Reengineering Community Development for the 21st Century

Donna Fabiani, Terry F. Buss, Terry F. Buss

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317461265
• Edition: 1
• Topic: Business
• Subtopic: Forecasting
• Index: Business

This timely book takes a wide-angled look at how the field of community development is evolving in an era of reduced resources, changing priorities, privatization, competition, and performance management at the federal, state, and local government levels, as well as for non-profits and private sector entities. It shows how community development organizations and programs are offering many new services, entering into new partnerships, developing extensive networks, and attracting new and alternative sources of funding - and how, in the process, these organizations are becoming more innovative, leaner in their operations, more competitive, and much more effective than ever before.Students, researchers, and policy-makers will all appreciate the numerous policy examples from the local, state, and federal levels, including a wide range of developments in housing, transportation, smart growth, education, and crime prevention. "Reengineering Community Development for the 21st Century" is an invaluable source for insights into the latest developments in community development financing and performance management.

1

Whither Community Development

An Introduction

DONNA FABIANI AND TERRY F. BUSS

In 2004, federal agencies spent about $45 billion on community development, as broadly defined. Federal transfers of funds made up about 70 percent of funding spent by states and localities on community development (Gerenrot, Cashin, and Paulson 2006). No one knows how much nongovernmental organizations, including nonprofits, foundations, and for-profit private-sector organizations, spent, but the amount is substantial. With this level of effort and with the changeover in leadership both in the House and Senate in 2007, the impending transition in the office of president in 2008, the unprecedented number of presidential candidates (most running since 2006), the expected turnovers among state and local officeholders, and the continuing evolution of the community development field, it seems a propitious time to take stock in this important issue.

In 2006–2007, the editors sent out a call for papers to policymakers, practitioners, researchers, and advocates, looking for chapter contributions about where community development stands as an issue, where it is headed, and how it might be reengineered to better meet the needs of various constituents and stakeholders. We left the definition of community development vague with the intention of including the broadest range of activities, including community economic development and community development finance. We were not disappointed. Leaders from a wide array of sectors responded (see other work on leadership in Morse, Buss, and Kinghorn [2007]).

Looking across the twenty-three chapters in the book, we are struck by three recurrent themes. First, policymakers, practitioners, researchers, and advocates interpret “community development” as encompassing many more domains than we would have anticipated. For example, David W Sears and Colin D. Sears, in chapter 19, “Positive Cycling: Riding Our Bicycles Down the Path to Community Development Success,” make a compelling case for promoting community and economic development through enhancement of bicycling as a way to reduce reliance on automobiles. James Bates, in chapter 20, “Aging-Out and Foster Care: Housing Policy,” observes that only 50 percent of youth “aging out” of foster care are employed—but in low-wage jobs—and they lack affordable housing options. Community development, then, can easily mean just about anything policymakers and practitioners want it to mean. As such, as these chapters aptly demonstrate, the field is highly diverse, providing as yet unrecognized opportunities for synergistic collaborations.

Second, decreasing or redirected funding subsidies and evolving market forces have compelled community development organizations and programs—public and private—to rethink their missions and goals, reorganize their operations, offer new or improved products and services, and engage in partnerships for mutual benefit. In the field of finance, as illustrated especially in part 1., “Community Development Financial Institutions,” community development financial institutions (CDFIs) are continually seeking to meet the evolving needs for financial products while maintaining their long-term sustainability, while banks seeking new revenues are taking a closer look at the markets CDFIs serve. This trend has challenged the field—often in positive ways—as organizations compete and partner in the market for community development finance.

Third, performance attainment—establishing that organizations and programs are having intended impacts and are efficient—has infused itself across the community development field. Federal community development programs—under the Government Performance and Accountability Act of 1993 and the Bush administration’s Program Assessment Rating Tool begun in 2002—have made performance management, coupled with accountability and transparency, a requirement (see Redburn, Shea, and Buss 2008). But state and local governments, along with private organizations and nonprofits, have followed suit, motivated by their own desires to demonstrate their value and to hold responsible people accountable.

Where the Action Is in Community Development

Although such a diverse cross-section of chapters on community development can be organized in various ways, and many chapters easily fit under several headings, we arranged Reengineering Community Development for the 21st Century in seven parts.

Part 1. Community Development Financial Institutions (CDFIs)

The field of community development finance is evolving rapidly as CDFIs find innovative ways to capture investment opportunities and meet the needs in underserved communities. The six chapters in part 1 offer different perspectives on the changes in the field. Robin Newberger, Michael Berry, Kirsten Moy, and Gregory A. Ratliff, in chapter 2, “Evolving Roles of Mission-Focused and Mainstream Financial Organizations,” take a comprehensive look at the community development finance industry. Building on a state-of-the-industry conference series, they examine how nine CDFIs’ relationships with mainstream financial institutions increase the impact of the CDFIs individually and collectively, suggesting that these types of strategic partnerships and creative business models can help bring the industry to greater scale.

In chapter 3, “When Subsidy Becomes Scarce: Rethinking Community Development Finance,” Julia Sass Rubin focuses on two types of CDFIs—community development loan funds and community development venture capital funds—that provide debt and equity capital in higher risk transactions. Rubin observers that changes in once-supportive economic and political environments have caused these institutions to reconsider their underlying business models.

CDFIs are innovative financial institutions. Annie Donovan, in chapter 4, “CDFIs ‘Make the Market’ for Charter School Facilities Financing,” examines a relatively new investment opportunity for CDFIs: financing facilities for charter schools. Donovan’s analysis shows the positive investment potential for charter school financing.

Anna Steiger, Tessa Hebb, and Lisa A. Hagerman, in chapter 5, “The Case for the Community Partner in Economic Development,” look at issues and best practices in linking investment intermediaries and community partners to channel capital into underserved neighborhoods. Investment intermediaries “intervene between the investor and the community by pooling investments, spreading risk across investors, and pricing the transaction up to the associated risk.” Community partners “draw on their specialized local knowledge to structure deals that ensure social benefits for low- and moderate-income residents.” Effective community development will rely increasingly on these partnerships.

Two chapters look at performance management and accountability issues in community development finance. Dan Immergluck, in chapter 6, “Research Design Issues for Measuring CDFI Performance and Impact,” addresses the methodological issues involved in evaluating CDFIs, including research design, impact measurement, data requirements, validity, and reliability. Although CDFIs pose numerous challenges in conducting evaluations, Immergluck lays out a framework that moves the field considerably in the direction of meaningful evaluation. David Porteous and Saurabh Narain, in chapter 7, “Social Performance Measurement for CDFI Banks,” move from the theoretical/conceptual to an actual assessment of the “social performance” of community development banks using a variety of publicly available databases. Like Immergluck, Porteous and Narain review database limitations and offer an agenda for future research.

Part 2. Asset Building

Asset building is one of the newer innovative perspectives in community development undertaken over the last few years. The simple notion behind the concept is that assets, whether individual or community, are both ends and means to community economic development. As such, asset building must be a focus, or for some, the focus, of development initiatives. Joshua Silver, in chapter 8, “Stubborn and Persistent Lending Disparities,” documents the extent and nature of disparities in loan pricing based on race and income levels in neighborhoods that arise from discrimination, market failure, and lack of consumer financial knowledge. Inability to obtain loans impedes wealth building and sustainable homeownership necessary for community development. Silver offers recommendations to remove barriers primarily through federal regulatory powers.

In chapter 9, “The Assets Framework: Moving Toward Transformative Transactions,” Hannah Thomas looks at asset building from an institutional perspective in which a CDFI—Coastal Enterprises, Inc.—approaches development not only by financing deals but also by building wealth in communities. Thomas calls attention to the fact that many CDFIs have acted or are tempted to act more like mainstream banks, in the process diminishing their community development focus. Coastal Enterprises offers a model for CDFIs to consider before redirecting their community development missions.

In chapter 10, “Connecting Asset Building and Community Development,” William Schweke develops a framework and comprehensive action agenda that promotes the linkage of asset-building strategies for individuals to broader community development approaches. In prominently linking asset building and community development, policymakers and practitioners can develop a whole new perspective on helping individuals and revitalizing communities, one that portends much success for those who engage it.

Rene Bryce-Laporte and Hilary Hunt, in chapter 11, “Innovation in State Government: Pennsylvania’s Financial Education Office,” provide a case study of how concerned Pennsylvania policymakers created a state-of-the-art financial education program intended to provide people with the skills they need to build assets. The authors show the necessity of building a broad coalition of decision makers and stakeholders in developing a sustainable program that yields great benefits in building communities.

Part 3. Capacity Building and Citizen Engagement

Capacity building in grassroots organizations and for citizens is critical if community development initiatives are to be successful in revitalizing neighborhoods and communities. Without capacity to effectively participate in community development planning and activities, some organizations will be ineffective and citizens will be frustrated as efforts fail. Four chapters look at capacity building in community development through very different lenses. In chapter 12, “Community Capacity Building Through Strategic Philanthropy at the United Way,” Yoel Camayd-Freixas, Gerald Karush, Melissa Nemon, and Richard Koenig detail how a local United Way in Manchester, New Hampshire, reengineered itself to engage community development as a core part of its mission, in the process moving away from a traditional community chest model of philanthropy. The authors show how the agency built capacity within its own operations and among its member agencies to realize its new approach.

Jane F Morgan, in chapter 13, “Building Community Capacity Through Multisector Collaborations,” looks at a multisector collaboration between a Local Initiatives Support Corporation in Detroit and numerous organizations involved in community development, education, human services, and a variety of other sectors. The collaborative model, grounded in neighborhood planning and community development corporation approaches, shows how the Detroit Low Income Support Corporation (LISC) took the lead and created Strategic Investment Areas to target funds in areas of greatest need to great effect.

In chapter 14, “Southern Bancorp’s Model for Community Economic Development: The Delta Bridge Project,” Ben Steinberg, Ben Goodwin, and Michael Rowett recount the efforts of Southern Bancorp—a community development bank holding company—to revitalize a rural community in the Arkansas Mississippi Delta region. The Delta Bridge Project illustrates how a bank can take the lead in stimulating participation across all sectors of a community, setting the stage for sustainable development.

Chapter 15, “Effective Citizen Engagement: Lessons from Seattle Schools—A Memoir,” is a memoir offered by Norman Rice, former mayor of Seattle, and Lynda Petersen, recounting Rice’s innovative effort to bring stakeholders—citizens and organizations—of Seattle together to solve the crisis in the city’s schools—at the time a major community develo...