Our Gemara on Amud Beis discusses a teaching of Rav Yitschak, regarding the status of a collateral object. Is the object considered still in the possession of the borrower, or once the collateral is taken, it is fully owned by the lender until such a time as the borrower repays the loan? One halachic outcome that depends on this distinction is if the object was lost due to unforeseeable circumstances. If the object is fully possessed by the lender, then he must absorb full liability for any losses, just as any owner of an object does. However, if it is still in possession of the borrower, then effectively, the lender will be considered a watchman of sorts and have limits to liability, especially in a case of non-negligent, utterly accidental loss. 

Rav Yitschak uses the verse by the collateral to prove that, in fact, it is fully owned by the lender. It states in Devarim (24:10-13):

כִּֽי־תַשֶּׁ֥ה בְרֵֽעֲךָ֖ מַשַּׁ֣את מְא֑וּמָה לֹא־תָבֹ֥א אֶל־בֵּית֖וֹ לַעֲבֹ֥ט עֲבֹטֽוֹ׃

When you make a loan of any sort to your compatriot, you must not enter the house to seize the pledge….

וְאִם־אִ֥ישׁ עָנִ֖י ה֑וּא לֹ֥א תִשְׁכַּ֖ב בַּעֲבֹטֽוֹ׃

If that party is needy, you shall not go to sleep in that pledge; 

הָשֵׁב֩ תָּשִׁ֨יב ל֤וֹ אֶֽת־הַעֲבוֹט֙ כְּב֣וֹא הַשֶּׁ֔מֶשׁ וְשָׁכַ֥ב בְּשַׂלְמָת֖וֹ וּבֵֽרְכֶ֑ךָּ וּלְךָ֙ תִּהְיֶ֣ה צְדָקָ֔ה לִפְנֵ֖י ה אלקיך

you must return the pledge at sundown, that its owner may sleep in the cloth and bless you; and it will be to tzedakah to you before your God.

Rav  Yitschok notes that the verse refers to this act as tzedakah, which can be translated as charity. Why would returning the collateral be described as charity? Kindly perhaps, but not charity. However, since the verse does refer to it as charity, this indicates that the collateral is in the lender's possession, and indeed letting the borrower use it at night is charity, in the sense that he was giving a gift of his own object to use.

This is all the derash, but the simple meaning is that it is charitable to let the owner of the collateral to still use the object. Furthermore, the word tzedakah does not strictly translate as charity alone, and can mean other kinds of kind deeds. 

The Rambam (Moreh Nevuchim III:53) discusses the precise meaning and distinctions between three similar Hebrew words: tzedakah, chessed and mishpat. Chessed refers to an extreme (rarely as extremely immoral, such as Vayikra 20:17,) and most often refers to an extreme kindness, of which there is no obligation. Mishpat is a form of justice that is meted out in a judicial manner, to either reward or punish. However, tzedakah is about something that is proper, thus often translated to English as righteous. That is to say, while not an obligation, it is a fitting act and brings completion to the person who performs the act. The volitional action toward what is appropriate and fair in judgment, constitutes a balance of a human soul and personality. Such actions complete and perfect the personality of the giver, and this is the Rambam’s interpretation of this verse, when it states, “and it will be tzedakah to you before your God.” The emphasis is on the words, “to you”. By acting in this way voluntarily, the soul becomes elevated by behaving in sync with God’s sentiments. 

The idea that tzedakah is an act which perfects the person who performs it may help explain a cryptic Rabbenu Bechaye (Vayikra 27:8). Rabbenu Bechaye quotes a Gemara (Bava Metzia 114a) which rules that if the Temple treasury takes a collateral on a pledge, it does not return it for use at night. The Gemara deduces this also from the verse’s declaration that it “It will be tzedakah to you”, that since Hashem does not need charity, the directives in the verse do not apply. The Gemara over there notes that though God does not need charity, He does “need” blessing, as it states in Devarim (8:10): “And you will eat, be satisfied, and bless Hashem your God for the good land He gave you.”

Rabbenu Bechaye wonders how it makes any sense that God “needs” blessing, but not charity? He answers, the distinction between the two is “self-evident for an insightful person”. Here is what I believe he means. The function of chessed that we described above is a form of self-development, that God has no need for. However, the function of blessing that we “give” to God is not a completion, but rather an activation of a channel for His blessings to manifest in the physical world. This is similar to the a principle that Nefesh Hachaim (I:3) explains, based on an Eichah Rabbah:

And the sages said in Eicha Rabba (1:33, on verse 1:6): “When Israel performs God’s will, the Almighty’s power increases, as is written (Tehillim 60:14): “through God, we will make valor. ” And when Israel doesn’t perform God’s will, it is as if they weaken the great power of heaven, as is written (D’varim 32:18): “Rock, your children weaken You”  In the Zohar we find that the sins of man cause blemishes above, and similarly the opposite occurs too, as we mentioned. And this is what the Torah says (Tehillim 68:35): “Give strength to God.” 

Translations Courtesy of Sefaria, except when, sometimes, I disagree with the translation

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