Loans Without Profit Help Relieve Economic Pain

When Hirshy Minkowicz was growing up in a Hasidic enclave of Brooklyn 30 years ago, he often noticed visitors arriving after dinner to meet with his father. They would withdraw into the study, speak for a time, then part with some confidential agreement having been sealed.

As he grew into his teens, Hirshy came to learn that his father operated a traditional Jewish free-loan program called a gemach. The visitors, many of them teachers in local religious schools, struggling to raise their families on small and irregular salaries, had been coming to borrow money at no interest and with no public exposure.

Now 39 years old and serving as the rabbi of a Chabad center near Atlanta, Rabbi Minkowicz has done something he never expected: open a gemach that deals primarily with non-Orthodox Jews in a prosperous stretch of suburbia. The reason, quite simply, is the prolonged downturn in the American economy, which has driven up the number of Jews identified by one poverty expert as the “middle-class needy.”

The same phenomenon has appeared in Jewish communities across the country, albeit most often in those with existing Orthodox populations already familiar with the gemach system. This institution, rooted in biblical and Talmudic teachings and whose name is a contraction of the Hebrew words for “bestowal of kindness” (“gemilut chasadim”), is now meeting needs created by such resolutely modern causes as subprime mortgages, outsourcing and credit default swaps.

“I honestly never thought, in my realm here, to start a gemach,” Rabbi Minkowicz said in a recent interview. “I thought people wouldn’t understand it. It’d be a foreign concept. They hadn’t grown up that way. But definitely, definitely, definitely the economy now is the worst. The 13 years I’ve been here, I’ve never seen people go from a regular life to rags. I’ve seen that up-front and personal.”

It is difficult to determine the exact dimensions of the economy’s impact on the Jewish population in general and on the surge in the use of gemachs specifically. The loan programs, often financed and run by families, operate on the basis of anonymity. Governmental statistics on poverty, unemployment, foreclosure and other such measures of the continuing malaise are not broken down by religion, as they are by race.

Still, the evidence points to an economic toll on Jews — not severe enough in most cases to plunge them into homelessness and destitution, or to qualify them for food stamps and Medicaid, but deep enough to destabilize what had been securely middle-class lives. Since the stock market collapse in late 2008 pushed the nation into recession, the demand for food and clothes from Jewish social service agencies and charities has risen by roughly 40 percent, according to their administrators.

“This area of the middle-class needy has just exploded,” said William E. Rapfogel, the chief executive of the Metropolitan Council on Jewish Poverty, which covers the New York area. “We’ve seen people who were making $75,000, even $200,000, lose a substantial portion of income. When they lose a job, they get another, but it’s a job for less. They’re so over-leveraged in their homes, they can’t get out. If they sold, they wouldn’t take out a nickel.”

On Staten Island, the borough of New York most akin to a suburb, Rabbi Moshe Meir Weiss of the Agudas Yisroel synagogue has seen that situation. In the past, Jews in his community used gemachs primarily to borrow items they needed for only a limited time: a wedding dress, rubber bins for moving furniture, a wig to cover hair lost to chemotherapy, even breast milk for a nursing child. Over the last several years, however, the gemachs have increasingly dispensed cash loans and groceries.

“People have been so taken by shock,” Rabbi Weiss said. “Picture yourself, God forbid, having to take a can of tuna from someone. It’s almost like the soup lines of the Great Depression.”

The gemach system, however, offers two tangible differences. First, as a matter of religious teaching and longstanding custom, a gemach makes no profit on its loans. Second, the tradition of confidentiality, rooted in Judaic commentaries about giving and receiving charity, allows a supplicant to save face.

“When it’s within your own group, it’s less embarrassing,” Rabbi Weiss said. “You feel your compadre understands and is doing it out of love.”

In suburban Atlanta, Rabbi Minkowicz had similar thoughts in mind last August, when a congregant approached him with an idealistic but unformed proposal. The man had seen the toll that corporate layoffs and the cratered housing market had taken on the local Jewish community. He and his wife, both professionals in public-sector jobs, had saved $5,000 to do something about it. Their question was what.

At that point, Rabbi Minkowicz explained about gemach, a word the donor had never heard. What impressed the man immediately, in this era of celebrity charities and naming rights, was the quality of humility. A borrower would not be subjected to a credit check or required to put up collateral, only to have another member of the Jewish community co-sign. The donor could remain unknown.

“I could help people without seeming like I’m showing off,” the man said. Indeed, he spoke for this column only on the promise that his identity not be revealed.

By now, four months later, the resulting gemach has made two loans of about $1,000 apiece, with a third imminent. As those borrowers repay the gemach, at the rate of roughly $100 a month, Rabbi Minkowicz can in turn recycle the money to others who need it.

All of which puts him in mind of those knocks on the door in Brooklyn decades ago, and of the decorous way his father answered. “I’ve tried to use the same model I saw,” Rabbi Minkowicz put it. “You help the people who are struggling. And you try to preserve their dignity.”

http://www.nytimes.com/2011/12/03/us/a-traditional-jewish-loan-program-helps-ease-pain-of-tough-economic-times.html