See below to read the eJewishPhilanthropy article submitted by our fearless leader, Cindy Rogoway, and her counterparts in New York (David Rosenn), Los Angeles (Rachel Grose) and Detroit (David Contorer) about Hebrew Free Loan organizations being part of the solution for dealing with poverty in the Jewish Community. Feel free to share it with your networks!
There is a startling finding at the center of “On The Edge,” the recent report on Jewish poverty in the United States commissioned by the Harry and Jeanette Weinberg Foundation: Most American Jews struggling to make ends meet are not on a downward slide or trapped in a multigenerational cycle of poverty. Instead, the struggles of two-thirds of Jews who face economic hardship are best described as “situational vulnerability.” Their financial challenges, while very real, tend to be episodic rather than long-term, caused by unexpected events like job loss, family changes or natural disasters.
“On the Edge” provides rich details of the financial vulnerability experienced by millions of American Jews, lifting up the voices of individuals whose financial struggles take a toll on their physical well-being, their mental health and their connections to the Jewish community. Like previous work commissioned by the Harry and Jeanette Weinberg Foundation, “On The Edge” deepens our knowledge of the extent and impact of financial insecurity in the American Jewish community, shining light on an issue that affects millions of American Jews but is not often at the top of the community’s agenda.
For all its comprehensiveness, however, the report fails to note that the Jewish community already has a powerful and uniquely Jewish tool for addressing situational vulnerability: a network of over 50 interest-free loan agencies that provide dignified, accessible relief from short-term financial challenges and help borrowers invest in a stronger long-term economic future for themselves and their families.
As the heads of the four largest Jewish free loan organizations in the United States, we know that situational financial vulnerability comes from the struggle of many full-time working people to afford the basics, leaving them living paycheck to paycheck and unable to accumulate savings for emergencies. When emergencies arrive, people without savings often turn to payday loans or subprime credit cards. Because these “solutions” come with interest rates from 25% to 400%, they quickly find themselves caught in a cycle of unmanageable debt, and what started out as a modest and temporary financial setback threatens to turn into a full-blown financial crisis.
All of this could be avoided if people facing modest financial challenges were able to access credit designed as a tool to help them meet financial challenges without diminishing their already scarce resources.
For centuries, Jewish communities have provided exactly that kind of credit by creating interest-free loan funds that mobilize community resources for people in need — and we provide it still. Last year, member agencies of the International Association of Jewish Free Loans disbursed more than $230 million in loans to thousands of borrowers.
Loans that helped them recover quickly from a financial bump in the road. Loans that helped them travel down a different and better financial road altogether.
More than just a safety net, loans from Jewish free loan organizations are also “ladders” that borrowers use to invest in opportunities to increase their long-term earning power by earning a college degree, completing a job training program, or starting a small business.
In addition to being a distinctively Jewish form of addressing financial insecurity, interest-free lending is also incredibly cost-effective. All of our organizations have repayment rates of 99%, which means that contributions to interest-free loan organizations are recyclable: As soon as repayments from current loans come in, we lend them right back out again, creating a force multiplier for impact.
In short, interest-free loans are a tailor-made solution to the form of financial precarity highlighted by “On the Edge.” So why is mention of this tool virtually absent from the new report?
You will not find interest free-loans on a list of helpful reduced-rate goods offered by Jewish and other organizations (p. 64), nor will you find Jewish interest-free loan organizations on the table of organizations with whom human service providers have formed useful partnerships (p. 65). And while the report does list a set of strategic opportunities for philanthropy, the strategic opportunity of taking interest-free lending organizations to scale somehow does not make the cut.
“On the Edge” mentions that counseling and guidance can be crucial for successful intervention outcomes, but in addition to good casework, many of the challenges faced by clients require cash. Because funding is limited for things like eviction prevention, college completion and resolving medical debt, interest-free loans are a renewable resource and a tool that every human service professional working on financial insecurity should have in their toolbox.
Jewish free loan organizations are also highly aligned with the values and outlook of human service organizations, and are in many cases capable of helping borrowers meet needs in the areas of housing, education, employment and health care. Funding for better connections and collaborations between Jewish interest-free loan organizations and Jewish human services agencies is another strategic opportunity for philanthropists to consider.
The nature of Jewish poverty is complex, and there is no simple solution. “On the Edge” adds to an increasingly sophisticated body of knowledge that will help the community better understand and address the set of material, emotional and spiritual issues facing lower-income American Jews. Thankfully, the American Jewish community already has a powerful tool that appears to be a perfect fit for some of these kinds of challenges; and as talk about Jewish poverty instigated by this new report moves forward, we want to reintroduce interest-free lending into the conversation.
David Contorer is the executive director at Hebrew Free Loan Detroit.
Rachel Grose is the executive director of the Jewish Free Loan Association in Los Angeles.
Cindy Rogoway is the executive director at the Hebrew Free Loan Association of San Francisco.
Rabbi David Rosenn is the president and CEO of the Hebrew Free Loan Society in New York.
