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Hebrew Free Loan Society Interest-Free Lending

Hebrew Free Loan Society
New York, New York United States
Leadership team

Rabbi David Rosenn, Executive Director
Vivian Mamelak, President
Ian Shrank, Vice President
Mark J. Gerstein, Vice President
Dov B. Braun, Treasurer
Ellen M. Braitman, Secretary

Organization website
Prize category
Local/Regional
Operational
5+ years
Target audience
20s & 30s, Adults, Baby Boomers, College Students, Disabilities, Families, Women & Girls
Categories
Philanthropy, Poverty, Social Justice, Social Service

Engaging the Jewish community in microfinance through small loans that make a big impact on the lives of low-income borrowers is a powerful application of Jewish wisdom. Drawing on Jewish traditions of helping people help themselves and interest-free lending, the Hebrew Free Loan Society (HFLS) is shaping a 3,000 year-old Middle Eastern practice to meet 21st century American needs, and is combating poverty in a way that is direct, sustainable, and which maintains the dignity of the borrower. As we shape this tradition, it shapes all of us as individuals and as a community.

What Jewish wisdom do you use in your work?

Three fundamental Jewish teachings provide the values base for interest-free loans: k’vod-habriyot: the idea that society is responsible to ensure that every person has access to the basics required for a decent and dignified life; V’hehazakta bo: the belief that strengthening and supporting people before they experience economic decline is a more dignified and more efficient way to address social needs than responding to economic crisis after the fact; and kol Yisrael arevim leh le-zeh: the view that sees us all as implicated in each other’s lives and responsible for one another’s welfare.

By preventing poverty through access to affordable credit, the HFLS lending program also embodies a core insight of Jewish social welfare wisdom: not only is it more efficient and compassionate to prevent poverty than it is to address all of the problems caused when families face dire need, but prevention also averts the pain and humiliation that comes with impoverishment. In other words, prevention is better for the community and for its individual members. A commitment to using the community’s resources to prevent poverty – in the words of Leviticus 25:35, to strengthen people’s hands before they slip – is the reason that our most common loan is $5,000 for emergency needs, like home repairs or catching up on bills following unemployment or a serious illness. Without access to interest-free emergency loans, many of our borrowers would have otherwise coped with their emergency expenses by using high-interest credit cards which can be financially disastrous for a low-income family facing an already difficult situation. Other borrowers would otherwise resort to cobbling together support from friends and family, which can put others in a financially vulnerable position.

Finally, the entire endeavor here at HFLS is a profound exemplar of the Jewish ideal of mutual responsibility. Not only does our organization exist only because members of the community recognize a need to assist others through interest-free loans, but our loans could not be made were it not for community members supporting each other by agreeing to become guarantors.

Each HFLS loan is secured not by collateral or credit ratings, but by two guarantors – acquaintances of the borrower who agree that they will repay any outstanding balance on the loan if the borrower defaults. Very often, our borrowers find neighbors, friends, or family members who agree to serve as guarantors. The borrowers return this gesture of solidarity by repaying their loans on time. HFLS has a 99.9% repayment rate, and that is because borrowers repay – and we almost never collect from guarantors. Our lending helps to create a community in which people become mutually responsible for one another’s welfare, even when people are at their most vulnerable.

At the Hebrew Free Loan Society, we run two mutually-reinforcing tracks of applied Jewish wisdom: on one track, we exemplify through our interest-free loan program many of the distinctive Jewish teachings about dignity, responsibility, and community. On the other track, we are building a community of moral imagination that engages in and supports this work by simultaneously raising the profile of interest-free lending and reframing it as a relevant and powerful Jewish practice.

How does your program work to make that wisdom accessible and directly applicable to your audience's lives?

Thousands of people are involved in this virtuous cycle of community building – we have more than 1,800 outstanding loans with two guarantors each, along with 2,000 people on our mailing list and social media audiences who constitute a growing community of moral imagination and action. Recently, we have begun to weave teachings about the Jewish wisdom out of which our lending grows into all of our communications: letters to guarantors acknowledging their critical role, emails and social media communication to our support base, and a new engagement tool for bar/bat mitzvah kids. There is no better educational vehicle for teaching about social values than the embodiment of those social values and some reflection of what it means to those involved. We also encourage borrowers to share their stories with their communities to engage as many people as possible.

What impact has your program had on your participants?

In the 2016 fiscal year, we lent more than 9.7 million dollars to over 900 borrowers in need. Our loans not only directly help the individuals who take the loans, but also strengthen families and entire communities. With the help of an interest-free loan, borrowers and their families avoid falling into desperate financial circumstances or are able to pursue lifelong dreams, like going to college or graduate school or starting a small business. Below are two stories of HFLS borrowers whose lives were transformed with the help of an interest-free loan.

Rimma received a loan to support the down payment for a low-income subsidized Mitchell Lama apartment. She said: “I moved to the United States from Russia in 1997. My husband and I were living in a rental apartment, which we were barely able to afford. We had a bad landlord who stopped giving us heat one winter, just as my husband was about to have major oncology surgery.

Because our apartment was so cold, he really thought that he wouldn’t survive after the surgery. I started looking for other apartments, but they were so expensive. We had entered a housing lottery, and fortunately a low-income subsidized apartment opened up just when we needed it. It was perfect, but we needed to pay a substantial deposit immediately.

I came to HFLS for help with a large part of the payment. Without this loan, I would have had to ask all of my friends for small amounts of money to try to come up with whole payment.

When I got the loan, I really felt as if a miracle had happened! We were able to move right away, only because of HFLS. I have to say that you saved my husband’s life, and we are so grateful.”

Hillary and Joel, who received a loan to adopt their son, Levi, said:

“We wanted a child so badly. We were trying to start a family and it just wasn’t happening. After a while, one of us said, ‘Maybe we should think about adoption?’

It was a really challenging process. There’s so much work – and money – that goes into it. We placed newspaper ads, hired lawyers and arranged home visits.

We knew this would be a huge financial undertaking, and we came to HFLS. When we were approved for the loan, we were in tears, because we needed it so desperately at that point. If we hadn’t had this money, my parents would have refinanced their home, or we would have put a lot of it on credit cards.

In December 2015, we met Levi for the first time, just after he was born. I can’t describe how I felt when I held him for the first time! The love I had for him was just absolutely overwhelming. I kept thinking, “I’m a mom! I’ve always wanted to be a mom.”

Levi is a really big, strong and active baby. He has brought so much joy to our lives and to our whole family. We have never loved someone as much in our lives – never.”

What have you learned about applied Jewish wisdom that contributes to your success?

We have learned the importance of shaping traditional Jewish wisdom to fit current needs in a way that directly and immediately improves people’s lives. Interest-free lending is a 3,000 year old practice that we continually shape to meet current challenges, like reducing the burden of student loans for low-income and immigrant families and minimizing the financial impact of growing families through fertility treatments or adoption. We have learned that wisdom is not a static object, passed from generation to generation without being shaped by the ones who transmit it. Quite the opposite: Jewish wisdom, and the practices through which we express it, are in unceasing dialogue with actual Jews. We not only pass along our wisdom, but we add ourselves to it, enriching and enlivening the tradition as it moves through us. As we shape this wisdom and tradition, it shapes all of us as individuals and as a community, touching countless lives along the way.