Posted by:
Steve Dubb
Governing profiles nation's largest CDC at 40
In the summer of 1967, riots in Newark’s Central Ward killed 23 and injured 725. Shortly afterward, Father William Linder and other community members helped found New Community Corporation, an example of a then new type of nonprofit known as a community development corporation (CDC) that aimed to provide services, create businesses, and build a better Newark. Today, as Alan Ehrenhalt explains in his article in Governing, the CDC employs 1,800, manages more than 3,000 units of housing, runs two charter schools and a nursing home, operates training programs for cooks, auto mechanics and practical nurses, and owns property valued in excess of $500 million.
As Ehrenhalt points out, the CDC’s size has not shielded it from all problems. The CDC’s ability to provide social services to the community for a period of decades when city services often failed is not disputed. But by itself, the CDC was not able to significantly change Newark’s poverty levels. In Ehrenhalt’s estimation, “New Community Corporation didn’t save Newark. But it may have kept it alive.” As Ehrenhalt notes, this tension between providing social services and meeting economic development goals is hardly unique to Newark or New Community.
On the other hand, when discussing CDC’s financial challenges, Ehrenhalt is likely extrapolating too much from the case of New Community. Ehrenhalt acknowledges that New Community CDC, with its huge asset base, can “continue to provide [a] social safety net ... simply by managing its real estate assets,” but suggests that the CDC’s operating losses and smaller operating budgets of recent years are emblematic of the industry, citing the case of the defunct National Congress for Community Economic Development (NCCED) trade association. Smaller CDCs without New Community’s asset cushion, Ehrenhalt implies, might not survive.
To be sure, there are a number of failed CDCs. And it is likely that, in many cities, smaller CDCs will be encouraged to merge with others. On the other hand, from 1998 to 2005, the number of CDCs nationwide increased from 3,600 to 4,600. Also worth noting is that during that same seven-year period, housing production, commercial space development, and job creation by CDCs was nearly equal to (or, in the case of job creation, greater than) CDC achievements in those areas in the previous three decades combined. These are hardly signs of decline.
One final good sign involves the defunct trade association Ehrenhalt mentions. In March 2007, less than nine months after the demise of NCCED, a new CDC trade association, the National Alliance of Community Economic Development Associations, had already arisen to take its place.