The $90 Billion Blind Spot: The Diaspora’s Costliest Contradiction

Since Oct. 7, 2023, American Jews have pulled off one of the most extraordinary displays of communal generosity in living memory. Billions for hospitals, evacuees, bereaved families, frontline responders. Every federation campaign, every synagogue appeal, every “friends of” gala has carried the same urgent message: Israel is in crisis, and we will not look away.

Beautiful. Also, by itself, not enough.

Here is the part nobody says out loud at the gala: U.S. Jewish organizations sit on roughly $90 billion in endowments and donor-advised funds. How much is consciously invested in Israel? A rounding error. A handful of federations maintain a real Israel allocation. Most treat Israel the way a global index fund treats Uzbekistan — whatever fractional weight the algorithm assigns.

Jewish communities write emergency checks with one hand and keep their investment portfolios as far from Israel as politely possible with the other. We are, to put it plainly, the world’s most generous absentee investors.

The “Divest Israel” crowd has figured out something we haven’t. They understand that where capital flows is a statement of legitimacy. Every campus resolution, every city council divestment vote, every pension fund debate frames the same question: is Israel a place where serious money belongs?

When our own multi-billion-dollar communal portfolios answer that question with a shrug and a zero-percent allocation, we hand BDS its best talking point for free. We tell the world that Israel may be worthy of our compassion but not our capital — a charity case, not an investment destination. That is the most expensive unforced error in Jewish communal life, and no amount of op-eds or campus counter-programming can undo what our balance sheets quietly say.

Think about it from the other side. BDS activists do not need to win every divestment vote — they just need to shift the presumption. Their strategy works when “investing in Israel” sounds like something that requires a defense rather than a rationale. And every time a Jewish institution publishes a glossy report about its Israel philanthropy while its investment committee treats the Israeli capital market and regional investments as if they were radioactive, that presumption deepens. We are losing the legitimacy argument not because our adversaries are brilliant — though some are — but because we refuse to deploy the single most credible rebuttal available: our own capital. Putting money where our mouth is would do more to normalize Israel in global finance than a thousand conferences on antisemitism. It confirms the courage of our convictions confirming Rav Kook’s famous saying about resilience and hope that found its way to be a bumper sticker in Israel: “the eternal people are not afraid.”

Forget sentiment for a moment. The investment case is sitting there in plain sight, practically waving its arms.

Israel invests 6.35% of GDP in civilian R&D — more than double the OECD (Organization for Economic Cooperation and Development) average and the highest ratio on earth. Tech accounts for a fifth of GDP and over half of all exports, and those exports are overwhelmingly services: software, cybersecurity, AI, cloud platforms. You cannot blockade a SaaS (Software as a Service) contract. You cannot checkpoint a cloud deployment.

During the 2023–24 war, the domestic economy contracted sharply. Technology exports kept growing. Cybersecurity investment doubled. Defense-tech startups nearly doubled. By early 2026, both S&P and Moody’s had reversed their wartime downgrades, the shekel had strengthened 15% against the dollar, and the Tel Aviv Stock Exchange posted the best equity market performance in the world—up over 50%, outpacing every major U.S. benchmark and has continued to rise during this current war.

The pattern is the most predictable thing about Israel’s economy: sharp contraction, then a V-shaped, tech-led recovery. After COVID, GDP fell 1.5% and surged 9.9%. After the war, same shape. Investors who sold on the evening news and ignored the recovery have been wrong every single time. The geopolitical risk premium is real — but it is episodic, not structural, and it has historically overcompensated patient investors. That is exactly the kind of mispricing endowments are supposed to understand.

For decades, the Tel Aviv Stock Exchange was a lovely institution with one small problem: it traded Sunday through Thursday. That is like opening a restaurant that’s closed on weekends and wondering why nobody shows up.

In January 2026, Israel shifted to Monday–Friday trading, aligning with every major global market. This is not a footnote. It is the difference between being included in indices that control trillions in passive capital and being politely ignored. Beyond the calendar fix, regulators are rolling out reforms that would have been unthinkable a decade ago: lighter disclosure for growth-stage tech firms, dual Tel Aviv–NASDAQ listings, green and sustainable bond standards, securitization rules, digital securities infrastructure. A new Yozma 2.0 program—$450 million in government co-investment—is drawing Blackstone, KKR, Apollo, and StepStone into Israeli venture capital.

Israel is not just producing innovative companies. It is building the capital market to finance, list, trade, and govern them at global standards. Innovation economy meets innovation capital market. That convergence is the real story—and it has barely been told.

Closing the generosity-investment gap does not require abandoning diversification or fiduciary discipline. It requires acknowledging that a sober look at risk and return supports a larger, not smaller, Israel allocation. Three shifts would change the landscape:

• Set modest but real Israel sleeves — 5% to 10% — in communal portfolios, across equities, fixed income, blended finance and private funds, calibrated to each institution’s risk profile and focus on impact.

• Make Israel options standard in donor-advised fund lineups, so donors can choose new kinds of themed Israel Bonds, Israel-focused equity and venture vehicles without needing a treasure map.

• Report annually on Israel allocation with the same transparency we bring to our fundraising campaigns. If we publish how much we give, we should publish how much we invest.

None of this is radical. All of it is overdue. And the collective signal would be unmistakable: the people who know Israel best, who give to Israel most generously, who sit on some of the most sophisticated investment committees in the nonprofit world, have looked at the numbers and concluded that Israel belongs in their portfolios. That is a counternarrative no BDS resolution can touch. By our estimates, there’s more than $2 billion in portfolio flows that might be corrected if we were listed in comparable indexes and active asset manager that prove that geography is not destiny.

Emergency checks will always matter — hospitals cannot be financed by capital markets and trauma services cannot be securitized – but then again, we can aggregate them through pooled securities and sustainable impact investments by mobilizing catalytic capital to finance social infrastructure. But philanthropy without investment is a strategy with one arm tied behind its back. Giving sustains Israel through the crisis. Investing builds the infrastructure, the companies and the capital markets that make the next crisis shorter, shallower and less damaging. Both are acts of solidarity. Only one compounds interest by leveraging new and more capital.

We are so very fortunate that the Diaspora shows up when Israel is under rocket fire and we are in shelters. The harder question is whether they will show up when Israel is underpriced.

That question is not for governments or rating agencies. It is for us — and it is still open.

Glenn Yago is Senior Director of the Milken Innovation Center at the Van Leer Jerusalem Institute on the faculty of Hebrew University Business School and University of California-Berkeley. He is also Senior Fellow/Founder Financial Innovations Lab at the Milken Institute. This essay draws on the policy brief “Why Now? Re-Invest in Israel: The Case for Institutional Capital Allocation to Israel’s Capital Markets” (March 2026).