#110 Mar/Apr 2000

Time to Remove the Rose-Colored Glasses

The community development movement has gone from advocating for social change to narrowly providing housing and economic development. As the movement returns to a broader agenda, can it overcome resistance […]

The community development movement has gone from advocating for social change to narrowly providing housing and economic development. As the movement returns to a broader agenda, can it overcome resistance to funding organizing and lack of accountability?

Though outwardly positive and peaceful, the community development movement has been marked from the beginning by sharp philosophical differences, disputed achievements, and serious tensions. The rarity of public airings of community development corporations’ (CDCs) problems and weaknesses is due to the absence of critical analysis of these organizations. The literature of the movement is almost pure exegesis, written by cheerleaders, not objective observers. Only recently have any writers and analysts begun to focus on the movement’s problems and limitations.

In recent years a number of established and seemingly successful CDCs have either shut down or suffered serious setbacks. Many others walk a fine line; they are undercapitalized, overextended, and poorly managed, and they lack general operating support.

Perhaps most surprising of CDC failures was the l997-98 collapse of Eastside Community Investments in Indianapolis. [See Shelterforce #104.] With more than 80 employees and a multi-million dollar budget, ECI had gained a national reputation as one of the community development movement’s pilot ships. It became the darling of city officials and large foundations like the Lilly Endowment. Despite early warnings of financial disaster before it spun out of control, the organization continued operating without foundation oversight or public scrutiny. When ECI finally went belly-up, the Lilly Endowment, which had poured millions into its operation, chose to look the other way. Neither it nor city government appointed a team of evaluators to investigate what happened, lessons that might have benefited other struggling CDCs. The same was true for foundation funders in other cities where CDCs died or lay on their deathbeds.

The reason for this “ostrich head in the sand” approach is that foundations, financial intermediaries, and CDCs themselves have collaborated in a conspiracy of silence in an attempt to maintain an “all is well” image to the outside world. No one has had the courage to take responsibility for the movement’s failures.

Shaped By Funders

A look at the movement’s history provides another explanation. Funders’ philosophies and priorities have largely shaped CDCs. Private foundations, corporate donors, and the federal government are not institutions often known for their courage, tenacity, and risk-taking.

The community development movement’s roots lie in earlier economically oriented organizations such as city booster corporations, community unions, southern low-income cooperatives, and some of the early grantees of the Office of Economic Opportunity’s Research and Demonstration Division. But modern CDCs were launched in l967 with the Labor Department’s Special Impact Program’s (SIP) launching of the Bedford Stuyvesant Restoration Corporation. A year later, under the same program, the Office of Economic Opportunity funded its first CDC, the Hough Area Development Corporation in Cleveland. By mid-l971, OEO, which had taken over SIP, had funded 18 urban and 19 rural CDCs. In the 1970s the number of CDCs grew rapidly.

Initially, CDCs were to be more than generators of housing and economic development. Behind the Special Impact Program – later Title VII of the Economic Opportunity Act – lay the notion that comprehensive efforts were needed to attack the problems of poor neighborhoods and communities. CDCs would assist in the economic, social, and physical revitalization of low-income communities. They would develop jobs, improve services, build indigenous leadership, and involve private enterprise in the rebuilding process. Neighborhood residents would be an integral part of this work, both serving on CDC boards and as an active constituency.

Many of the early CDCs did undertake a balanced program of economic development, services, public education, and advocacy strategies. But the pressure to focus almost exclusively on housing and economic development intensified by the end of Nixon’s first term. Joseph Halbach, who then headed OEO’s Economic Development Division, claimed that social goals conflicted with economic objectives. He insisted that CDCs should be profitable enterprises, not concerned with resident participation or community control. When Gerald Mukai took over the unit during the Carter presidency, he took Halbach’s philosophy one step further, informing CDCs that they were to operate like businesses. He encouraged and condoned some of the questionable practices they modeled after their business counterparts.

In the 1970s, foundations found CDCs attractive alternatives to more activist local organizations and pressured them to more narrowly focus on housing and economic development. The Ford Foundation, with a large investment in CDCs, provided much of the philanthropic leadership that steered community development in this direction. Ford’s philosophy, espoused by Mike Sviridoff, the foundation’s capable and energetic vice president for domestic programs, was based on a hierarchical view of community based organizations. At the apex of the pyramid were large CDCs that enjoyed close, friendly relationships with business and local governments; at the bottom were the activist groups involved in community organizing and issue advocacy. The fact that an organizing group like Citizens Organized for Public Service (COPS) in San Antonio had been responsible for shifting hundreds of million of dollars in federal and local money to the impoverished, Chicano west side of the city did nothing to shake Ford officials’ belief that organizing and development were incompatible. Indeed, only in the last couple of years has Ford begun to support community organizing and constituency building.

Corporations also found CDCs to their liking. CDCs fit the corporate image of bottom line: results-oriented organizations with which they could easily relate, as long as the groups did not attack established community institutions or cause too much trouble. The Reagan years accelerated this tendency of CDCs to follow a straight housing and economic development path.

Paying the Price

But this departure from the SIP’s original vision came with a price. Lured by the siren call of funders, many CDCs dropped their organizing, advocacy, and community leadership development activities. Perhaps none was so dramatic as the shift in the Mississippi Action for Community Education’s efforts that had built a strong constituency in 16 counties through community organizing. In eliminating its organizing and advocacy projects, the group lost much of its constituency, influence, and power – a development from which it has yet to recover. Other organizations like Telecu in Los Angeles, the Spanish Speaking Unity Council in Oakland, BUILD in Buffalo and the Mexican American Unity Council in San Antonio experienced similar changes.

This more narrow agenda often proved self-defeating for CDCs. In many cities, universities and hospitals destroyed thousands of affordable housing units without any opposition from their neighborhood CDCs. This often resulted in a net loss of affordable housing in these communities, despite CDCs’ efforts to produce new housing. And it was not surprising that the battle to win passage of the Home Mortgage Disclosure Act and the Community Reinvestment Act was won by community organizing and advocacy groups, not CDCs, which had the most to gain from this legislation but did little or nothing to promote it.

In their push to become more business-like, many organizations appointed businesspeople and professionals to their boards, limited their boards’ size, and reduced the role of community residents in their operations. Community accountability lost its cachet with CDC directors and staff. In the face of enormous pressures to narrow their efforts, it is a tribute to certain organizations like the Bickerdike Redevelopment Corporation in Chicago, the Northwest Bronx Laity and Clergy Concerned, Los Sures and The Fifth Avenue Committee in New York, the Coalition for a Better Acre in Lowell, Massachusetts, and the South Bend Heritage Foundation in South Bend, Indiana, that they continued their comprehensive approach to community development.

The emergence of the large intermediary organizations, especially the Local Initiative Support Corporation (LISC), the Enterprise Foundation, and the National Congress for Community Economic Development (NCCED), further abetted this narrow development. It also perpetuated the view that all was well in the community development world. NCCED issued periodic reports on the movement’s impressive expansion, based on the assertions of the organizations themselves, without any objective analysis. Wishing to maintain the confidence of donors, Enterprise and LISC became the national public relations advocates for community development. They were anxious neither to stir and encourage the growth of advocacy nor surface the problems and tensions many organizations were experiencing.

It was in the intermediaries’ self interest to zealously promote the Low Income Housing Tax Credit without modifications, even though the program in many places increased the cost of affordable housing, lengthened the building process, provided a public service employment program for technicians and lawyers, and increased CDCs’ dependency on them. Nor did it seem to bother them much that the complex tax credit made it increasingly difficult for CDCs to provide housing for very low-income people. In stressing CDC housing production almost exclusively, the intermediaries failed to provide an alternative to this approach, namely the management and control of production by private developers in cases where CDCs might have found such a strategy better suited to its needs and those of its constituents.

Shift to Comprehensiveness

In the early l990s, more comprehensive community development approaches once again started coming into vogue. This was partly due to many CDCs’ realization that effective community revitalization required a broader focus. Probably the major cause of this reversal, however, was that major foundations “discovered” that comprehensive approaches to community building were important. New foundation initiatives gave legitimacy to the notion that CDCs could and should assume responsibility for a broader range of activities and greater community accountability, even though most of the initiatives, unfortunately, were foundation inspired, manipulated and controlled, often with questionable results.

The historic debate about comprehensive versus narrow approaches and the proper balance between organizing and development should not obscure the community development movement’s enormous achievements in many cities and rural areas. The nonprofit community development field has developed hundreds of thousands of housing units, financed innumerable businesses and commercial enterprises, and improved many neighborhoods, or parts thereof. Many CDCs have become technically more competent and capable of going to greater scale. These successes have been well publicized. What hasn’t received much, if any, attention are the problems that beset community development and threaten its future.

Both LISC and the Enterprise Foundation have conducted informal assessments of CDC failures and problems, but these have been carefully guarded in-house documents. Foundations and other donors, with a real stake in community development, have continually hesitated to evaluate either the field’s failures or problems. For example, when the Enterprise Corporations, which were supposed to finance the Enterprise Foundation’s low income housing programs, all went out of business, foundations that had donated millions were unwilling to sponsor an evaluation of why it happened. Further, no foundations, though aware of the weaknesses of the Low Income Housing Tax Credit, have been willing to evaluate its impact and the ways it could be improved.

It is just in the past year that journalist Carol Steinbach and Robert Zdenek, former executive director of NCCED, have commendably written about ECI and the problems other CDCs are facing. [See Shelterforce #104.] Yet even their critical look is tempered by a reluctance to assign blame for ECI’s demise, to place the responsibility where it should lie, on the funders, intermediaries, and the executive director who suddenly left town by the midnight rail without taking any real responsibility.

If the community development movement is to profit from its mistakes and tensions, it will require a tough, ongoing objective analysis, one that takes into account issues of responsibility, accountability, and integrity. That assessment will have to deal with the challenges of organizing and advocacy, alliances with other community based groups, the question of production versus the management of production, the role of the large intermediaries, matters of leadership, the extent of community accountability, and the limitations of CDCs themselves. The Community Development Corporations deserve better treatment from their funders and boosters. They need the truth about the movement, their potential, and their options.

If community development’s enormous accomplishments are to be perpetuated and strengthened, we will need a body of observers, evaluators, and critics who will put the lie to the good old public relations myth that only good news, even if incomplete, is the sure path to success.


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