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The Role of CDFIs in Disaster Recovery: Lessons Learned from the Gap Funding Initiative (GFI) Program

When Superstorm Sandy made landfall near Atlantic City the night of October 29, 2012, no one could have guessed that the recovery process would be a multi-year effort. Over the next few days and weeks it became apparent that the damage to New Jersey, and especially its coastline and iconic shore towns, was unprecedented. While Community Development Financial Institutions (CDFI), broadly, and New Jersey Community Capital (NJCC), specifically, focus primarily on providing affordable loans to low income communities, an extraordinary disaster required an extraordinary response. As CDFIs continue to evolve and show what they are capable of doing, add administering grant programs to the list.

NJCC partnered with both the American Red Cross and the Hurricane Sandy New Jersey Relief Fund (HSNJRF) to manage the Gap Funding Initiative (GFI), a $16 million endeavor that awards grants of up to $20,000 to eligible homeowners that are in the state’s Reconstruction, Rehabilitation, Elevation, and Mitigation (RREM) grant program. The GFI grant is designed to help homeowners who have an ‘unmet need’ beyond the RREM grant and other funding sources. GFI began accepting applications a year after the storm, and ultimately received nearly 1,500 applications in a one-year span. As we approach the four-year anniversary of the storm, GFI has already or will shortly provide critical financial assistance to more than 700 homeowners in eight New Jersey counties.

The Gap Funding Initiative is set to close up shop by the end of 2016, but we learned valuable lessons in the course of administering the program that we think are worth sharing. The basic premise of GFI has remained the same throughout its history, but we learned the importance of being prepared to change course at times, to make the funding process as simple as possible, and to not only expect delays, but to plan for them. If GFI had stuck to one rigid set of rules from the get-go and never changed its policies, we would have reached far fewer homeowners and would still have a large percentage of funding not yet out the door. Our original Request for Payment (RFP) process under Pathway B proved to be time-consuming for both the homeowner and GFI staff. The RFP process was duplicative, as it required homeowners to send in documents (contracts and invoices) that had already been approved by RREM weeks or months earlier. Homeowners were also often dealing with multiple grant/loan programs, contractors, and their daily lives, so it made sense to take as much of the heavy lifting away from the homeowner as possible. From RREM, to municipalities, to individual contractors, the Sandy recovery process also involved a ton of moving parts. This meant inevitable delays and forced us to evolve along with RREM.

For far too many homeowners, the road back home has been a long and tiring one, but GFI has played an integral role in helping a number of individuals get back up on their feet. Superstorm Sandy may have forever changed the face of the Jersey Shore, but NJCC and GFI are changing the face of what CDFIs are capable of achieving.