The Israel Free Loan Association (IFLA) is the largest free loan association in the world, having lent out nearly $150 million in the last two decades. This non-profit organization offers interest-free loans to citizens of Israel only. It is supported primarily by private donations and grants. The IFLA's basic principle is that a loan is better than charity as it enables people to help themselves.
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The Israel Free Loan Association is the largest interest free loan organization in the world. Since its inception in 1990 it has lent out nearly $150 million to over 43,200 low income families, the working poor and struggling small businesses. Currently it lends out $15 million every year to Israelis of all backgrounds.
IFLA loans help immigrants from Ethiopia move out of temporary housing and buy apartments, enable university students to obtain academic degrees, allow ailing Israelis to undergo operations, help families with handicapped children to purchase medical equipment, help struggling Israelis get back on their financial feet, enable Israelis to start a business or expand existing ones thereby supporting both themselves and others and much more.
While with conventional charity the money is depleted, with free loans the source funds are preserved. And while with conventional charity its influence decreases over time, with free loans the influence increases as time passes as more and more loan repayments are recycled, from the same funds, ad infinitum. As the great Jewish sage Maimonides wrote – a loan is better than charity as it helps people help themselves.
The IFLA is a non-profit organization and registered accordingly in Israel, the U.S., the U.K. and Canada. The Chairman of the IFLA is Jerusalem businessman Edward S. Cohen. The Founder and President of the IFLA is Prof.Eliezer Jaffe, an expert on nonprofit associations and philanthropy, who is a Professor at the School of Social Work of the Hebrew University of Jerusalem and Co-Chairman of the Center for the Study of Philanthropy.
From 1990 to 2011, the Israel Free Loan Association has provided nearly $150 million in interest-free loans to more than 43,000 needy Israelis to help them through a temporary financial crisis. The IFLA approves an average of 230 new loans each month, including personal and small business loans.
The IFLA offers loans to new immigrants in Israel from any country ($4,166), to immigrants from Ethiopia moving from caravans to permanent housing ($4,166), to parents raising a seriously handicapped child at home ($4,166-$8,333), to single parents or large families ($4,166), to adopting couples ($4,166-$7,000), to needy students for college tuition ($4,166), to immigrants and other struggling Israelis for small business loans (up to $19,444), to victims of terror or those with economic problems due to the security and war situation ($4,166) and to those in special emergency situations. There is no limitation on geographical location of the borrowers, so long as they are low income Israeli citizens living in Israel.
Applicants must be employed and earning at least an NIS 3,000 steady monthly income, and must have two to four guarantors who are employed. Loan repayments are flexible, but the basic principle is that loans must be repaid on schedule so that they can be constantly recycled and reissued to other borrowers. Only 0.29% of the loans made are defaulted.
From 1990 to 2011, the IFLA's capital had been recycled over three times the original value of donations and the source funds are recycled again in perpetuity.
The IFLA is supported by private donations, grants and legacies from individuals and private foundations in Israel and other countries around the world. Administrative expenses are less than 4% of total financial activity, which are for salaries, bank charges and legal fees. Administrative expenses are partially covered by occasional overhead grants from some donors. No funding has come from the Israeli government or the Jewish Agency.
Donors who make a $5,000 cumlative donation can create a Named Loan Fund to or in honor of family members or friends, or to mark an important occasion, or in their own name. Donors who have a Named Loan Fund receive an annual report of loans made from their loan account at the IFLA. Over 350 individuals, Jewish federations and foundations have chosen to open a named interest-free loan fund account in their name at the IFLA, which range from $5,000 to several million dollars. Others have included the IFLA in their will. The IFLA depends on these donations to meet requests for loans and to open new loan categories. There is a waiting list of applicants and donations are used immediately to issue new interest free loans.
The Israel Free Loan Association is a highly regarded national nonprofit association. It has received the President's Award for Outstanding Volunteer Organization, the Mayor of Jerusalem Citation for Nonprofit Activity, the Ministry of Immigrant Absorption award for help to new immigrants, and the Sderot Conference Award for contribution to Israeli society. The IFLA website www.freeloan.org.il is in both English and Hebrew, and the Hebrew section of the site contains application forms for use of borrowers.
In January 2012 Professor Jaffe was awarded the Speaker of the Knesset Prize for Outstanding Service to the State of Israel.