He isn’t the first to make the suggestion, but Abraham Foxman, national director of the Anti-Defamation League, was talking sense last week when he called, in an interview with the Israeli daily Haaretz, to phase out organized American Jewish philanthropy for Israel and invest the money in the American Jewish community instead.

As observers have been pointing out for years, American Jewish aid to Israel, once a vital contribution to the economy of the Jewish state, has long become an anachronism. Consider a few economic facts:

In 1950 the United Jewish Appeal, the roof organization of American Jewish philanthropy, raised a total of $142 million, of which $86 million was allocated to Israel. In that same year, the gross national Israeli product was $4 billion, Israel’s national budget was $160 million, and its trade deficit was $215 million, with the value of exports amounting to only 14% of the value of imports.

In the year 2003, on the other hand, the United Israel Appeal raised some $827 million, of which less than $300 million went to Israel. The gross national Israeli product was $98 billion, the national budget was $60 billion, and the trade deficit was $5.8 billion, with the value of exports amounting to 80% of the value of imports.

To put it differently: From 1950 to 2003, in absolute dollar terms, Israel’s GNP increased by a factor of 25, its national budget by a factor of 360, and American Jewish contributions by a factor of 3.5.

Or to put it still differently: While in 1950 American Jewish contributions to Israel came to over 50% of the Israeli national budget, by 2003 they had dropped to one-half of 1%.

Or again: In 1950, American Jewish money covered two-thirds of Israel’s trade deficit, whereas in 2003 it paid for one-twentieth of it.

All of these statistics are telling us the same thing. As the Israeli economy has grown by leaps and bounds over the years, the importance to it of American Jewish philanthropy has shrunk drastically. If there was a time in its early years when Israel would almost certainly have collapsed economically were it not for American Jewish aid, this aid could be eliminated tomorrow with few negative effects. Its disappearance would be the metaphorical equivalent of skipping breakfast two or three times in a year.

But this, of course, is only half the story. The other half is the financial needs of American Jewry itself, which have grown enormously in the same period, even as, due to intermarriage and assimilation, the Jewish community in America has gotten smaller. This is not really a paradox, because the causes of increasing assimilation are also the causes of increasing costs, particularly in the area of Jewish education.

The reason for this is simple. Once upon a time, when American Jews were still predominantly an immigrant and second-generation community, the job of producing more Jews – of raising children with a Jewish identity – was largely carried out by the family. Today, when most American Jewish families are thoroughly acculturated to American life and secular Jewish ethnicity has all but vanished, the burden has been passed to the educational and religious institutions of the community. Not father and mothers, but schools and synagogues, are now the main bulwark against assimilation.

But schools and synagogues today cost vast sums of money to operate and maintain, especially on a qualitatatively high level – and as Mr. Foxman observes in his interview, this has made Jewish education and synagogue participation prohibitive for many childbearing American Jewish couples. In an age when good Jewish day schools are forced to charge tuitions not much lower than those of Ivy League colleges, most Jewish parents cannot afford to send children to them without a generous system of scholarships and assistance.

The fact that the American Jewish community has steadily been cutting down on the percentage of charitable funds passed on by it to Israel, which has fallen from two-thirds to one-third in the last 50 years, is itself a sign of how strapped for cash it has become. It should now take the next step and help itself to the remaining one third as well. It would not only be doing itself a favor, it would be doing Israel a favor as well.

Israel after all needs a strong American Jewry, which is ultimately the base of its political support in America, far more than it needs American Jewish dollars. After having received some $11 billion from American Jews since its establishment, it is time for it to say, “Thank you for your wonderful generosity – and now, having been helped by you for so long, we’d like you to help yourselves by using the money you raise for your own needs. A Jewish dollar spent on Jewish goals in America is ultimately worth far more to us than a Jewish dollar sent in Israel.”

Contributing financially to Israel has become such an ingrained part of American Jewish life that it may be psychologically difficult to give it up. There is even a fear among some American Jewish leaders that ceasing to raise funds for Israel will only weaken American Jewish identity still further. But this is putting the cart before the horse. Jews do not feel Jewish because they give money to Israel, they give money to Israel because they feel Jewish. The same feeling should now encourage them to use their money at home, where charity begins.

Mr. Halkin is a contributing editor of The New York Sun.