Interest-Free Loans Improve Quality of Life
An American immigrant to Israel received today one of the country’s great honors, the Knesset Speaker’s Prize for Quality of Life.
In 1990, three decades after immigrating to Israel, Hebrew University academic Eliezer Jaffe set about taking the old shtetl idea of a free loan society and building it on a national scale in Israel.
Jaffe, co-chairman of the Hebrew University Centre for the Study of Philanthropy and author of “Giving Wisely: The Israel Guide to Non-profit and Volunteer Organizations,” set up the Israel Free Loan Association, a body that grants interest-free loans to low-income individuals and businesses.
The organization provides new immigrants and veteran Israelis with interest-free loans for all kinds of purposes, including adapting a family’s living space to accommodate the special needs of a disabled family member, developing small businesses, setting a failing business back on its feet and making higher education available for disadvantaged young people.
The great thing is that the money comes back — it’s a kind of recyclable philanthropy — meaning that while its assets are much smaller, the program has awarded some $130 million. It has granted 40,000 loans altogether.
Amazingly, the return rate for these loans stands at 99%, a rate much higher than is the norm for bank loans, or loans from other financial institutions.