NEW ORLEANS-Three years after the storms' passage, the devastating effects of hurricanes Katrina and Rita are still being felt in Louisiana-and in some cases becoming even more magnified, thanks to the economic slowdown and another battering storm season.
Almost a quarter of the small businesses in the Big Easy have yet to be rebuilt post-Katrina and many entrepreneurs are struggling to secure financing to restore their businesses to their former glory. This year's hurricanes Gustav and Ike did not help.
"With more recent hurricane evacuations and the state of the economy in general there is definitely still a very big need," said Shannon Cain, community development specialist at ASI Federal Credit Union, which is playing a key role in a project to disperse donated microloans to local entrepreneurs.
ASI and Jewish Funds for Justice, a non-profit community development charity based in New York City, have teamed up to provide loans ranging between $5,000 and $15,000 to local small business owners who have yet to get on their feet after Katrina. The campaign, called 8th Degree, takes donations from private individuals, packages them together and disburses them to qualified applicants. Over the course of three to six years those loans are paid back and that money is then lent out to another small business that needs it.
"The program is actually named after a lending model that was proposed by a 12th century philosopher Maimonidies. Of the eight levels of giving, he saw the eighth level as a gift that would allow others to be self-sufficient," Cain said. "We're not giving handouts. The time for handouts is over."
Since Katrina hit, ASI has been working with the Louisiana's government to give loans to businesses from state coffers. But over time, the community development credit union began to see a pattern of worthy businesses being left by the wayside because they did not fit the state's narrow criteria to receive loans.
"We were right on the tail of round one of the program, and we were seeing a lot of applicants that were very strong, but unfortunately they fell just outside of the state's criteria for the program," Cain noted.
How Process Works
Enter Jewish Funds for Justice, which, three years ago made rebuilding the Gulf Coast one of its long-term goals. It has since directed millions of dollars to the region.
"We've either deposited loans or otherwise organized about $2.5 million for community development financial institutions," noted Rabbi Mordechai Liebling, vice president for strategic initiatives. "Through our grant-making work we've directed about $4-million to community organizations. We've partnered with many Jewish and other organizations to make that possible."
Liebling described 8th Degree as a small-scale enterprise directed to constant reinvestment of donated dollars into the community. Jewish Funds For Justice is also working on setting up an $11-million loan fund that takes block loans from various other religious charities and organizations and disperses those monies into community banks, credit unions and other projects in the Gulf Coast. Aside from the scale, the difference is that money given to the 8th Degree is not eventually returned to the donors, whereas the monies in the JSFJ loan fund and community investment websites like Kiva.org eventually find their way back to the individuals or organizations that first lent the money.
While the project has only now begun in earnest, both ASI and Jewish Funds For Justice are committed to the long haul-the longest haul possible in fact, as ASI CEO Mignhon Tourné envisions no end in sight for the alternative lending effort. "Our dream is that this will go on and on and on as the loans are resolved," she said. "We'd like to see it go on as long as possible; even infinitely."
