Ogen offers no- and low-interest loans to tide cash-strapped Israelis over as war hurts economy

With government slow to roll out assistance programs, the nonprofit lender is looking to leverage philanthropic donations to help families, businesses and nonprofits

More than 2,000 Israelis have applied for no- or low-interest loans from the nonprofit lender Ogen this week, as the ongoing war with Hamas has displaced tens of thousands of Israelis and wreaked havoc on the national economy, the organization’s CEO told eJewishPhilanthropy.

This week, Ogen — formerly known as the Israel Free Loan Association — launched the Swords of Iron Emergency Economic Relief Fund, referring to the Israeli military’s official name for the war, which is meant to provide assistance to Israeli individuals, small businesses and nonprofits. Ogen has already raised $10 million for the fund through philanthropy, which CEO Sagi Balasha said the organization can “leverage” to provide several times that in loans. However, Balasha said this amounts to a “drop in the bucket” in light of growing needs.

According to Ogen, the goal of the fund is to provide at least 1,000 no-interest loans to individuals and families, 300 loans to small businesses, and 133 loans to nonprofits, which they estimate will help more than 30,000 people from across the country.

“This crisis started on Saturday the 7th and a day after it started on the 8th, we already met and understood that… there will be an enormous economic crisis in the entire country, not just in the Gaza periphery,” Balasha told eJP this week. “Of course, the Gaza periphery is the center of this war, but businesses all around the country are shut down. More than 350,000 people were called up to the reserves, and many, many types of small businesses are inactive or losing a big chunk of their revenue. And people who cannot make a living.”

The government’s response to the economic ramifications of the war has been limited so far, according to John Gal, a Hebrew university professor and the chair of the social welfare policy program at the Taub Center think tank in Jerusalem.

Gal said Israel’s public social services were “critically understaffed before the war,” which came on top of a general, expected sluggishness of government. While the Israeli Finance Ministry is developing programs to help people who have been displaced by the war or are otherwise unable to work, this type of assistance “takes a while,” he said.

For people more directly affected by the war, specifically those who have been personally injured, there are some programs that have been rolled out to help them, Gal said. He cited a relatively rapid expansion of benefits from Israel’s National Insurance Institute (Bituah Leumi) for the survivors and their families, benefits that are normally only offered to the families of people killed in terror attacks, which roughly 1,700 people have already been deemed eligible to receive.

The Welfare Ministry has also recently partnered with the International Fellowship of Christians and Jews, in which the organization provides NIS 10 million ($2.45 million) and the government matches it, in order to provide direct assistance “to people in need, either those still living on the border or who have been evacuated,” Gal said.

“But the government has not yet decided” about broader assistance in the form of unemployment insurance or grants and support for small businesses,” he said.

Balasha said Ogen was looking to fill that vacuum with its no- and low-interest loans.

“Banks will make a lot of noise as if they’re helping, but their help will be minimal. And you can see our dysfunctional government that is currently unable, after more than three weeks, to come up with financial help of any sort, not grants, not loans, not government guarantees, nothing,” he said. “We understood that we should be there as quickly as possible. And in a week, we raised the first $10 million in order to start an emergency program for families that were hit, for small businesses and nonprofits.”

The initial funding came from four main sources: UJA-Federation of New York, the Jewish Agency for Israel, an anonymous Israeli donor and Robert Gottesman, the executive chairman of the financial services firm First Manhattan, and his wife, Trudy, who are longtime supporters of Ogen. 

“Given Ogen’s current capabilities and reach, we felt the time [was] right to offer substantial support and aid in launching this emergency response campaign,” Gottesman said in a statement. “We have unwavering confidence in Ogen’s ability to make a significant difference for those facing financial hardships during this challenging period.”

Balasha said Ogen needed to raise an additional $25 million in philanthropic funds or else “we anticipate to run out of resources in less than a month.”

Ogen’s pitch to donors is that the impact of their donation is several times greater than the amount they give as the organization uses the philanthropic funds it receives as a guarantee in order to borrow far larger sums from capital markets. “The philanthropy absorbs the risks of defaults… and subsidizes the interest [paid by recipients],” said Eldan Kaye, the lender’s vice president of development and partnerships.

“You donate one dollar, you provide help [worth] four or five dollars,” he said.

Balasha said Ogen was in talks with the government to try to get it to provide a guarantee for its loans, which would further increase the impact of philanthropic donations. (Ogen received such a government guarantee in 2020 during the COVID-19 pandemic.)

“If we raise $30 million, we will be able to provide more than $100 million [in loans],” he said. 

“If the government of Israel will give us a government guarantee for our loans, then the proportions are much bigger. That $30 million will enable us to lend at least 200 million dollars,” Balasha said. “So there is really an opportunity here to leverage philanthropy to big numbers and to reach exactly the populations that were financially hit around the country in a way that is quick, non-bureaucratic and not for profit.”

The emergency fund launched on Oct. 22 and “within 24 hours, there were like 2,000 applications. Not all of them fit, not all of them meet the criteria, not all of them will end up getting lonas, of course, but we are bombarded because we are practically the only ones right now,” Balasha said. 

Gal confirmed that Ogen is the only organization providing these types of no- and low-interest loans in Israel today at significant numbers. “I don’t know of anyone else doing it,” he said.

There are three tracks for Ogen’s loans through the fund: one for individuals and families, one for small businesses and one for nonprofits. Ogen is also offering free financial counseling through its hotline.

Individuals and families can request a no-interest loan of up to NIS 60,000 ($14,700) in order to pay for repairs if their home sustained physical damage in an attack or up to NIS 40,000 ($9,800) if they have income loss. If they are from a community adjacent to the Gaza border, they can also apply for a loan of up to NIS 40,000 without any conditions.

Through Ogen’s joint project with the Jewish Agency, known as SparkIL, businesses can request a loan of up to NIS 300,000 ($73,700) with a heavily subsidized interest rate.

Nonprofits can apply for a no-interest loan of up to NIS 100,000 ($24,600) or a low-interest loan of up to NIS 300,000. 

Kaye said people were already beginning to receive loans through the funds, though he said it was still too early in the process to have a clear picture of the types of people applying.

Balasha stressed that the loans were not pure charity. “We need to make sure that people can repay the loan. If someone had an insolvent business before the war, they don’t need a loan, they need a grant,” he said.

Gal was skeptical of the extent to which Ogen would be able to help Israelis as the concept of no-interest or subsidized loans is not common in Israel, meaning that even people who could benefit from them may not think to apply for one and would instead muddle through until government assistance comes.

However, he said that Ogen’s loans can be a significant resource for businesses and individuals that do not have the reserves to wait the few weeks or few months before significant government assistance programs begin to roll out. “They can play a role in the short term or even the medium term,” Gal said.