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After October 7th: The $60 Billion Imperative

Executive Summary

The numbers tell a compelling story: In 2024, those who bet against Israel's economy fundamentally misread its resilience. Despite unprecedented challenges, the Tel Aviv Stock Exchange rose over 30%, outperforming the NASDAQ 100, S&P 500, and FTSE 100. Israeli startups raised $12 billion, marking a 31% increase from the previous year. Early investors like Bill Ackman, who purchased a 4.9% stake in TASE in January 2024 with his wife Neri Oxman, saw an 80% return in just 10 months. "We wanted to buy more, but that's all that was available for sale," Ackman noted, underscoring the strong demand for Israeli market exposure.

Source: TASE, Market Data 2024
Source: TASE, Market Data 2024
Source: TASE, Market Data 2024
Source: TASE, Market Data 2024

This remarkable performance isn't an anomaly - it's evidence of deep structural strengths in a nation where innovation and resilience are cultural imperatives. As detailed in "Start-Up Nation," Israel's unique combination of mandatory military service, flat hierarchies, and direct problem-solving approaches creates a workforce uniquely suited to innovation and adaptation. Before October 7th, this translated into 6.5% GDP growth while maintaining near-full employment. Even in the face of global economic headwinds and regional challenges, Israel's innovation economy continued to thrive.


For institutional investors of Jewish foundations, federations, and donor-advised funds collectively managing over $60 billion in assets, this creates both an imperative and an opportunity. The old model of separating investment strategy from philanthropic mission - often resulting in investments that could undermine their community's interests - no longer serves in today's reality. With rising antisemitism globally and increasing economic pressure on Jewish institutions, foundations cannot afford to have their investments work against their mission. Instead, a new paradigm is emerging: one that recognizes both the moral imperative and financial opportunity in ensuring investment strategies strengthen rather than undermine philanthropic goals.

Breaking the Mission-Investment Disconnect

The story of foundations separating their investment and philanthropic activities is hardly new. In 2000, the Gates Foundation made headlines when it was discovered that its endowment held tobacco company stocks while simultaneously funding cancer research. By 2007, over 41% of its assets were invested in companies that directly undermined its charitable mission. Their response - creating a "firewall" between investments and grants - became a model that many foundations still follow today.

Jewish institutional investors face a similar crossroads, but with far clearer imperatives. A typical foundation might deploy $5 million annually to strengthen Jewish education and community while simultaneously managing an $80 million investment portfolio with no strategic allocation to Israel. In some cases, these investments even flow to markets potentially hostile to Jewish interests. This disconnect no longer makes sense - either financially or strategically.


The Strategic Context: Why This Matters Now

The remarkable performance of Israel's markets in 2024 becomes even more significant when viewed against broader economic and structural dynamics. Recent research from Tel Aviv University highlights several critical factors that make this an especially compelling moment for institutional investment:


Tech Sector as Economic Engine

Israel's tech sector has emerged as the linchpin of the economy, producing 17% of GDP and approximately half of Israel's exports. This sector's strength is particularly notable because:

  • It provides about 25% of Israel's direct tax revenues

  • It drives the majority of foreign investment flows

  • It represents Israel's primary competitive advantage globally


Market Dynamics Creating Opportunity

The current environment has created what economists call "market inefficiencies" - gaps between asset prices and fundamental value that create opportunities for strategic investors. This is evidenced by:

  • Bill Ackman's January 2024 TASE investment returning 80% in 10 months

  • The TASE's 511% growth in market value since its 2019 IPO

  • The TA-125's resilient performance post-October 7th


The Critical Role of Institutional Capital

Research indicates that about 90% of investment in Israel's tech sector traditionally comes from foreign sources. This creates both an opportunity and an imperative for Jewish institutional investors to:

  • Provide stability through long-term strategic investment

  • Support critical economic infrastructure

  • Help maintain Israel's competitive position in global markets


The Virtuous Cycle of Strategic Investment



Virtuous Cycle of Strategic Investment
Virtuous Cycle of Strategic Investment

The 5% allocation we propose isn't just about portfolio returns - it's about creating a virtuous cycle that strengthens both investment returns and mission impact. When institutional investors allocate strategically to Israel:

  1. Their capital helps create high-skill jobs

  2. These jobs attract and retain talent

  3. Workers contribute to the tax base

  4. Tax revenue supports social programs

  5. The cycle creates sustainable positive impact


Managing Risk Through Strategic Allocation

While recent market performance has been strong, institutional investors should understand both opportunities and risks. Key considerations include:

  1. Market Evolution

  2. Israel's economy has shown remarkable resilience post-October 7th

  3. The tech sector continues to drive innovation and growth

  4. Market infrastructure has proven robust under stress

  5. Strategic Implementation

  6. The 5% target allows for thoughtful, systematic allocation

  7. Diversification across sectors reduces specific risks

  8. Professional management ensures institutional-grade execution

  9. Long-term Perspective

  10. Focus on structural advantages in innovation and technology

  11. Align with Israel's demonstrated ability to adapt and grow

  12. Support the foundations of sustainable economic strength


The Timing Imperative

The convergence of several factors makes this a particularly important moment for institutional investors to consider strategic allocation:

  1. Market Opportunity

  2. Current valuations reflect short-term concerns rather than fundamental value

  3. Early movers like Bill Ackman have demonstrated the opportunity

  4. Market inefficiencies create potential for above-market returns

  5. Strategic Necessity

  6. Reduced foreign investment creates need for institutional capital

  7. Supporting market infrastructure is critical for long-term stability

  8. Alignment between investment and mission has never been more important

  9. Competitive Advantage

  10. Jewish institutions understand Israel's unique strengths

  11. Existing relationships facilitate access to opportunities

  12. Mission alignment creates natural long-term investment horizon


The Path Forward: AMPLIFY Investor Summit

To catalyze this critical mission-aligned investment movement, the AMPLIFY Investor Summit (March 31-April 2, 2025) brings together an influential group of 15 Chief Investment Officers from major U.S. Jewish foundations and Federations, each managing portfolios over $80 million. Co-chaired by Michael Lustig (Impact Investor and former Managing Director at BlackRock) and Fleur Hassan-Nahoum (Israel's Special Envoy for Trade & Innovation), this exclusive gathering will:

  • Connect CIOs with Israel's leading fund managers, entrepreneurs, and market innovators

  • Showcase investment opportunities across tech, venture capital, private equity, and public markets

  • Facilitate direct engagement with successful founders and investment leaders

  • Build lasting relationships within Israel's investment ecosystem

  • Accelerate the path from intention to action

The Summit represents the beginning of a coordinated effort to align Jewish institutional capital with mission through fiduciary strategic investment in Israel's future. By bringing together investment leaders, market experts, and innovation pioneers, it creates a platform for turning the vision outlined in this paper into reality.


Conclusion

The traditional separation between investment portfolio and philanthropic mission no longer serves Jewish foundations' best interests. By strategically aligning investments with mission through allocation to Israel, foundations can multiply their impact while participating in one of the world's most dynamic economies.

The convergence of compelling returns, demonstrated resilience, and mission alignment creates an unprecedented opportunity. Those who act now will be best positioned to strengthen both their investment returns and their contribution to Jewish flourishing globally.

T

his paper is produced by Arakura in collaboration with leading investment professionals and market experts. For more information about the AMPLIFY Investor Summit or to discuss implementation strategies, please contact results@arakura.co


Bibliography

Abelson, R. (2000) Charities’ Investing: Left Hand, Meet Right, The New York Times. The New York Times. Available at: https://www.nytimes.com/2000/06/11/business/charities-investing-left-hand-meet-right.html?unlocked_article_code=1.s04.1wbv.DCTUM4tSRfWv&smid=url-share (Accessed: 29 January 2025).

 

Dark cloud over good works of Gates Foundation (2007) Los Angeles Times. Los Angeles Times. Available at: https://www.latimes.com/news/la-na-gatesx07jan07-story.html (Accessed: 29 January 2025).

 

How leading experts got Israel’s economy wrong – opinion (2025) The Jerusalem Post | JPost.com. Available at: https://www.jpost.com/business-and-innovation/opinion/article-839503 (Accessed: 29 January 2025).

 

Perger, A. (2024) Bill Ackman sees 80% return on Tel Aviv Stock Exchange investment in just 10 months, ctech. ctech. Available at: https://www.calcalistech.com/ctechnews/article/skg300fbj1e (Accessed: 31 January 2025).


Yashiv, E., 2023. When Populism Meets Religion: Economic Lessons from Israel’s Existential Crisis.

 

 

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Welcome to the Arakura Blog

Welcome to our exploration at the intersection of philanthropy, leadership, and artificial intelligence. As a philanthropic advisor with a focus on the transformative potential of AI, this space is dedicated to uncovering insights that drive meaningful impact. Through my studies at Oxford University's Saïd Business School, I've gained a unique perspective on how strategic giving and innovative technology can shape a better future. Join me in this journey, where we'll challenge conventions and discover new pathways to effective philanthropy. Your thoughts and experiences are invaluable to this dialogue—let's engage and learn together.

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