Donald Sterling TV tirade puts surprise spotlight on Jewish free loan groups


LOS ANGELES (JTA) — Not every celebrity endorsement is a welcome one.

The saga of Los Angeles Clippers owner Donald Sterling took yet another bizarre turn when he went on national television this week and started touting the virtues of Jewish mutual aid organizations.

In a CNN interview that aired Monday night, Sterling’s attempt to apologize for the inflammatory racial remarks that may cost him his team veered into a tirade against Magic Johnson. The Jewish tycoon argued that the basketball legend, who has a charitable foundation that addresses HIV/AIDS issues, is insufficiently philanthropic, and Sterling invoked the tradition of Jewish free loan associations to make his point.

“What does he do for the black people? He doesn’t do anything. The Jewish people have a company, and it’s for people who want to borrow money at no interest,” Sterling told CNN’s Anderson Cooper. “They want to give them a fishing pole. We want to help people. If they don’t have the money, we’ll loan it to you. You don’t have interest. One day you’ll pay us back.”

Earlier in the interview, during another attack on Johnson, Sterling said, “Jews, when they get successful, they will help their people. And some of the African-Americans — maybe I’ll get in trouble again — they don’t want to help anybody.”

What Sterling was describing — and thrusting rather uncomfortably into the media glare — is a more than century-old communal institution that has helped both Jews and non-Jews with interest-free loans.

His words were not exactly welcome news to the professionals who run these organizations.

“I’m sorry that he mentioned us,” said Cindy Rogoway, executive director of the Hebrew Free Loan Association of San Francisco and vice president of the International Association of Jewish Free Loans. “I just think he’s a disgrace to himself.”

Sterling’s remarks,  however, do shed light on what has been a quiet corner of the Jewish charitable world.

Jewish free loan societies grew out of the landsmanschaften, or mutual benefit societies, organized by Jews from Central and Eastern Europe in the 19th century and transported to America when they immigrated.

Drawing on the biblical admonition not to charge interest to fellow Jews, the interest-free loan societies became a key financial resource for immigrants, providing funds for housing and education, as well as capital for small business expenses such as pushcarts and sewing machines.

“One of the main reasons that Hebrew free loan societies became so popular in the United States is that many immigrant Jews used these as access to capital for business,” said Shelly Tenenbaum, a professor of sociology at Clark University and the author of “A Credit to Their Community: Jewish Loan Societies in the United States.” “Business was a very important vehicle for Jewish immigrant mobility.”

Free loan societies proliferated. According to Steven Windmueller, an emeritus professor of Jewish nonprofit management at Hebrew Union College in Los Angeles, a 1927 survey by the American Jewish Committee counted more than 500 Jewish free loan societies in the United States.

But by the mid-1940s, free loan societies were on the decline. Banks began to provide better access to capital through personal loans and the needs of growing Jewish businesses outstripped the societies’ resources.

The website of the International Association of Jewish Free Loans lists more than 30 Jewish free loan associations in the United States that belong to its network, along with others overseas.

Interestingly, the two largest American Jewish free loan societies, in New York and Los Angeles, were founded more than 100 years ago as nonsectarian institutions, giving loans to Jews and non-Jews. San Francisco, the third largest, has been sectarian since it was founded in 1897, but it has just launched a pilot program to offer student loans on a nonsectarian basis.

The Jewish free loan societies now fund an array of programs ranging from loans for education and small business, but also for camping, adoption and even fertility treatment. Borrowers are required to have one or more co-signers. All the free loan societies boast repayment rates of more than 99 percent.

A number of free loan societies have seen their assets and loan pools grow in recent years — the Jewish Free Loan Association in Los Angeles, for example, has some $18 million in assets and approximately $11 million circulating in loans, a figure it estimates has risen by about $1 million a year in the past few years.

The organization said Sterling has not been a donor but declined to comment further on his remarks.

Recent economic turbulence also has returned free loan societies to their roots as a last-resort safety net for American Jews and others.

The San Francisco association recently implemented an unemployment loan program. Rachel Grose, an associate director for the Los Angeles group, said that starting with the recession, her organization has seen its applicant pool expand from the poor and working classes to include more middle-class people.

“You had a lot of people who lost their jobs,” Grose said. “They weren’t necessarily living extravagant lifestyles, but they weren’t our typical caseload.”

Jewish free loan associations have inspired other ethnic groups to emulate their model. In San Francisco, the Hebrew Free Loan Association has been working for more than a decade with members of the local black community, including former Mayor Willie Brown, to help establish the African American Interest Free Loan Association.

Timothy Simon, the board chairman of the AAIFLA, said his organization is restructuring but hopes to begin making loans later this year pending approval by the state, with the San Francisco Hebrew Free Loan Association helping to evaluate, serve and process loans.

The city’s Hebrew Free Loan Association “has been not only extremely supportive but overwhelmingly empathetic to the needs of underserved communities in San Francisco,” Simon told JTA. “Our alliance is very strong.”

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