Community Investing After Katrina
By Michael Kramer
This article first appeared in the Fall 2006 edition of the Natural Investing newsletter
In the 15 months since hurricanes devastated the Gulf Coast Region, natural investors have participated in revitalizing communities through investing in affordable housing, minority-owned businesses, and redeveloping urban and rural areas torn apart by the storms.
Community development financial institutions (CDFIs) have channeled capital to low-income and displaced populations traditionally underserved by conventional banks, providing credit to those who have insufficient income or lack credit or collateral. This assistance has been and continues to be critical for those hardest hit by Katrina. Because the CDFIs were already in these communities, they had the infrastructure and relationships in place to offer immediate and prolonged help throughout the recovery effort.
Natural Investment Services (NIS) investors have to date invested over $2.2 million in this community investing initiative through two primary vehicles: CRA Qualified Investment Fund and Calvert Community Investment Notes.
The CRAFund (ticker CRAIX), of which NIS investors currently own $1.7 million, is the ninth largest SRI mutual fund with nearly $800 million in assets, $15 million of which have been bonds supporting reconstruction during the post-Katrina Gulf Coast recovery. In September 2005, CRAFund became the first mutual fund in the U.S. to dedicate fund assets towards post-Hurricane Katrina reconstruction in New Orleans and other damaged portions of Louisiana, Alabama, Mississippi, and also in South Florida and parts of Texas where the largest numbers of evacuees relocated. Since then, CRAFund has invested $15 mil- lion in bonds supporting reconstruction in disaster areas.
The Calvert Foundation has directed a total of $1.6 million in affordable loan capital to five groups that are working in the Gulf Coast Region. These loans are based, in part, on investment funds raised since 2005 through the “Gulf Coast Recovery Initiative,” a Community Investment Note program. NIS investors currently hold $525,000 of these notes.
Calvert Foundation has disbursed $1 million to the Community Recovery Fund, partnering with Rural Local Initiatives Support Corporation (Washington, DC) and Enterprise Community Partners (Columbia, MD). They provide permanent affordable housing to working poor and extremely low-income people primarily in Louisiana, Mississippi and Alabama. Enterprise Housing provided emergency housing and support services to 1,500 Hurricane Katrina evacuees and advised the Louisiana Recovery Authority on developing a comprehensive $8 billion housing rebuilding plan. An affiliate of the Local Initiatives Support Corporation has committed a total of $50 million for first mortgage loan capital to sup- port affordable housing development in Louisiana and Mississippi, which to date has repaired 400 homes and built another 550 homes.
Other Calvert Foundation capital placements include: Affordable Housing Resources of Nashville, TN, which worked with federal subcontractors to settle more than 2,000 evacuees in over 500 trailer homes in Baker, Louisiana, and ASI Credit Union of Harahan, LA and Community Development Capital of New Orleans, LA.
Every dollar invested in a Calvert Community Investment Note is placed in a diversified loan pool with the objective of earning both a financial and a social return. The full value of the capital is invested and then rein- vested several times in low-income communities – allowing individuals to “magnify” the impact of their assets in a way that would be impossible to achieve through a simple charitable donation. Community Investment Notes fund a dynamic portfolio of loans to nearly 200 outstanding non-profit organizions in all 50 states, and over 100 countries around the world, that target the following categories: afford- able housing (building and refurbish- ing homes for lower income families and individuals) microcredit (loans of as little as $50 to help the poor turn their lives around); small business loans (helping people start or strengthen job-creating and community-build- ing businesses); community facilities (financing for local nonprofits and cooperatives, supporting healthcare, education, childcare and many other core needs in troubled communities); and social innovation capital (cutting-edge programs such as support for fair-trade farmers, innovations that protect the environment, and the pro- motion of independent media).
Other important Gulf Coast investment programs have included:
- Access Capital Strategies, in conjunction with Liberty Bank and Trust, the largest African-American bank in the region, has assisted with $40 million in home mortgage and small business loans, particularly in the Ninth Ward and New Orleans.
- Enterprise Corporation of the Delta/HOPE Community Credit Union is Jackson, Mississippi’s primary provider of business and non- profit recovery loans and consumer recovery products and services. These low-interest loans, technical assistance, and flexible financing terms have been vital to home and business revitalization.
- Jewish Funds for Justice/Shefa Fund’s Hurricane Katrina Fund made strategic loans to immigrants, people of color, and low-income people affected by the storm.
- NCB Development Corporation • Nonprofit Finance Fund • Rudolf Steiner Foundation • Southern Bancorp
For more information about these and other community development efforts in the Gulf Coast region and elsewhere, visit www.communityinvest.org
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