Peer-to-peer lending: A journey of connectivity for the Jewish future - comment

SparkIL is simultaneously a lifeline for Israel’s small and micro business owners and a new, personal, technology-driven way for world Jewry to be directly engaged with Israel and its people.

 The storefront of Hoshen, hand-crafted Judaica, is one example of a small business using the SparkIL platform to generate interest-free loans from Jews around the world. (photo credit: Hoshen)
The storefront of Hoshen, hand-crafted Judaica, is one example of a small business using the SparkIL platform to generate interest-free loans from Jews around the world.
(photo credit: Hoshen)

Maria, a new immigrant and former engineer from Russia, wanted to pass her knowledge to the next generation of Israeli youth by creating an after-school program featuring Lego. She received an interest-free loan to buy Lego kits to expose dozens of children throughout Acre in northern Israel to the power of engineering.

An Ethiopian Israeli woman received an interest-free loan to open an Ethiopian restaurant in Rehovot. She suddenly became equipped not only with stable income, but the opportunity to expose Israeli society to her culture.

Haredi (ultra-Orthodox) and secular Israelis received a loan to open a brewery in Haifa. The venue serves not only as a place to share a drink, but a setting where the secular and religious communities can come together without judgment.

These scenarios are not figments of the imagination. Instead, they are tangible embodiments of the forthcoming impact of a win-win proposition for Israel’s small business owners and the Jewish state’s supporters throughout world Jewry. That proposition is SparkIL, the first peer-to-peer lending platform that enables individuals to support the small business of their choice in Israel.

How did this new venture come to be? It is a dream that combines two of my longtime passions.

 Amira Ahronoviz, CEO and Director General at The Jewish Agency, Na’ama Ore, CEO of SparkIL and Sagi Balasha, CEO of The Ogen Group (from left to right) mark the launch of SparkIL. (credit: SparkIL) Amira Ahronoviz, CEO and Director General at The Jewish Agency, Na’ama Ore, CEO of SparkIL and Sagi Balasha, CEO of The Ogen Group (from left to right) mark the launch of SparkIL. (credit: SparkIL)

The first passion dates back to my childhood in Beersheba and the Negev, where I learned how small businesses function as a major driver of a healthy economy, particularly for disadvantaged communities in Israel’s socioeconomic periphery. For members of peripheral populations who experience gaps in access to stable income, running a small business creates a model for supporting a family and building a brighter financial future. This notion was reinforced when I managed loan funds for small businesses in the Negev as part of my first formal position at the Jewish Agency for Israel.

Inequitable distribution of economic strength is a pressing issue in Israel today, as some populations in the country are being left behind. Economic growth does not spread to all segments of Israeli society or all regions of the country.

This is not a small-scale problem, as 210,000 of Israel’s approximately 500,000 small and micro businesses are located in the country’s geographic or social periphery, according to a 2020 report from the Ministry of Economy. This challenge of inequitable distribution also makes many would-be supporters of Israel throughout the Jewish world, among them American Jews, deem Israel a wealthy country that no longer needs their investment.

The commercial and financial system fails to sufficiently appreciate the economic contributions of small businesses, often presenting business owners with obstacles to success. 32% of Israel’s small and micro businesses report that a lack of accessible credit constitutes the primary barrier to expanding their businesses and to maintaining stability and growth in a competitive market, the Ministry of Economy found. In some ways, the system is telling them to give up on their dreams, and on their ability to maintain a healthy financial situation.

On a parallel track, the second passion revolves around my decades of efforts to foster greater closeness in Israel-world Jewry relations – and my understanding that current challenges are as vast and complex as they have ever been in that arena. Today’s younger generation is far different than its predecessors, including the ways in which its members perceive their role in the world, act on their values, form their opinions, and perceive leadership.

Younger Jews live in the digital sphere. They want to quickly see the results from any endeavor they are involved with, and to be agile, moving from one initiative to the next. This generation connects more directly with people and values. We need to give them choices of ways to engage with Israel, rather than force-feeding them a single solution to embrace or one cause to support. Members of the younger generation are also inspired by the chance to utilize innovative financial vehicles such as impact investing, and we need to provide them with those opportunities.

Solving problems and answering questions

Due to these challenges in the arenas of Israel’s small business environment and Israel-world Jewry relations, I asked myself two questions. First, how can the global Jewish collective support small businesses, and connect entrepreneurs with an environment that helps them grow and fulfill their dreams, as a mechanism for continuing to strengthen Israel’s society? Second, how does the global Jewish collective create more relevant, up-to-date opportunities for engagement with Israel which meet younger people where they are?

The answer to both questions is SparkIL, established in collaboration with The Jewish Agency for Israel and The Ogen Group. The Jewish Agency’s unique role as a global platform working in and connecting Jewish communities around the world with Israel, enabled by the direct support of the Jewish Federations of North America (JFNA) and Keren Hayesod, will contribute directly to SparkIL’s unique strategy and capabilities.

Ogen brings to the table its knowledge and experience as a critical player in the social finance arena within Israeli society. SparkIL is also made possible by its founding partners, including the Max M. & Marjorie S. Fisher Foundation, and UJA-Federation of New York, along with a private foundation.

JFNA and the Jewish Federation of Greater Pittsburgh are providing essential support to SparkIL through risk cushions. These funds will allow SparkIL to offer more borrowers opportunities to raise much-needed capital on the platform.

This new digital platform allows lenders to explore business opportunities that empower them to make an impact on Israeli society that speaks to their aspirations, passions and values. The platform’s funding opportunities are categorized by People, Place and Purpose. This includes Israel’s populace, cities, regions and high-priority socioeconomic causes.

SparkIL’s founders envision a day when all of the dreams of Israeli small business owners are fulfilled. Crucially, through crowdsourcing, the platform harnesses a new form of Israel-world Jewry solidarity in which lenders will be engaged and inspired by borrowers’ stories. They will be right alongside them in pursuing their dreams.

Once multiplied, small changes can make a difference on a large scale. That is how SparkIL maximizes the impact of any loan, turning traditional philanthropy on its head. Each contribution is pooled into a larger loan for the business or population of the lender’s choosing. After repayment of their loan, lenders can choose to reinvest their money into other Israeli small and micro businesses – ensuring that their initial loan has ripple effects indefinitely – or to withdraw their funds from the platform. When the borrower’s goal is met, the full loan is released.

Innovative lending strategies

SparkIL also generates opportunities for creative lending strategies. In addition to individual lenders supporting Israeli small and micro businesses, they can join forces with their relatives, friends, colleagues, fellow students, or partners in other personal networks. Imagine, for instance, the sense of community that is fostered when a loan is funded by an entire bus from a Birthright trip, division of a summer camp or membership of a synagogue.

We will measure success not only by the number of loans or amount of dollars we provide, but by the creation of a broad, diverse community of social lenders, as well as a deep pipeline of diverse borrowers whose stories showcase the multifaceted nature of Israeli society.

SparkIL is simultaneously a lifeline for Israel’s small and micro business owners, and a new, personal, technology-driven way for world Jewry to be directly engaged with Israel and its people, as well as with Jewish values. We are embarking on a unique journey of connectivity that is poised to pay dividends for the Jewish future.

The writer is CEO and director-general of the Jewish Agency for Israel, and the chair of the board of SparkIL.