I travelled to Puerto Rico twice after Hurricane María struck the island, observing the near total destruction of the infrastructure and discussing the possibility of the development of renewable energy cooperatives as a component of a sustainable future.
During those visits, I came to appreciate the strength of Puerto Rico’s mutual insurance capacity, in particular through Cooperativa de Seguros Multiples de Puerto Rico, as well as the strength of Puerto Rico’s credit unions, better known as “cooperativas de ahorro y crédito” or savings and loan cooperatives. I also learned the story of how the savings and loan cooperatives were able to continue operating to maintain a cash flow in their communities when there was no electric service, and all of the automated systems were down. That story has now been very well documented by Inclusiv, a certified Community Development Financial Institution intermediary that helps low- and moderate-income people and communities.
In their article “Community-based Lenders Provide Critical Financial Services After Climate Events: Lessons from Hurricanes Maria and Irma in Puerto Rico”, Inclusiv CEO Cathie Mahon and Inclusiv Vice President, Puerto Rico and USVI Network, René Vargas Martínez provide terrific insights into the community-based thinking and actions of the savings and loan cooperatives of Puerto Rico. As background, they point out that there are 98 state-chartered cooperativas and five federal credit unions with a “brick-and-mortar presence” in 75 of Puerto Rico’s 79 municipalities providing financial services to 1.1 million member-owners with assets of over $11.7 billion.
Cathie and René describe the phenomenal work of the savings and loan cooperativas to maintain financial services in their communities in the immediate aftermath of Hurricane María.
In September 2017, Hurricane María made landfall in Puerto Rico as a Category 4 storm, destroying the electricity and telecommunications infrastructure. Yet, as Cathie and René have documented, “Most cooperativas opened their doors 48 hours after the storm, even as other mainstream financial institutions, particularly banks, remained closed for weeks and months. A month after Hurricane María, 35 percent of banks remained closed.”
The efforts of the cooperativas, as the authors relate, were nothing short of heroic:
Cooperativas cashed checks from other institutions without the capacity to verify the availability of funds. Cash, as well as the files to be able to run ACH transactions, were in San Juan at the Banco Cooperativo. This meant that for ACH transactions to be posted, and for new cash to reach these communities, cooperativa leaders had to travel to the capital city and back under very difficult conditions. Their efforts allowed the processing of direct deposits and transfers. They collected cash, procured diesel on makeshift trucks, cleared roads, and gathered supplies to bring to their communities. These initiatives all required a greater risk tolerance during the crisis, including more flexible interim controls, such as limits on cash.
In addition, “many cooperativas provided financial assistance, food, supplies, laundry services, childcare, and other support to their employees.”
To support cooperativas, Inclusiv collaborated with the New York Credit Union Association (NYCUA) and the National Credit Union Foundation’s CU Aid (a disaster response fund administered by NCUF) to raise resources and deploy funds. Together, Inclusiv, NYCUA, and the National Credit Union Foundation distributed $500,000 to help cooperativa employees in the aftermath of Hurricane María.
The full story is available in Chapter Four of the attached pdf, What’s Possible: Investing Now for Prosperous, Sustainable Neighborhoods, Copyright@2024, Federal Reserve Bank of New York, Enterprise Community Partners and Local Initiatives Support Corporation.
