Community Development Bank Grant Program (CDBG)

The Community Development Block Grant Program (CDBG) provides grants to states and local governments to address a wide variety of community development needs. At least 70 percent of each grant must be used for activities that benefit low- and moderate-income persons. The remaining 30 percent may be used for other projects, including those that prevent or eliminate slums and blight.

CDBG funds are allocated annually between local governments and states. In FY 2010, the CDBG received an appropriation of $4.45 billion. For FY 2011, President Obama has proposed $3.99 billion. Local governments that receive these funds are considered "entitlement communities." Entitlement communities include cities with over 50,000 people or counties with over 200,000 people.

Localities that do not qualify as "entitlement communities" are classified as "non-entitlement communities." These communities receive CDBG Funds directly from the state in which the community is located. Grants are based on a formula that takes several factors into account, including community need, poverty level, age of housing stock, and population growth, among other factors.

All entities that receive these grants must develop plans that include citizen participation, providing reasonable public access to meetings, permitting an opportunity for review of proposals and performance of existing programs, and establishing a grievance and complaint process. If there is a significant population of non-English speakers, additional accommodations must be made. Additionally, to increase public transparency, jurisdictions are also required to file a report indicating how they will use the funds in the upcoming year, and file a report listing how the funds were spent the previous year.

Local community wealth builders can work with local governments on developing their local CDBG plans. Indeed, the Community Development Block Grant is one of the three leading federal funding sources for community development corporations (the other two are the Low Income Housing Tax Credit and HUD's HOME Investments program).