Community Development Corporations (CDCs)

Description and History

Community Development Corporations (CDCs) are nonprofit organizations established to revitalize communities by addressing housing, economic development, and social service needs. CDCs adopt a bottom-up approach, being set up and run by community members or local groups, such as churches and civic associations. A defining feature of CDCs is the inclusion of community representatives in their governing or advisory boards. Typically, at least one-third of the board is comprised of local residents, ensuring that the organization remains accountable to the community it serves. This community-driven structure differentiates CDCs from other organizations focused on development.

As nonprofit institutions, CDCs are tax-exempt and eligible to receive unlimited donations and grants from both public and private sources. Their funding is often derived from a mix of local, state, and federal grants, such as the U.S. Department of Housing and Urban Development's Community Development Block Grant (CDBG), as well as philanthropic foundations like the Ford Foundation and the Surdna Foundation.

CDCs emerged in the 1960s, with early support from the Ford Foundation’s Gray Areas program and the 1966 Special Impact Program amendment to the Economic Opportunity Act. Initially, many CDCs focused on community organizing and empowerment, often linked to religious and civil rights groups.

There is no precise count of CDCs operating in the United States today. However, the National Alliance of Community Economic Development Associations (NACEDA) has reported that estimates can vary, with many CDCs existing but not always accurately counted. .

Community Development Corporations, Just Use of Land and Property, and the Community Wealth Building Wedge

CDCs provide pathways for wealth-building by creating affordable housing, facilitating homeownership opportunities, and offering business development and job training programs. By maintaining community control over local assets, CDCs ensure that the benefits of development are equitably shared among residents, preventing wealth from being extracted by external developers or corporations. This focus on local ownership supports sustainable development that aligns with the needs and aspirations of the community.

Through their focus on community control of assets, CDCs can be powerful drivers of community wealth building (CWB) activities. However, ensuring that CDCs remain committed to community governance and control is essential for achieving long-term, equitable outcomes. CDCs also have the potential to reclaim their roots in community organizing and political engagement, strengthening their role as agents of social change.

Examples

  • Bedford-Stuyvesant Restoration Corporation (BSRC), New York: The first CDC, BSRC has developed or renovated 2,200 housing units, provided $60 million in mortgage financing, and attracted over $500 million in investments. BSRC also owns commercial real estate and operates a property management firm and a construction company.

  • New Community Corporation (NCC), New Jersey: NCC manages around 2,000 housing units and owns a shopping center and supermarket. Income from these assets funds social services like after-school programs, job training, a nursing home, and daycare centers.

  • The East Los Angeles Community Union (TELACU), California: TELACU offers college-readiness programs, financial assistance, and owns businesses in construction, real estate development, and financial services. TELACU has also been actively involved in community organizing and political engagement.

Challenges and Limitations

CDCs face several challenges, including undercapitalization and constrained funding, which restrict their ability to scale projects. Smaller CDCs may struggle to maintain the necessary professional expertise, and changes in federal policy can affect their operations. Although CDCs are structured to prioritize community governance, enforcing ongoing community control and involvement can be difficult as these organizations act independently. Additionally, some contemporary CDCs have shifted toward more market-oriented, technocratic approaches, focusing primarily on housing development and traditional economic strategies, which may distance them from their original mission of community empowerment and political action.

Taking it Forward

Community Development Corporations are key players in fostering sustainable and equitable development in underserved communities. Through their focus on community control of assets, CDCs have the potential to drive local community wealth building initiatives. However, to maximize their impact, CDCs must continue to prioritize community governance and reclaim their original focus on organizing and political engagement. By recommitting to these principles, CDCs can continue to be effective agents of change, helping to address local needs and creating pathways for wealth-building and empowerment in the communities they serve.

Resources