A “Mean Spirited” Clash Between CDC, Local Government

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November 26, 2012; Source: Virginian-Pilot

Gary Harki has written a long article for the Virginian-Pilot about an ongoing controversy between the Center for Community Development Inc. (CCDI), a nonprofit community development corporation (CDC), and the city of Portsmouth, Va. Harki exhaustively describes some of the current and brewing issues, including a U.S. Department of Housing and Urban Development (HUD) review of CCDI’s rehab work on one property, CCDI’s delinquent city tax bills, the city’s grants to the CDC to help make the payments, and concerns about CCDI’s short term survival if the city withholds funding support.

Harki also got input from many of the protagonists in the story, including CCDI’s founder, Maury Cooke, who blames the city for the organization’s financial straits; Portsmouth city council members, who are raising questions about CCDI operations and expenditures; and a CCDI board member, though the CCDI executive director refused to make himself available for questions.

Those who are experienced with these breakdowns in relationships between local government funders (using HUD community development block grant (CDBG) and other funds) and nonprofit recipients know that the breakdowns frequently aren’t as sudden as they appear. In this case, the root of CCDI’s problem with the city seems to be allegations of conflict of interest concerning the former CCDI executive director’s sale of a house to the organization. HUD said the purchase was made with federal funds and constituted something of a conflict of interest. CCDI said the purchase was made by tapping a business line of credit the organization had with BB&T. Other charges and countercharges have since been lobbed back and forth.

Now the Portsmouth City Council is tossing a host of its own charges about city funds that some think CCDI might have misdirected and raising questions about whether CCDI properties merit tax exemptions. Where all of this will lead is hard to guess, especially since CCDI’s founder suggested to the Pilot that the charges were at least “mean spirited,” if not racially based or class based.

At a minimum, from a nonprofit management angle, CCDI and its supporters and partners should be asking, given where things are now, what was known perhaps a year ago that would have led to this situation. What might have been known two years ago, three years ago, or five years ago? One suspects that there were earlier intervention points for HUD, the city, and CCDI before their relationships deteriorated to this extent. That is also a role for CCDI’s funding partners, which include entities in neighboring Norfolk, Va. as well as private funders such as BB&T and the Wells Fargo Foundation. If partners are really partners, they should be working together to ward off problems that might be first spotted as fraying inter-organizational relationships. –Rick Cohen