I’ve spent more than three decades working in community development in various capacities, and I can safely say that some of the hardest, most rewarding work I’ve ever done was in leading a community development corporation (CDC) on the southeast side of Indianapolis.
It isn’t that my subsequent roles haven’t been innovative and effective—they have been enormously rewarding. But small CDCs are unique. They are more closely connected to families and communities than any other aspect of our national community development ecosystem.
So, what do I mean by small CDCs? I’m talking about neighborhood/place-based, development-focused organizations led by boards that are drawn mostly from the communities they serve.
Given their size, they can’t do everything. They generally don’t have the capacity to drive large-scale housing or economic development plans. And, because of that, they aren’t well-positioned to take on “meta” challenges, like reducing regional poverty or closing the racial wealth gap—though they certainly contribute to progress in those areas, particularly when they partner with production-focused developers. The same ground-level focus that makes them so valuable to their communities can also make it more difficult for them to attract enough capital and expertise to drive comprehensive solutions without the help of more specialized partners.
Maybe that’s why, despite their enormous value, small CDCs are often overlooked in conversations about the affordable housing crisis, the pressing need for environmental sustainability, and systems change to promote equity and inclusive economic growth. But it’s a mistake to think of them as sidebars to these larger conversations. They should be the roots anchoring broader efforts to the communities they aim to benefit.
In fact, more than ever, I am convinced that community development funders, investors, and intermediaries like the Local Initiatives Support Corporation, or LISC, where I now work, must prioritize the well-being of small CDCs as part of larger strategies for impact. These organizations, though varying widely, share some overarching advantages, including:
- CDCs are typically trusted local institutions: Small nonprofits that understand development have been linchpins in efforts to organize disinvested and/or gentrifying neighborhoods, so residents aren’t ignored or pushed out in the process. They also step up to protect people hit hard by a range of social, climate, and economic disasters and are a vital part of our continuum of economic first responders. Whether leading community planning efforts or mitigating unforeseen tragedies, they are able to ensure that community investments are effective because most have earned the trust of local stakeholders over years of direct engagement.
- CDCs serve as local “docking stations” for large-scale programs: Organizations and institutions that want to make place-based investments need local connection points to effectively deploy impact capital. Time and time again, we have seen that programs working “for” underserved communities rather than “with” those communities often stumble, even though driven by good intentions. With neighborhood-focused CDCs involved, national and regional strategies and solutions can be deployed through tailored local approaches. For example, local and state leaders mobilizing to address nationwide housing shortages need the help of CDCs to overcome widespread NIMBYism by ensuring that new housing is thoughtfully planned and executed to truly benefit existing neighborhood residents, businesses, and institutions.
- CDCs are a bridge between investors, intermediaries, and communities: There is a massive gap between the voices of disadvantaged people and organizations with the capacity to drive systems change. While this is not new, I think the increasing sophistication of the development process, complex capital stacks, demanding measurement and reporting requirements, and the emergence of AI have built greater cultural barriers, pushing the people able to invest in large scale progress further and further from the people they want to support. CDCs can bridge those cultural gaps because of their deep community roots, in combination with the nimble operating structures they already have in place and their working knowledge of how development really happens in their regions. In South Los Angeles, a coalition of place-based groups convened by LISC are linking community stakeholders to adjacent initiatives such as the construction of a transit line, the opening of the Lucas Museum, and nearby venue planning for the 2028 Olympics. These CDCs are both advocating and building partnerships so that neighborhood businesses and residents have access to opportunities and local culture is honored.
I hate to think what would be lost without these organizations, and yet there are worrying signs for the future. The last few years have taken a significant toll on small CDCs across the country, as they drained their reserves to support projects and residents during the worst days of the pandemic. They are still dealing with ongoing economic upheaval, which has destroyed the feasibility of many projects and effectively shuttered many small CDCs.
LISC has local staff working in communities across the country. And still, we know that is no substitute for the block-by-block expertise and neighborhood relationships that drive so much CDC success. We work with local partners to set and advance key community goals because, without them, we won’t have the same level of stakeholder ownership, which we know is critical to our work. Our technical expertise is much less effective without the sustained leadership of people who live and work in the communities that we serve.
Without small CDCs, we would also lose a level of efficacy that can’t be found anywhere else. Precisely because they are small, nimble, and creative, local CDCs find ways to combine, stretch, and leverage resources for maximum gain. If we lose that capacity, the field of community development will likely fuel fewer homes, businesses, health centers, schools, and jobs in the places where they could have their greatest effect.
Finally, there is no better training ground for how to successfully drive social and economic impact than working at and with small CDCs. Raw enthusiasm grows into community leadership skill through showing up to community meetings and city council meetings and through sitting side-by-side with local business owners and across the kitchen table from neighborhood residents. My most effective peers at the national level are grounded in this kind of experience.
In other words, no large community development organization can replicate the local credibility of a small CDC. If investors, funders, intermediaries, and public officials want to fuel equitable growth and opportunity in the places where these goals are hardest to achieve, we all need to support small CDCs. They give long-disinvested communities the chance to achieve their own distinctive vision of success.
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4 thoughts on “Standing Up for Small CDCs”
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Great. Here’s how:
First, a common mistake made by funders that like to work with “trusted” partners is to compel CDCs to hire lawyers and consultants. Trust is great…local firms are great…but subject area competency and experience within the community are primary requirements. Attorney and consultants should only be working under the direction of a competent CDC executive, not in place of one.
Second, funders need to be prepared to hire and pay CDC directors and key staff at the same level as deputy mayors. All CDCs are required to interface with the community and government at every level, provide direct support across a broad array of issues, and deliver focused results – for small CDCs this requires executive level boots-on-the-ground leadership.
Third, sustained staff funding (aligned with goals, increasing over time) is required to promote continuity and tenure. Small CDCs, like any successful small business, shouldn’t be struggling to meet payroll every month.
Smaller CDCs are only able to provide outsize community services if they have the right people (or as is often the case, the right person) in place and have the financial stability to build momentum in their work.
Funders need to understand that providing community and economic development services is an investment that does not inherently generate income and is not necessarily self-sustaining, though the benefits compound over time. It’s imperative that community development funders identify, recruit, and elevate executive-level individuals in their communities that are already committed to working toward long-term community goals. The status quo —underpaid and inexperienced CDC staff working with “safe” attorneys and consultants— is not a recipe for success.
Great article, Bill! Amen for small CDCs!
Good article Bill. Small CDCs play an invaluable in the community development ecosystem. They are the ears, eyes, and voices, and aspirations of neighborhood residents and business leaders. They are critical to the revitalization process and help launch community development in many urban, suburban, and rural centers.
Dee Walsh and I highlight their numerous competencies in our book Navigating Community Development published in 2017. They excel at community engagement, communications, planning, and project development. Small CDCs make natural partners with larger CDCs and regional housing developers who have asset management, lending, and resource aggregation, systems and management competencies. In California, there have been a growing number of new CDCs formed who have forged partnerships with CDCs. We have a lot to learn from each other
Adam, this is a great article.