Credit: Manno (
Those who seek social transformations by virtue of changing the forms of ownership in society must recognize that these forms of ownership—on their own—are not anywhere near enough…The political content of work in communities comes from a myriad of sources, of which the form of ownership is just one. A transformed political economy requires a transformed set of understandings of society; not (just) a transformed set of organizational forms in society.

On the Transformative Potential of Community Land Trusts in the United States,” by James DeFilippis, Olivia R. Williams, Joseph Pierce, Deborah G. Martin, Rich Kruger, and Azadeh Hadizadeh Esfahani

Last month, Shelterforce, a leading community development journal, published two articles that took a careful look at flaws in two leading forms of community-based economic development. One was an interview by editor Miriam Axel-Lute of Ed Gorman from the nonprofit National Community Reinvestment Coalition (NCRC), which chides community development financial institutions (CDFIs) for not taking on enough risk. The other, authored by Olivia Williams, an economic geographer, asks whether the “C” (community) in “CLT” (community land trust) remains meaningful as the sector has grown—and says it too often has not.

Both authors are friendly critics. Gorman acknowledges that NCRC, among other functions, actually launched a CDFI years ago, one that is not exempt from the criticisms he makes. Williams, for her part, acknowledges that CLTs can, if employed creatively, promote transformative change. But, broadly speaking, both contend that the system-changing potential of community-owned institutions often takes second fiddle to funding exigencies.

These criticisms should surprise few of us. Certainly, any organization that operates in today’s economy, no matter what its social justice or political vision may be, must act in what is often a hostile environment. Back in 2004, INCITE! sponsored a conference with the theme of The Revolution Will Not Be Funded: Beyond the Nonprofit Industrial Complex, which laid bare the many contradictions that social justice nonprofits in particular face in achieving their missions.

The tensions between day-to-day operations and long-term vision, in short, are common among nonprofits, and indeed all mission-based organizations, whether or not they are legally structured as 501c3s. This is not to excuse every compromise made, but it is to acknowledge the challenge inherent in any work that seeks to promote even modest structural economic change.

Both CDFIs and CLTs—especially CDFIs—have grown rapidly in recent years. Indeed, as NPQ has noted, CDFIs as a sector have rapidly expanded from controlling a few billion in assets two decades ago to $185 billion today, a point Gorman acknowledges.

“CDFIs, just judged by the total capital being invested, are a remarkable success over the last 25 years,” Gorman says, “but I think everybody knows we could all do better.”

Essentially, Gorman’s complaint is that CDFIs, to be successful and achieve that growth have held back on how much risk they will take on. This is good for the economic bottom line, but less good for their social mission. As Gorman explains:

It takes roughly the same amount of time to close a small business loan that’s a microloan as it does a larger loan. You’re going to have to do a hell of a lot of volume to make up for the size of the loan. There’s more technical assistance needed, because the relative sophistication of the borrowers is lower, at least from a business standpoint. All of those things add up to a more difficult hill to climb, and you’re pretty much guaranteed [some] loss. That’s tough stuff.

So, when we wonder why we’re not seeing enough money make it into the hands of moderate-income [folks] and folks located in low- and moderate-income census tracks, it’s pretty clear why.

Williams makes similar observations about CLTs. CLTs, she notes, are not economically self-sufficient because the fees they collect only cover some of their expenses, thus requiring generating income from grants and the development of new housing.

“The focus on grant writing and housing development,” Williams writes, “means that CLTs