A stack of money next to small wooden houses lined up next to each other as in a community funded by Community Development Corporations
Image credit: coffeekai on istock.com

Community is one of humanity’s great achievements. Yet community development corporations, a $28 billion sector of over 6,200 nonprofits that support local community economic development, are largely invisible in the national conversation. A new survey of these organizations published by the Urban Institute, the first in 18 years, seeks to fill this gap.  

The invisibility of community development organizations has had harmful repercussions. The ability of community groups to recognize each other and form common cause to address pressing issues such as gentrification has been damaged by the lack of connection and mutual understanding. 

Historically known as “CDCs”—not to be confused with that other CDC (Centers for Disease Control and Prevention) in Atlanta—these organizations haven’t really been perceived as a “field” of organizations since the late 2000s. Beforehand, regular national conferences and reports brought the field together. But then reporting stopped, and for years no one knew how many organizations there were, where they were, what they did, or how much. Without national research into the field or field-level convening or visioning, national policy focusing on these organizations became rudderless.

It was almost like the field had been forgotten, or at least deprioritized, in favor of a focus on activities, programs, and outputs—such as affordable housing development, community investment, job creation, financial coaching, small business support, even neighborhood revitalization—things the traditional CDC field did.

But the field ignored who the CDCs were.

Heroic Origins

The origin stories of community development corporations have the feel of David and Goliath. Beginning in the 1950s and 1960s, poor communities and people of color stood up to the federal government and the excesses of urban renewal, which had bulldozed many poor communities, especially communities of color. They organized protests and tent cities. In 1967, they achieved federal recognition. They blocked the construction of highways. They built political power to pass civil rights legislation, such as the Fair Housing Act that outlawed discrimination in the housing market and eventually the Community Reinvestment Act that outlawed redlining and compelled banks to invest in low-income communities in which they do business. 

But to quote Joseph McNeely, who got his first community experience as a Baltimore organizer in the 1960s:

We stopped the feds from building an interstate right through the heart of Black Baltimore. We organized. We protested. We gained political power. We claimed ownership of our part of the city. And the powers-that-be listened. We won. But after the celebration, we all looked at each other and realized something really important. We were still poor. Our part of Baltimore still didn’t have the investment that other parts of the city had. Sure, we stopped a highway. But now what?

That era gave birth to the urban CDC movement—nonprofit and place-based institutions with a mission to steward the future of a place, particularly disinvested places that were often predominantly populated by people of color. The rural CDC movement had a different, distinct origin story, rooted in the faith community, especially among African American churches, but similarly had place, justice, and hope at the heart of their mission.

From Movement to Industry

Despite the impressive numbers, the national spirit that had sustained a movement for decades dissipated.

Throughout the 1990s and early 2000s, banks, private investors, and governments increasingly relied on mission-based developers and CDCs to accomplish projects, bringing previously absent bank and corporate investment in housing and economic development to economically neglected places. 

Partnering with a CDC was increasingly looked upon favorably by bank regulators and other governmental institutions. A for-profit firm that partnered with a CDC would score more points on its proposal for a federal tax-credit subsidy. All of this is part of the housing build-up of the early 2000s. This period also saw a substantial shift from rental housing to affordable home ownership as CDCs and others took advantage of historically low mortgage rates to help people access wealth-building opportunities.

But as development became more complex, the heart of the movement had been supplanted. Specifically, there was less need for community organizers and more need for underwriters and lobbyists. For-profit corporations that entered the broader community development field brought resources and often made projects more efficient—good things. 

In terms of production, CDCs were doing well. A 2005 report from the National Congress for Community Economic Development (NCCED), cited by Shelterforce, counted 4,600 organizations that had produced or rehabilitated more than 1,252,000 housing units. But despite the impressive numbers, the national spirit that had sustained a movement for decades dissipated.

A Diminished National Profile

Shortly after the 2005 report’s publishing, NCCED died. There were multiple reasons for this—some had to do with movement dynamics and some with personalities. But as the organization’s demise coincided with a rapidly professionalizing field, the effect, at least at the level of national discourse, was a deafening silence. 

Lacking data and a markedly reduced national political presence, anecdotes and innuendos were all that was left. As the director of the National Alliance of Community Economic Development Associations (NACEDA)—a successor organization to NCCED—for almost 15 years, I have heard it all. CDCs are dead. CDCs have lost support from the banks and foundations. They all need to merge. CDCs are no longer mission-driven. CDC leaders are all old, retired, or dead.

If you have been around the field long enough, maybe you’ve made some of these claims or failed to correct others who have. I know I am guilty. And shame on us. These claims were disingenuous at best and, at worst, a self-serving fabrication. There were no data to back up these claims. Sure, there were failures. But for every CDC-led deal that fell through, there were countless stories of inspiration and transformation.

When I think of all the inspiring stories I have heard since joining NACEDA, I am reminded of the old question, “If a tree falls in the forest, but no one hears it fall, did it make a sound?” 

Regarding CDCs, a similar story reflects much of the past two decades. But just because too few people notice CDCs’ work doesn’t mean it doesn’t happen. As Paul Nelson noted in NPQ, in many cities, “federal and local governments have come to rely on nonprofits to deliver services to vulnerable communities,” many of which are CDCs. And now we have the data to prove it.

In 2020—in very different ways—both the pandemic and the uprising that followed George Floyd’s murder posed vital questions for our movement: What if there had been a better system to support organizations stewarding forgotten places like Floyd’s neighborhood in Minneapolis? Was there a CDC or similar organization attempting to steward that neighborhood’s future? What about all the neighborhoods like it? 

Even I didn’t know the answers to these questions—and I am the director of an organization that should know. That was part of the problem.

What the Data Tell Us

In the following months, NACEDA gathered partners and resources across the national community development landscape to sketch out the missing pages of the CDC story. A new report by the Urban Institute, commissioned by NACEDA, found a collection of approximately 6,200 organizations with $28 billion in annual revenue and $54 billion in assets. 

It so happens that since 2005, the lifetime housing production of these organizations has grown from 1.25 million units to over four million today. Between 2019 and 2021, CDCs invested $3.5 billion annually in community lending and financial assistance—building 3,500 commercial, industrial, and community facilities. In addition to real estate, almost every organization (96 percent) provides some kind of social service, such as advocacy, workforce development, housing counseling, and so on. They span urban and rural geographies in every corner of the country—an untold story of community development and neighborhood empowerment.

What makes CDCs unique is their identity as community-based institutions improving lives through the power of place.

Rebuilding a Common Identity

The production numbers may be impressive. But numbers only get you so far. If researchers of CDCs stop at numbers, then they miss what’s truly important about these organizations.

What makes CDCs unique is their identity as community-based institutions improving lives through the power of place. This is true regardless of whether they focus on housing, business development, neighborhood improvements, social services, or something else. The point is their dedication to places that have suffered from disinvestment—or, sometimes, places threatened by gentrification that bring in new (typically White, upper-middle-class) residents while pushing current residents (most often BIPOC) out. 

Business lines have changed and will surely continue to evolve. Social service provision today is much more prevalent than in 2005, for example. But services and production numbers aren’t the point. The point is that within each community, a group of people got tired of being forgotten and left behind. And they formed a community-based institution to do what others had failed to do for them. That story has been forgotten for far too long—and sometimes, sadly, by community groups themselves, which have often prioritized production over organizing and community building. 

Some readers may be familiar with the movie Encanto, a Disney film about the special superpowers or “gifts” bestowed upon members of the Madrigal family. The gifts were obtained through a miracle given to the family’s Abuela (matriarch/protagonist) as a young mother and refugee settling in a new land after her husband’s demise. 

Throughout the film, the miracle gradually fades. Desperate to preserve it, Abuela chastises her family’s every mistake, thinking their lack of perfection is causing the miracle to die. A child drops a plate. A young woman refuses to marry Abuela’s chosen suitor. The granddaughter with super strength can no longer lift a pack of donkeys. The tighter Abuela’s fist squeezes around her family, the weaker the miracle becomes.

A key takeaway…from the events of 2020 was that the myopic focus of the last 20 years came with a cost.

At the movie’s climax, Abuela realizes that her obsession with her family’s gifts is causing irreparable harm to her relationship with her children and grandchildren. It is destroying the family. And as the family deteriorates, so do the gifts. As Abuela realizes that she is causing the miracle to die, she admits to her granddaughter, “In my darkest moment, I was given a miracle, a second chance. And I became so afraid to lose it, I lost sight of who the miracle was for.”

Community organizations provide incredible gifts to the people and places they serve. They create homeownership and wealth for families who, for generations, had none. They provide homes for the homeless. They have been neighborhood leaders in opposing racism and unchecked capitalism. They have even, at times, compelled the world’s largest financial institutions to cross the brightest of red lines.

But the miracle is not the activities that these organizations do. The miracle is in the communities themselves and the institutions they create to build their future.

Beyond Bricks and Mortar

A key takeaway from the events of 2020 was that the myopic focus of the last 20 years came with a cost. We had become so focused on organizational production, the what, that we lost sight of the field, the who. The federal government has played a large role in this trend, taking the role played by CDCs for granted. It has relied on that truly special connection between these organizations and the communities they serve in moments of crisis (such as the Great Recession or COVID-induced economic shutdown) but otherwise has largely ignored them.

We have an opportunity—right now—to elevate a fragmented collection of organizations into a field capable of addressing racial justice effectively at the community level. But this will only occur if the field comes together. 

In recent years, public and private resources dedicated to the sector have increased significantly—the 2022 Inflation Reduction Act climate legislation and the 2021 infrastructure bills are the latest examples—but is the investment in the sector’s human capital keeping pace with the investment in bricks and mortar?

Anecdotally, the sector has recruited people of color and younger individuals in recent years. How are we ensuring newer staff and leadership stay, and are promoted, advanced, and supported over the long term? 

Our research, sadly, suggests that CDCs may not be ready to support the new staff members’ long-term growth and development. Leaders of all races noted that directors of color face systemic barriers that limit their advancement within community development. At least three out of four noted a lack of the basics—including training and mentoring, coaching, and peer support.

Funders, policymakers, researchers, and advocates lost track of these organizations over the past two decades. Their accomplishments must be understood and celebrated, even as it is important to address and remedy their challenges. 

For those of us who value local empowerment, agency, and equity in community, we need CDCs to truly achieve all that was core to the reasons for their founding.