(National Congress for Community Economic Development, 2001)
National Congress for Community Economic Development. (2001). What is a CDC? In National Congress for Community Economic Development. Retrieved January 22, 2002 from the World Wide Web: http://www.ncced.org/
WHAT IS A CDC?
You can find several different definitions of a CDC, however, all would agree that a community development corporation (CDC) is a non-profit organization that is created to revitalize a low- or moderate-income community. CDCs are created by people with a stake in the community itself. This can include residents of the target area, churches or other religious institutions, and sometimes, small business owners. The CDC model is one of self-help. People from the target area form their own organization to address their own needs. It is not the creation of people from outside the community.
The majority of CDCs are involved in the development of affordable housing for community residents. This can be rental housing or homeownership. Some CDCs provide housing counseling programs and some develop housing for people with special needs, such as the elderly and the disabled.
A growing number of CDCs are becoming involved in job creation activities. The most common approach to job creation is through small business lending. Many CDCs operate revolving loan programs for small businesses. Some CDCs focus on loans to very small businesses, known as microbusinesses. Other approaches to job creation include commercial development and the creation of industrial parks. In order to complement their activities, some CDCs provide training in different aspects of starting and running a small business.
Some of the older, more comprehensive CDCs also provide social services to local residents. The type of social services varies, but can include GED programs, substance abuse counseling, English as a second language classes, food pantries, job training and placement, etc.
How Do I Start a CDC??
Starting a CDC is the same legal process as starting any other type of non-profit organization. Depending on how long it takes your local group to agree upon your articles of incorporation and by-laws and for the Internal Revenue Service to grant your letter of non-profit status, it can take up to a year to become a legally incorporated non-profit organization.
Legally a CDC is the same as any other non-profit organization. The term CDC describes the types of activities that the non-profit is engaged in. In the case of a CDC it is housing development or job creation or possibly both. There is no federal government agency or other national body that certifies organizations as a CDC. Many federal agencies have programs for which CDCs are eligible applicants, but each program has its own eligibility criteria.
Over 3,000 CDCs already exist in the United States, so you know that a lot of communities like yours have already created their own CDC. There is no reason that you can’t create one too. However, it will take a certain level of hard work commitment, and patience to make it work.
1) Convene community stakeholders with an interest in revitalizing their area to form an initial volunteer board.
2) Board members identify, review, and discuss the types of projects they want the organization to work on. Based on the projects, the board will then determine the best structure for the organization.
3) The board will then need to agree on a name and mission for the organization. Articles of incorporation and by-laws need to be drawn up and filed with your state government. The timeframe needed for this will vary, depending upon the time it takes for the board to reach agreement and the ease in finding a lawyer to write the articles of incorporation and by-laws. This can vary from a few weeks to several months. (Writing the articles of incorporation and by-laws can be done with assistance from an attorney, some of which will do it pro bono. Another resource is the Legal Handbook that was developed by LISC, and can be obtained through NCCED.)
4) You will receive notice from your state government once your organization has successfully completed the incorporation process. You will then need to file an application to the federal Internal Revenue Service for designation as a non-profit organization under the U.S. tax code.
5) Once you receive the letter from the IRS granting your organization non-profit status, you can start to approach funders for the dollars that you will need to start-up your organization. The IRS letter is crucial to your fundraising efforts. Without the IRS letter, virtually no funder will be willing to give grant funds directly to your organization.
6) You need to decide what type of projects your CDC wants to start out with. This will determine which funding sources to approach. A few funding sources can be used for a wide variety of projects, but usually funders of housing development are different from funders of small business or commercial development. The choices you make will determine which funders your organization should pursue. Do not try to solve every problem in your community right off. Start with one type of project and build your organizational capacity before broadening out to new activities.
7) When first starting your fundraising search, start locally and work your way up to statewide and national funders. Local funders are more apt to take a chance on a newly formed organization than a statewide or national funder would be. The broader the geographic scope of the funder the higher the number of applicants and the stiffer the competition. Foundations, banks, corporations, religious institutions, financial intermediaries, and federal, state, and local governments are all potential funding sources.
Here are some books and websites that can be very useful to new CDCs.
www.ncced.org Our website, with up-to-date information on public policy and available resources, as well as all of NCCED’s own activities.
www.knowledgeplex.org This website was organized by Fannie Mae, with 19 partners, including NCCED. It pools information from each of the partners and provides easy access to a wide range of information on community economic development in one location.
www.communitydevelopers.org A website for people interested in a career in community economic development. Provides some basic information and lists ways to get into the field.
www.capwiz.com A website that provides an easy means to send letters to your elected officials in Washington about legislation that relates to community economic development.
www.microenterpriseworks.org The website for the Association for Enterprise Opportunity, the national trade association for non-profits involved in microenterprise lending.
www.enterprisefoundation.org The website for the Enterprise Foundation, a national financial intermediary that provides funding and technical assistance to CDCs in certain geographic locations.
www.liscnet.org The website for the Local Initiatives Support Corporation (LISC), another national financial intermediary. LISC has local offices in many large cities across the country, as well as a program for rural CDCs.
Federal agencies are easily accessed through their web sites. Generally, their sites consist of the acronym for the agency, followed by .gov. For example: [www.hud.gov] or [www.dhhs.gov] etc. There is also one central web site through which all federal agencies, the federal register, and other information can be accessed. It is www.firstgov.gov.
The Foundation Center has several publications on fundraising for non-profits and there are libraries across the country with Foundation Center collections. For more information on their publications and the library nearest you, contact www.foundationcenter.org.
The Grantsmanship Center provides training on how to write proposals and publishes a newsletter. For a list of scheduled trainings and other information on proposal writing, contact. www.tgc.com.
A wide variety of publications on non-profit management topics, including boards, are available through the National Center for Nonprofit Boards, www.ncnb.org
Available through NCCED are several individual publications, as well as a comprehensive library of community economic development publications.
Individual books include:
Coming of Age—A report based on the most recent national census of CDCs in the U.S. This publication provides basic information on the CDC industry, including the number of CDCs, the number of units of housing and jobs that they have produced, a regional breakdown, a rural/urban breakdown, and summary of the recent trends in the field. A publication that can help the new practitioner see that they are part of a big, experienced network of CDCs. This report is also useful to show prospective funders that your new organization is part of a field that has a long tradition and a successful track record.
An Annotated Bibliography for Faith-Based Community Economic Development—Useful for both faith-based and non faith-based CDCs, this bibliography provides a listing of much of the best material available on community economic development.
Media Toolkit—Provides how-to information on identifying your constituencies and working with the media to get your organization’s story told.
Community Economic Development Tool Kit—This comprehensive library of materials on community economic development was put together by NCCED from our own publications and outstanding publications from other organizations on a variety of topics related to non-profit management and community economic development. General topic areas include: an overview of community economic development; getting started; running the business; financing and fundraising; jobs and business development; faith-based development; policy; and keeping connected.