Thinking About Disaster Relief Before the Disaster Hits

September 20th, 2010 | Uncategorized | 1 Comment »
The current Nonprofit Quarterly has an interesting article about innovative thinking happening at Southern Mutual Help Association, an organization based in rural Louisaiana directly hit by Katrina, about planning for disaster relief before the disaster happens.  Five years after Katrina, the Gulf Coast region continues to rebuild, and it continues to rely on financing and support raised in the aftermath of the storm to carry out those rebuilding efforts.But what if there were a tool to have funds and structures in place for disaster response before we even know what the specific disaster will be? Here at Jewish Funds for Justice, the Isaiah Fund happens to address some of those very issues, at it is structured to respond to long-term disaster recovery and rebuilding needs in low-income communities.  However Southern Mutual Help Association (SMHA), a JSFJ partner, grantee, and service site, has come up with an exciting proposal for a tool to address the issue.

In particular, Executive Director Lorna Bourg is advocating to Congress for the creation of a National Disaster Recovery Bond.  According to the Nonprofit Quarterly article,

This new investment vehicle would give people an opportunity to invest in bonds to support disaster relief, including money for redevelopment projects and funding for retiring home and business loans on homes and businesses that no longer exist after the disaster.  The latter is important and frequently undervalued in disaster relief.  How can homeowners and businesses take out very low cost loans to rebuild after disasters when they are already carrying mortgages or business loans for property and assets that might have been swept away by floods and storms?  Disaster relief funding has to enable people to clear the books on their debts rather than driving them into bankruptcy under the guise of offering loan funds for rebuilding.

Generally, Congress comes up with disaster-specific bond programs, such as the Gulf Coast Recovery Bonds, typically for large-scale capital projects such as airports and hotels, not for homeowners and small businesses devastated by the catastrophe. For example, an October 2008 audit of Louisiana’s use of the Gulf Coast bonds revealed 105 approved projects, mostly office buildings, hotels, and retail businesses such as a Coca Cola bottling plant and a Marathon Oil refinery.   These disaster relief bond programs are authorizations to issue bonds to support specific big ticket projects, not to create a general funding pool for disaster relief geared to homeowners and small businesses.

We’ll see how this all plays out, but it’s heartening to see smart ideas like this one getting some attention.  Perhaps soon we’ll be able to purchase disaster relief bonds and know that our investments will be deployed to individuals who most need support when disaster strikes.

Laura Wintroub is Community Investment Officer at Jewish Funds for Justice. This post first appeared on Jspot.org.

One Response

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