National Community Development Initiative Is Paying Off

New Study Offers Strategies for Continued Success

WASHINGTON, D.C., (October 26, 1998)—For the first time in their 30-year history, community development corporations (CDCs) are thriving and making a real difference in the low-income neighborhoods they serve, according to a new report from the Urban Institute.

Community Development in the 1990s, by Urban Institute researcher Christopher Walker and Mark Weinheimer of Weinheimer & Associates, offers the first solid evidence of this progress. For CDCs in 23 of the nation's largest cities, the report finds that housing unit production is up, budgets are larger and management structures are vastly improved, and funding sources are more diversified. The organizations have stronger ties to other community and citywide institutions and are better able to mobilize local talent, leadership, and financial support.

The report documents the role that a unique consortium of private and public funders—known as the National Community Development Initiative (NCDI)—has played in this dramatic improvement.

Through 1997, the NCDI has pooled over $150 million from corporate, philanthropic, and government sources in an effort to increase the capital available to CDCs—often the most productive developers of affordable housing for a city's low-income residents. Two intermediary organizations, the Local Initiatives Support Corporation and the Enterprise Foundation, worked with local partnerships in the 23 cities studied to invest NCDI funds in CDCs.

"The 1990s have been revolutionary for community development," noted Walker. Businesses, private foundations, and city governments have collaborated with the intermediary organizations to supply project funding and core operating support, Walker reported. "Because of these new local partnerships, CDC projects are better understood and implemented in cities all around the country."

Methodology

Field interviews were conducted in each of the 23 NCDI cities during 1996 and 1997. Research teams worked closely with local community development experts and used a standard set of "system performance indicators" to measure capacity in 1997 and assess progress made since 1991. In addition, researchers reviewed reports from intermediary organizations and financial and demographic data from public agencies and other sources.

Findings and Recommendations

The past decade witnessed unprecedented changes in CDCs in every city studied. Not only have CDCs built more low-income housing, they have made a difference in some of the cities' toughest neighborhoods and have built strong ties with local governments and community leadership. Investments in community development by federal, private, and local sources are large—and have a significant impact.

Specifically, the capacity of CDCs has grown dramatically. Since 1991, the number of CDCs that can add more than 10 housing units to a city in one year nearly doubled. Operating budgets of CDCs have grown by 63 percent, and there are more CDCs with consistent production records, strong internal management and governance, and diverse funding sources (a 45 percent increase since 1991).

Overall, money matters. The study finds that federal funding to low-income housing has doubled since 1992. The single best predictor of the number of capable CDCs in a city is the amount of federal funding channeled by local government to neighborhood revitalization.

In spite of the decade's successes, challenges for CDCs remain. For example, local governments can still face obstacles in delivering services to all communities and their citizens. On a broader scope, not all elected officials at the municipal level place the same value on community development. And the resource allocations made by state governments sometimes run counter to successful community development strategies.

"The key is for CDC staff and leadership to continue to work with government officials in community development efforts—due to their proven potential for improving the nation's cities," concluded Walker.

To get a copy of Community Development in the 1990s, by Christopher Walker and Mark Weinheimer, call the Urban Institute Publications Sales Office at (202) 261-5687.

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