New Goodwill Track
IFLA’s new Goodwill Track takes our mission to help low income Israelis to the next level by taking on borrowers who are trying to climb out of poverty.
After a successful pilot program with Katef L’Katef, IFLA is now offering Goodwill loans to borrowers who do not meet our usual criteria either because they do not have guarantors or because they do not have a sufficient credit record. While we help low income borrowers, we have been unable to reach segments of the low income population who are truly facing poverty. With partnerships like our new initiative with Katef L’Katef, and with your help we can help people who normally are unable to benefit from an IFLA loan.
HOW DOES IT WORK
Borrowers can receive a Goodwill Loan in one of two ways.
- The borrower comes to IFLA and we see that they don’t meet our criteria. When we learn that their financial situation is severe and they could benefit from a financial rehabilitation program, we refer them to one of our partners. After completing the program successfully, they can come back to us for a loan.
- An individual or family has been vetted by one of our partner organizations and is referred to IFLA when the organization feels that an interest-free loan would:
- Provide financial stability for the borrower
- Not be too much of a burden for the borrower
- The borrower has the tools and means to repay the loan
HOW YOU CAN HELP
IFLA has designed two opportunities for donors to support Goodwill Loans.
Option 1 – Loan Funds:
You can donate today to the Goodwill loan fund which will provide loans to borrowers who do not meet our standard criteria. We anticipate a 5% default rate on these loans and by donating through this link or indicating Goodwill on your check, we know that you are aware of this increased potential default. If you donate $10,000 or more, you can of course establish your own Named Loan Fund which entirely designated to Goodwill loans.
Already have a Named Loan Fund and willing to accept a little more default and designate it to Goodwill loans? Contact us and we’ll make the change right away to make sure your loan fund is battling poverty. Kaley@freeloan.org.il
Option 2 – Guarantor Funds:
We anticipate a 5% default rate on these loans and until now we have shared with our donors our commitment to the lowest default rate possible. In order to use existing funds that are not designated for this purpose, we need a way to cover the default. You can help us by committing to cover the default and providing 5% of the amount you are willing to guarantee up front.
For example, $1,000 donation up front allows IFLA to loan 60,000 NIS loans (Approximately 2-3 loans) along with a commitment to cover any of default on the loans at the end of year.
This option is for major gifts of $10,000 and above. Please contact us today to contribute to the Guarantor Fund. Kaley@FreeLoan.org.il
BACKGROUND OF GOODWILL LOANS
After 26 years of impacting low and middle income Israelis, we are getting into the trenches and taking on segments of the low income population who are committed to getting out of poverty.
How is that different from what we are doing already?
People always ask how we manage to maintain such a low default rate of 0.16%. The answer is simple, we utilize a set of criteria that sets up the borrower for success:
As a result our current borrowers might be low income but are at least stable enough to have guarantors that will trust them, to not have defaulted on any loans, and have reasonable credit history. Our loans help this population because they don’t have a cushion when financial challenges come up and an interest bearing loan from a bank would put them in even worse financial hardship.
IFLA has always been committed to helping impoverished Israelis while maintaining a responsibility to our donors by ensuring the lowest default possible. This is how we sustain the high rate of recycling on donations.
Two years ago a few donors approached us with the same desire to help those truly in poverty and as a result a partnership with Katef L’Katef (link) was born.
Katef L’Katef takes on the lowest level of low income families and over a period of six months to two years, provides financial literacy and rehabilitation guidance over several months.
In 2014 IFLA launched a program with Katef L’Katef to become a part of the solution they offer to their families who are facing intense poverty, by offering an interest-free loan as a key part of their financial rehabilitation program. After changing their budget to live within their means and ensuring every adult in the house has a job, a family is in a much more stable position. But there is often still the issue of debt. Katef L’Katef also takes the step if negotiating this debt down to a more reasonable and affordable. This is where IFLA comes in. We provide a loan for the amount of the outstanding debt, up to 30,000 and the client can pay off their debt interest-free and with a reasonable repayment schedule. This last step in the Katef L’Katef process can often be the “make it or break it” for a family. After all their hard work to stabilize, we are grateful to provide this final piece to the puzzle of their financial freedom and climb out of poverty.
So far none of the Katef L’Katef borrowers have defaulted or were late on a payment. We still have time with the repayments of the initial loans but with the success so far, IFLA’s Board has decided to expand the program.
Donate today to support the Goodwill Track:
* U.S. tax deductible contributions are made to American Friends of IFLA (AFIFLA, 501(c)3).