Nonprofits Fear Loss of CDBG Grants

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January 23, 2011; Source: The Durham News | Nonprofits in Durham, N.C., have voiced their concerns about a plan by the city to cut, if not eliminate, nonprofits' access to the "public services" component of the city's Community Development Block Grant funds. This is a serious local government policy trend that is going to whack human service and community development nonprofits as it spreads.

Usually cities allocate 10 percent to 15 percent of their CDBG allotment to community services groups for programs that complement the housing and community development functions of the bulk of the CDBG funds. In addition, some fraction of the main portion of CDBG funds goes to groups carrying out affordable housing rehab and construction work. The total that Durham allocates to nonprofits for both functions is roughly $1.2 million out of a $3.5 million entitlement.

The city apparently is stuck with trying to fund a major redevelopment project called Rolling Hills/Southside. One can guess that Rolling Hills is a redevelopment project involving costly acquisition, site prep, environmental clean-up, and other elements that always – trust us, always – cost way more than the original estimates. So the city's plan seems to be to shift money away from the nonprofits to "concentrate future money" in making the redevelopment project work.

We have no doubt that nonprofits everywhere are watching their share of CDBG allocations shrink under pressure from cities wanting to use the funds to pay for their own community development and human services staff and to fill holes in redevelopment projects sponsored by private developers. Across the nation, the impact of these CDBG cutbacks on community-based nonprofits will be devastating. This is an issue requiring national and state nonprofit trade associations to get on the stick and fight to save resources that are absolutely vital for the roles that nonprofits play in sustaining the social safety net.—Rick Cohen