Archive for the ‘Innovation’ Category

What’s a CDC? New Legislation Provides an Answer.


August 24th, 2010 by Joe Kriesberg

“What is a CDC?”

I have probably been asked that question 1,000 times since I started working at MACDC in 1993.  It seems like a rather simple question and certainly one that the President of a CDC association should be able to answer.

But it is not so easy.  There are many different definitions in use around the country and many use words like “often,” “usually,” and “may,” when describing a CDC’s structure and activities.  Certain themes emerge – housing development; economic development; community engagement; neighborhood revitalization, etc, but no clear definition exists that is universally used in the field. The resulting confusion creates a problem for those who want to build and strengthen the sector.    

In Massachusetts, we have had a state law define the term since 1975. However, over the past decade or so that law became a dead letter as the definition  became more outdated — one provision of the law required that CDC board members must have 3 year board terms. So if a nonprofit had board terms of 2 years – it was not a CDC! Moreover, the benefits associated with the definition were minimal and there was not even a process by which groups could be officially certified as a CDC so there was no list of who even qualified for those benefits that did exist.

A few years ago, the Massachusetts Community Development Innovation Forum  decided to explore two questions: What is a CDC? And does it matter?

After countless meetings and discussions and research about how the term is used throughout the country, we agreed that it was indeed important to define the term because we can’t grow stronger CDCs if we don’t know who or what they are. We also settled on a new, updated, 21st Century Definition of a CDC that reflects the diversity of our field and the diversity of our communities.

And thanks to legislation signed into law by Governor Deval Patrick on August 5, 2010, our new definition (Section 86) is now officially part of state law.

Our definition boils down to three core elements – the organization’s mission, its activities, and its governance.  Specifically, Massachusetts’ new definition says that a CDC is a nonprofit organization based in Massachusetts that:

  1.  “. . .has as the corporation’s purpose to . . . develop and improve urban, rural and suburban communities in sustainable ways that create and expand economic opportunity for low and moderate income people;”
  2. “ . . . engage[s] local residents and businesses to work together to undertake community development programs, projects, and activities;” and
  3. “[can] demonstrate . . . that the corporation’s constituency, including low and moderate income people, is meaningfully represented on the board of directors . . . “

Our vision is that this definition will encompass a broad range of groups – far broader than the set of organizations traditionally considered CDCs in Massachusetts. We are trying to recognize and validate the different communities, histories, models and strategies that have evolved over time – so long as they share the three core elements above. 

The statute also requires the state’s Department of Housing and Community Development to develop guidelines and procedures for certifying groups as being a CDC. Over time, this will allow us to say specifically who and what a CDC is in our state. It will increase accountability and credibility for the field. And it will enable us to develop an intentional and comprehensive strategy for strengthening and sustaining these organizations over time – thereby creating and ensuring that we have the capacity to empower local residents and expand economic opportunity throughout the Commonwealth.  Such a strategy can learn from and improve upon our past experience in Massachusetts as well as other models like the CDFI and CHDO models developed nationally in the 1990s.

We are thankful to the Legislature and the Governor for enacting this important legislation. The stage is now set for an exciting transformation of the community development system in Massachusetts that builds on its extraordinary history of achievement while laying the foundation for even greater success and impact in the future.

In the 1970s and 1980s, Mel King, Governor Michael Dukakis and many others established the legal, financial and intellectual foundation for the Massachusetts community development field that allowed a nacesent movement to grow into a powerful sector that last year generated $1.67 billion of economic activity over the past seven years. This is their legacy – one that provides new benefits year after year.  Now it is our turn. Today’s community development leaders must work together to bolster, expand, and strengthen the field so our communities and the people who live and work there have the opportunity to work together and with others to create neighborhoods and communities of choice throughout the Commonwealth.

Let’s get to work!

Posted in Community Development, Innovation, Joe Kriesberg, State Policy | 1 Comment »

National Institute Will Advance Community Building


April 28th, 2010 by Joe Kriesberg

Article written by Joe Kriesberg and Bob Van Meter, Executive Director, Boston LISC

On April 20th, we were able to participate in an important event for community development.  A new Institute for Comprehensive Community Development was formally launched with a day long conference in Washington D.C. where community developers, policy makers from the Obama administration and foundation and intermediary staff met to talk about the state of comprehensive community development work and the direction forward. 

 The Institute was created by LISC to be a center for training of comprehensive community development practitioners, and to be a nexus for policy makers, researchers and practitioners to share ideas, best practice, and communicate more broadly about the work of comprehensive community development.  The leadership of the institute draws heavily upon the experience developed by Chicago LISC over the last dozen years as it has worked in partnership with the MacArthur Foundation and local community based organizations to do comprehensive community development in fourteen Chicago neighborhoods.  That successful experience was critical to LISC’s decision at the national level to adopt comprehensive community development as a national strategic direction and encourage each LISC program site to move in this direction.  The Institute is already providing training to LISC staff around the country. Marcus Haymon and Bob Van Meter were able to spend two days in Chicago in March in the Institute’s first intensive training session.

The March training was about the nitty gritty of comprehensive work but Tuesday’s “Inauguration” of the Institute was the view from 25,000 feet.  The alignment of the vision of comprehensive community development with the vision of the Obama administration was a strong theme of the day’s events.  Three White House officials spoke at the event, Adolfo Carrion, Jr. Director of the new White House Office of Urban Policy, Derek Douglas, Special Assistant to the President, White House Domestic Policy Council and Valerie Jarrett, Senior Advisor and Assistant to the President.  All of them spoke of the administration’s interest and support for comprehensive approaches to the challenges facing communities.  The work of three interagency working groups of the domestic policy council was described, including one focused on neighborhood revitalization that includes staff from the Department of Housing and Urban Development, the Education Department and the Department of Health and Human Services and the Department of Justice.  The two other working groups are focused on “Sustainable Communities” and “Regional Innovation”.

Derek Douglas described the approach of the working group on neighborhood revitalization as having several characteristics that include; 1) reinforce broad goals rather than being prescriptive about programs, 2) to emphasize the partnership of federal agencies, 3) to be evidence based.    Douglas said that there is already discussion between agencies about joint funding and joint review of applications by agency staff.    Valerie Jarrett spoke about the possibility that future federal funding decisions for core programs would include some priority for communities which are pursuing comprehensive strategies. 

Xavier de Souza Briggs, Associate Director for General Government Programs at the Office of Management and Budget and Erica Poethig, Deputy Assistant Secretary for Policy Development at HUD participated in an afternoon symposium on mapping the way forward.  Briggs, who was most recently on the faculty at the Department of Urban Studies and Planning at MIT (and spoke at the 2006 MACDC Convention), emphasized what an important factor residential mobility is in thinking about communities and how one measures the impact or benefit of place-based comprehensive strategy.

The symposium included a number of community development practitioners as well as administration officials and others.  Hippolito (Paul) Roldan of the Hispanic Housing Development Corporation made an impassioned plea for the importance of addressing public safety as a precondition for all other community development work.  He emphasized the scourge that gang violence is in some of the communities he works in and the importance of addressing violence.  Xav Briggs responded to Roldan arguing that sometimes liberal policy makers have emphasized violence prevention to the detriment of violence deterrence and that we must do both as we think most community developers would agree and pursue as a practical strategy.   

 Both Amy Liu of the Brookings Institution and Ron Phillips of Coastal Enterprises reminded the audience that community development is not just about cities.  Poverty is a suburban and rural phenomenon  and poor people living in suburbs, according to Liu, underutilize the largest income support programs perhaps in part because of access to those programs is less in suburban locations.

Bob Weissbourd, a Chicago based consultant (and speaker at one of our Community Development Innovation Forum events in 2009), reminded everyone that neighborhoods are impacted by the market and that community development needs to be about influencing the market but that much of the change that occurs both for good or ill in communities is determined by forces beyond our direct control.

Both Julia Stasch of the MacArthur Foundation, speaking in the morning and Ann Kubisch of the Aspen Institute speaking in the afternoon spoke about the importance of the broker role.  Kubisch said that a number of comprehensive approaches in the past had been successful in creating neighborhood level consensus or coalitions but that there had been less success in building linkages to power.  In Kubisch’s view that is an important role, that of convener, broker, aligner, often, but not always, played by a CDC.   Stasch spoke about the importance of the “glue” that keeps comprehensive efforts together.  Stasch also suggested that the Institute should work to create new metrics that measure the strength of the “platform” (platform is the LISC term for the coalition of local players who work together to advance neighborhood change) and whether they increase the resilience of the community.

Another theme running through much of the day’s events was the relation between regional strategies for growth and sustainability and the importance of strong neighborhoods and neighborhood revitalization. Stasch remarked that those involved in both regional efforts and comprehensive neighborhood efforts often acknowledge the importance of each other’s concerns but that real engagement between those ideas and approaches is lacking.  She suggested that the Institute should be a nexus of that engagement.

Xav Briggs and others spoke about the need for evidence to support allocation of public resources to support efforts but the evidence is difficult to come by given residential mobility, the strength of market forces, and the complexity of factors affecting both the people in communities and the communities.

In our view, there should have been a bit more discussion about the importance of creating strong community based organizations that can make demands on the public sector and corporations on behalf of the low income communities.  One of the central questions that has to be answered about comprehensive development strategies is how do you pay for the community organizing work, the glue, that does not fit easily into a programmatic box. 

Moving forward, both Boston LISC and MACDC expect to be active participants in this national discussion. Joe Kriesberg will be serving on the Institute’s new National Advisory Board and Bob Van Meter will be participating in Institute activities through his role at LISC. More importantly, Boston LISC will be rolling out its version of comprehensive community development later this year with a new “Resilient Communities” program in two local neighborhoods. MACDC is working with the Smart Growth Alliance to develop a new “Great Neighborhoods” program to promote local smart growth efforts that advance similar goals. Both of these new programs are focused on local neighborhoods, but are tightly linked to broader regional efforts to implement Metro Future, the regional plan for Greater Boston that was developed by MAPC.

The convergence of these local, regional, and national initiatives provides us with a game changing opportunity to advance our long-held vision for comprehensive community development that can transform both neighborhoods and the lives of the people who live in them.

Posted in Community Development, Innovation, Joe Kriesberg, LISC | No Comments »

Innovation in Action


April 9th, 2010 by Joe Kriesberg

The other day I read about a new report by New York State Comptroller Thomas DiNapoli (with the help of the New York Council of Nonprofits) that found that 87 percent of nonprofit contracts with state government (of more than $50,000) were not approved prior to the nonprofits’ beginning their work. On average, new contracts were approved nine months after the contract start dates and renewals were five months late on average.  New York State is essentially relying on nonprofit organizations being so committed to their mission that they will risk their financial health to continue providing services without contracts. Indeed the entire system appears to depend on this commitment. 

The only thing about this report that might surprise CDC and non-profit leaders is the fact that a state agency finally documented the problem.  All mission-driven organizations confront this challenge all the time – how to balance money with mission. We must often complete substantial work on a project or program before receiving a fee or reimbursement and those payments rarely cover the full cost of delivering the service. Cash flow becomes a chronic challenge and organizations are unable to build up a health reserve fund. The resulting impact on fiscal health can be severe as the Non Profit Finance Fund recently documented in a report on CDC Fiscal Health that was completed as part of the Community Development Innovation Forum.  

Reversing these trends is a primary goal of the Community Development Innovation Forum. We have recently re-activated a group of stakeholders to develop recommendations for how the real estate development finance system can be reformed to better enable non-profit developers to achieve their missions in a financially sustainable manner. 

In the meantime, I have some very good news to report about a recent policy decision that moves us in the right direction. On April 6, at MACDC’s annual Lobby Day, Massachusetts Secretary of Housing and Economic Development Greg Bialecki, announced that he would forward commit $600,000 in FY 2011 funding for the small business technical assistance program so that he could double the size of recent grants to CDCs and other nonprofits and extend the term of their contracts by 6 months. By providing greater funding certainty and stability, the state will strengthen its organizational partners, promote longer term planning, enhance professional and program development and help leverage more private and federal money – without costing the state any extra money. 

 The Secretary’s announcement was in response to problems this program has had in past years when uncertainty about the state budget would cause substantial delays in the RFP and subsequent funding decisions. Groups sometimes had to wait several months into the fiscal year before learning whether they were going to be funded again and at what level.

 Secretary Bialecki’s creative solution was made possible by a generous commitment from Mass Development to provide $600,000 in funding to the program in FY 2010 and now FY 2011. Since these funds are not contingent on legislative approval of the state budget in June, the Secretary had the flexibility to think outside the box and create a solution that will benefit the state, the grantees and most importantly the small businesses that this program seeks to support. Now that is the type of Innovation that is worth celebrating!

Posted in Financial Health, Innovation, Joe Kriesberg, Massachusetts, Small Business, State Policy | No Comments »

CDC Fiscal Health – where are we, where are we going?


March 1st, 2010 by Joe Kriesberg

Last Friday, at an event hosted by the Boston Foundation, the Community Development Innovation Forum released a new study by the Non Profit Finance Fund that looked at the fiscal health of the CDC sector.

Bill Pinakiewicz from NFF, highlighted the key findings of the study, including:

* Taken as a group, the twenty-six organizations represented in the study have become financially more vulnerable from 2003 thru 2008.  That means that the financial challenges facing community development corporations predate the 2008 recession.

* Unlike private real estate companies, CDC financial performance was not demonstrably better during the hot real estate market in the middle of the decade due to program limits on rents and profits, leaving little cushion when the market collapsed in 2008.

* The study did not find a significant difference among small, medium and large CDCs in terms of recent financial performance.

* CDCs were impacted by multiple factors – homeownership projects that came on line as the market collapsed, rental developments that were stalled or yielded inadequate fees, existing portfolios that generate little to no net cash flow to the CDC, cuts in government, foundation and corporate funding, and rising costs. The study period also covers the first five years following the elimination of the state’s CEED program, which had provided flexible funding to CDCs for more than 20 years.

* While all of the participating CDCs provided audits that fully comply with GAAP there is clearly a wide variation in financial reporting practices across the field that make it difficult to aggregate and compare data among CDCs.

We then heard from a panel including Geeta Pradham from the Boston Foundation, Jeanne Pinado from Madison Park DC, Phil Giffee from NOAH and Paul Juraschek the CFO at JPNDC.  The panelists pointed out that not all CDCs are struggling financially and that the true financial health of a CDC can sometimes be hard to discern from consolidated financial statements that include real estate properties and the core organization. The panelists described some of the tough decisions that CDCs have had to make to deal with the financial stress, including shutting down programs and laying off staff. They also noted that small changes in the real estate finance system with respect to developer fees, cash flow distribution and other rules could significantly improve CDC fiscal health and stability. There was also broad agreement that more consistency in financial reporting and more opportunities for CFOs and Executive Directors to learn from each other would be valuable.

MACDC, LISC and other partners in the Innovation Forum intend to follow up the study by renewing our efforts to improve the real estate finance system, to begin implementing Strength Matters in Massachusetts, to expand peer learning opportunities among CDCs, to support collaborations, mergers, and other ways to improve operating efficiency, and to continue researching trends to determine whether we are making progress in the coming years.

The structural flaws in the way that real estate is financed make it difficult for mission driven organizations to succeed, and this report underscores that point. Real estate development is a high risk economic activity and the affordable housing financing system makes it difficult for that risk to be adequately rewarded for mission driven organizations while not shielding them from the negative consequences of failure. It is also clear that the way all non profits are financed creates inherent challenges, including government contracts with little overhead, private philanthropy that is highly restricted and a lack of unrestricted operating funds that allow nonprofits to invest in organizational infrastructure, capacity building, research and development, and innovation. 

To me, a core problem is that too many funders are looking to simply buy services from nonprofit organizations at the lowest possible price and too many nonprofits play into this game at their own financial peril. Instead, we need more funders to think not just about the immediate program or project, but how their investment in that program or project will help the organization achieve lasting, sustainable community impact over the long term.

Posted in Community Development, Financial Health, Innovation, Joe Kriesberg, Massachusetts | 4 Comments »

Welcome to my new blog!


January 21st, 2010 by Joe Kriesberg

After a couple of years of cajoling and encouragement from friends and colleagues, and a few months of my own contemplation and procrastination I have decided to venture into the blogosphere. My hope is to offer some ideas, information, and insights that will be of interest to community developers and their partners in Massachusetts and perhaps around the country. I welcome your feedback and comments as I hope this blog becomes a vehicle for sparking conversation and debate about key issues in our field.

Right now I am reading a very interesting book called Start Up Nation: The Story of Israel’s Economic Miracle by Dan Senor and Saul Singer. I started reading the book because I am in Israel for the rest of January with a Jewish Community Relations Council (JCRC) delegation of non-profit leaders. We will be meeting with our counterparts in Boston’s sister city of Haifa and around the country, including some affordable housing advocates. I’ll be writing more about that later.

But right now I am really enjoying this book. While it is providing me with good context for my trip, it also has very relevant lessons for the work we are doing in Massachusetts with our Community Development Innovation Forum. You see, it turns out that Israel is the world’s leader in innovation and entrepreneurial activity – especially in the high-tech, biotech and smart energy fields.  The authors explore the cultural and environmental factors that support so much innovation. According to the authors, it flows from such factors as a lack of hierarchy, a willingness to challenge conventional wisdom, a propensity to argue, debate, question and challenge authority, and an ability to see failure as learning step toward success rather than a reason to quit. In short,  it requires “chutzpah!”  Innovation has also been spurred by necessity (lack of natural resources, constant threats, economic and political isolation in the region) immigration, universal military service, and a strong commitment to education.   Entrepreneurialism is produced “when people can cross boundaries, turn societal norms upside down, and agitate in a free market economy … to catalyze radical ideas.”  The biggest obstacle to such innovation it turns out is “order. A bit of mayhem is not only healthy, but critical.”

Of course, there must be some balance. Israeli entrepreneurs benefit from “stable institutions and the rule of law,”  but also from Israel’s “nonhierarchical culture where everyone in business belongs to overlapping networks produced by small communities, common army service, geographic proximity and informality.”

When we are at our best, I think the community development field shares many of these attributes and characteristics. But I do worry that sometimes  we are afraid to challenge conventional wisdom, our own customs and practices, or powerful authorities, including funders and government officials. There may be a tendency to think that all of us should do the same thing or pursue the same solutions. We are often quick to judge and criticize those who try things differently. Too often we are afraid to acknowledge something has failed and when we do see failure we may see that as a permanent taint rather than a learning opportunity. In our desire for scale, efficiency, and an orderly delivery system, will we stifle the very innovation we need to achieve our ambitious goals?

My own sense is that we are all going to have to get more comfortable with disruption, confusion, disagreement, failure, and a bit of chaos if we are serious about creating a culture of innovation in our field. 

What do you think? Do you want to argue with me about that? Either way, post your comment!

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Posted in Book Review, Community Development, Innovation, Joe Kriesberg, Massachusetts | 4 Comments »