is about relationships. Offering a donor something meaningful that is focused on their personal interests is a much better way to make a deal than to pull something dry off the shelf and try to market it to them as what they want. That’s fund raising 101. This is all the more so in a period when the economy is suffering, when the fallout of many economic factors is still being felt, and when there are more people asking for more money than there are necessarily donors prepared to donate it. One needs the personal relationship to be sure, but also to be able to think outside the box and differentiate the philanthropic product in a way that the donor embraces it as their own, just like in this instance, but hopefully with better results.