During Shmitah, the sabbatical year that takes place every seven years, Deuteronomy 15 calls for the remission of debts among fellow Israelites. The text anticipates a difficult consequence: As the year of release approaches, lenders may become reluctant to lend to those in need. Deuteronomy 15:9 warns against precisely that calculation.

According to Mishnah Shevi’it 10:3, Hillel later encountered the problem the Torah had anticipated. People were refraining from lending, leaving the poor without access to credit. His response was the prozbul, a legal instrument that preserved the collectibility of certain loans through the sabbatical year. It protected lending, but also left borrowers responsible for debts that otherwise would have been released. 

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One lesson here is that debt relief and access to credit are both valuable, and a system that protects one without considering the other can impose costs on the people it intends to help.

I am a Brazilian investor and entrepreneur, and for years I have been working on a set of questions applicable to a family, a company and a country: When something goes wrong, who pays for it, for how long and does anyone get to start over with a clean slate? 

Jewish tradition already took these questions seriously millennia ago, but Israel addressed them in modern legal terms when the Knesset enacted the Insolvency and Economic Rehabilitation Law in 2018, which took effect in September 2019. The law explicitly identifies economic rehabilitation and reintegration as objectives alongside repayment to creditors. For individuals, it establishes a structured path toward discharge, generally involving a three-year payment period following a rehabilitation order, subject to judicial adjustments and statutory exceptions. It does not erase responsibility; it defines the conditions under which financial recovery can become possible.

My own country illustrates why the distinction matters. In Brazil, a company can reorganize its debts while creditors continue pursuing the people who personally guaranteed them. Brazilian law provides individual insolvency and discharge mechanisms, but those procedures are separate and can be lengthy. A business may complete its restructuring while its founder continues facing personal debt enforcement. That gap can make another venture considerably harder to finance.

What does any of this have to do with philanthropy?

Jewish philanthropy already contains institutions that help people rebuild. Hebrew free loan societies have provided interest-free credit in American communities for more than a century. In Israel, Paamonim helps families address financial distress through counseling, budgeting and debt management. There are three ways in which donors and foundations could build on that tradition.

First, fund the exit, not only the start. Foundations that support entrepreneurship could also finance legal counseling, debt negotiation and financial planning for founders closing unsuccessful businesses. These services may prevent a manageable failure from becoming a prolonged personal crisis. The objective would not be to preserve every company but rather to make orderly and responsible closure possible.

Second, share risk without eliminating accountability. Philanthropic loan funds could offer limited first-loss protection or guarantee support for carefully assessed borrowers, reducing the need for unrestricted personal exposure. Lenders would still conduct due diligence, and borrowers would remain responsible for agreed obligations. The purpose would be to distribute risk more deliberately, not remove it.

Third, reward early disclosure. Grantees and borrowers who report trouble early should be treated better, not worse, than those who hide it until it is too late. Funders know this from their own portfolios: the problems that hurt most are often the ones they hear about last.

A foundation could begin with a small pilot in partnership with a community lending organization and qualified legal advisors. The program could provide early financial counseling, support negotiated settlements and help eligible borrowers navigate formal insolvency procedures. Its results should be measured: how many participants reach workable settlements, how much creditors recover and how many regain access to sustainable employment or entrepreneurship.

None of this means failure should be free. The prozbul reminds us that protecting access to credit sometimes requires protecting creditors, even at a cost to debtors. But modern philanthropy can also consider the other side of that balance: how to preserve lending while ensuring that an honest financial failure does not become an indefinite personal burden. 

A community that offers a responsible path back after failure can preserve human experience and future economic opportunity. Jewish tradition provides a starting point for that conversation, and philanthropy can help turn it into practical institutions.

Heitor Castro is a Brazilian investor and entrepreneur and the author of Amplianism: The Economics of Error.