Maimonides The Financial Adviser

Anna Carmi, an immigrant from Russia, owns a successful Jerusalem-based ceramics studio. The Israel Free Loan Association (IFLA) has helped Anna both establish and expand her business. Over the past 12 years Anna has received three separate loans for electric infrastructure, a professional ceramics oven and the building of a new studio. Photo: IFLA.

The brochure of the Jerusalem-based Israel Free Loan Association (IFLA) is filled with photos of its smiling recipients and their success stories.

Anna Carmi, an immigrant from Russia, has received several loans to help her expand her ceramics business in Jerusalem, including for a ceramics oven and electric infrastructure; Gigno and Sanayit Beyenah, an Ethiopian couple, received a loan to help them buy an apartment for their family of four; and David Banita, age 7, has cerebral palsy and is paralyzed in both his legs and arms and blind in one eye. His parents, Meir and Vivian Banita, received a NIS 18,000 ($4,658) loan from the IFLA to help them purchase a walker, wheelchair, and high chair for David’s eating and a plastic chair for washing.

Hebrew Free Loan Associations—primarily located in North America but also found around the world—have existed for over 100 years and are based on the biblical injunction in Exodus not to charge fellow Jews in need interests on loans. IFLA’s founder, Professor Eliezer Jaffe, said the organization he started in 1990 aspired to help people help themselves, echoing the highest rung on a 12th-century rabbi and philosopher’s ladder of charity.

“Our financial adviser is Maimonides,” Jaffe said in 1996.

Jaffe’s vision is alive and well in the offices of IFLA, where Chairman Edward Cohen says dignity is the most important word.

“When they’re taking a loan, because they know they’re going to pay it back, they do retain their dignity,” Cohen says during an interview with JNS.org in his office. “I think that is not something that we can put in numbers, but it’s maybe the most important thing we do.”

One of the office’s white walls is plastered from top to bottom with national honors awarded to Jaffe and to the organization, which has given over 43,000 loans, nearly all repaid, to families, individuals, business owners and students since its inception in 1990.

Israel Free Loan Association headquarters in Jerusalem. Credit: IFLA.

“Not only are we the largest interest-free loan organization in Israel, we’re probably the largest in the world,” says Cohen, who was born in Iraq, made aliyah in 1983 from London and has been the agency’s chairman since September. He first heard about Jaffe from a Jerusalem Post article about the young organization that gave out interest-free loans to Ethiopian and Russian immigrants for housing and other basic needs.

Jaffe, who was born in Cleveland, Ohio, made aliyah in 1960 and is a professor emeritus in social work at the Hebrew University in Jerusalem, was familiar with the Jewish free loan societies from the U.S. and viewed the model as the best way to help the new immigrants meet their basic needs. Today, IFLA gives loans not only to immigrants, but also to Druze and occasionally Arabs.

“I really liked what I read, so I called him cold turkey and asked to come and see it,” says Cohen, who also runs his family’s charitable trust. After that initial visit, Cohen decided to donate $20,000 to IFLA, the largest donation it had ever received, unbeknownst to him. Jaffe soon after asked Cohen to join the board, which he soon learned was extremely active, and today oversees the dispersion of 400 standard loans a month, at an average of NIS 20,000 ($5,176). IFLA has given out a total of some $160 million.

“We’ve been meeting every month– 12 times a year for 21 years,” says Cohen. “I was involved from a distance, and I’ve been thrown into the deep end now.”

The efficient organization gives the bulk of its loans—about 70 percent—for financial need for things like home medical equipment, adoption and to the first surrogacy in Israel, while others go toward small business loans of NIS 45,000-90,000 ($11,645-$23,291). The agency also grants scholarships (not to be repaid) to students for university studies.

Recipients pay back their loans in full at a rate that fits their specific situation, in 40 to 60 payments, and if clients encounter trouble meeting their payments, IFLA is happy to work with them to extend the repayment period or change the payment amounts.

Perhaps that’s why IFLA has a near perfect record—99.65 percent—of being paid back.

While IFLA does not ask recipients what they need the loan for—it’s generally assumed that if they’re coming to the agency they really need it—all applicants must present two guarantors and make an income of between NIS 3,000 and 15,000/month ($778 to $3,890) to be eligible.

NIS 15,000 ($3,882) for a family of four fits within the working poor in Israel, says Deena Friedman, IFLA’s development associate.

“We’re really helping the working poor,” says Friedman. “People are working and they’re still not making it and that’s where we step in and say okay, we want to keep you working but you might need a little hand for the time being.”

A big challenge facing the organization, which is supported solely from private grants and donations, is letting Israelis know about its services—which staff say are particularly needed given Israel’s recent “social justice” movement addressing everything from the price of cottage cheese to housing, and the ostensibly growing gap between the haves and the have-nots. That gap is one of the largest in the world, says Cohen.

“We feel like we were doing this before it became fashionable,” says Friedman of the social justice movement. “We’ve been there in the trenches for 20 years doing this stuff.”

Fundraising this summer is particularly exciting for IFLA, as an anonymous donor is doubling every donation received.

Looking to the future, Friedman says she hopes the organization can become more accessible to Israel’s needy population that live outside of the main cities, perhaps via branch offices or a roving office.

“There’s the need,” says Friedman. “If we can get the funding, we could do things like that.”