Essays on People, Place & Purpose

Investing in What Works for America's Communities

Fighting Poverty through Community Development

by Shaun Donovan, Arne Duncan and Kathleen Sebelius

Of course, many localities that have large deficits in their fiscal capacity are not as far along with respect to developing a comprehensive strategy for their economic future. For these places, SC2 developed an Economic Challenge that will competitively award funding to six additional cities and regions so that they themselves can hold “X-prize style” competitions that challenge multidisciplinary teams of experts to help develop and implement comprehensive, twenty-first century, globally competitive economic strategies for their regions.

The transformations underway in these cities will not happen overnight. But already, SC2 has made important progress.

In Memphis, our SC2 team is working in partnership with the Bloomberg team to create a CityStat performance management system that measures progress on the dozens of strategies already underway in the city.

In Cleveland, our SC2 team is working to align northeast Ohio’s workforce delivery system with economic growth opportunities presented by efforts such as the Integration Initiative’s Evergreen Cooperative green business development.

In New Orleans, our SC2 team is collaborating with city staff to improve access to primary care services and to develop a behavioral health strategy that establishes strong community partnerships to integrate behavioral health within the community.

In Detroit, we have seen that careful planning in places that have lost population and have high vacancy rates is essential, but not without challenges. There, our team has seen that capacity constraints within local government can affect the alignment with philanthropy. We are working to resolve these tensions, while understanding that some of them can be healthy.

We are also seeing how new partners can emerge. In Fresno, the General Services Administration worked with the Social Security Administration to help the latter sign a 15-year lease in downtown Fresno to bring more people into the heart of the city’s historic district.

In all these cases, the work of SC2 is emblematic of the approach that this administration has taken with cities—engaging as a partner, focused on local visions, local leadership and local assets.


Even before the Great Recession, the middle class was under siege. But with median family net worth dropping nearly 40 percent, millions of families have been pushed even closer to the brink of poverty and far too many more are falling behind. The growing gap between the wealthiest Americans and those with the least makes the task of climbing into the middle class tougher than ever before.

Instead of economic growth fueled by speculation and phony profits, we need investment in the people and places that can prepare our communities for long-term economic success in a globally competitive economy. President Obama has called for putting in place long-term policy reforms for our nation to “out innovate, out educate, and out build the rest of the world,” while taking important steps to combat the worst impacts of the economic crisis. We have focused on creating pathways to opportunity for all Americans, and the administration’s approach to revitalizing neighborhoods of concentrated poverty, ending homelessness, and supporting city governments are but three examples of the kind of new thinking we need to strengthen communities and end the scourge of generational cycles of poverty.

The cost is too great to leave countless families on the sidelines as we compete in a global economy. We have an economic and moral imperative to ensure that all children grow up in places that prepare them for the twenty-first century economy. And we must recognize how far and wide that imperative stretches, from education reforms that ensure all Americans have access to a complete and affordable education, to tax policy that encourages and facilitates work, to transportation and telecommunications infrastructure that expands access to job opportunities, to a health care system where every American can get the care they need to get healthy and stay well.

The administration has developed an integrated approach to community development that supports locally-driven comprehensive strategies, invests in what works with a focus on data and results, leverages resources to maximize current and future federal investments, and lays a foundation for stronger urban, suburban, and rural communities.

Our focus must be to provide the kind of partnership that recognizes the importance of the federal role when it comes to community development but is humble enough to recognize the federal role is one of many. It’s a partnership of families, neighborhoods, and governments that uses data to focus not simply on access and dollars, but on the outcomes that public investment produces, and understands the power not simply of federal investment in community development, but its ability to foster civic engagement and personal enrichment at the local level. With broad access to opportunity in an economy built to last, we can ensure that wherever Americans grow up, their hard work allows them to realize the American Dream.


  1. The economist Harry Holzer and colleagues have estimated that every percentage point of the child poverty rate costs the U.S. economy nearly $30 billion a year because of lost earnings and increased costs, particularly health and crime-related costs. In 2007, this meant there was a total annual cost of $500 billion per year from child poverty. By this estimation, the 4 percentage point increase in child poverty in the three years since the start of the Great Recession could cost the United States an additional $120 billion annually. Harry J. Holzer, Diane Schazenbach, Greg Duncan, and Jens Ludwig, “The Economic Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor.” Working Paper Series #07-04 (Washington, DC: National Poverty Center, 2007).
  2. While suburban poverty is still lower than urban or rural poverty, it has since the Great Recession seen higher rates of growth (50 percent) from a lower base compared with increases of 25 percent in urban and rural areas. Further, just as suburbs are not immune from neighborhood poverty, children from middle-class families are not exempt from the effects either. Indeed, a federal evaluation of the reading and mathematics outcomes of elementary students in 71 schools in 18 districts and 7 states found that even when controlling for individual student poverty, there is a significant negative association between schools with high levels of poverty and student achievement.
  3. Data drawn from tabulations of the U.S. Census and reported by the Center for Budget and Policy Priorities. See Arloc Sherman, “Poverty and Distress Would Have Been Substantially Worse in 2010 without Government Action, New Census Data Show” (Washington, DC: CBPP, November 7, 2011).
  4. This encompasses direct, indirect, and induced jobs that are likely supported by program expenditures, which was estimated by the Office of Policy Development and Research at the U.S. Department of Housing and Urban Development using the IMPLAN model. IMPLAN is a well-respected input-output model developed in collaboration between the University of Minnesota and the U.S. Forest Service:
  5. The White House, “Education and the American Jobs Act” (2011), available at
  6. The White House, “Creating Pathways to Opportunity” (2011), available at
  7. Ibid.
  8. Thomas Kingsley, “Taking Advantage of What We Have Learned.” In From Despair to Hope: HOPE VI and the New Promise of Public Housing in America’s Cities, edited by Henry Cisneros and Lora Engdahl (Washington, DC: Brookings Institution, 2009).
  9. Ibid. Seventy-two percent of leveraged capital, an estimated $7.81 billion, came from private sources, which included private investments in the Low Income Housing Tax Credit; Abt Associates, “Interim Assessment of the HOPE VI Program, Cross Site Report.” (Washington, DC: U.S. Department of Housing and Urban Development, 2003), available at
  10. Name has been changed.
  11. Mary E. Larimer et al., “Health Care and Public Service Use and Costs Before and After Provision of Housing for Chronically Homeless Persons With Severe Alcohol Problems,” The Journal of the American Medical Association. 301 (13) (April 1, 2009).
  12. U.S. Conference of Mayors, “Hunger and Homelessness Survey: A Status Report on Hunger and Homelessness in America’s Cities,” (Washington, DC: Conference of Mayors, 2009), available at

One Comment

  1. James Monroe Holland Jr. Reply

    This activity of engagement mirrors the implementation of (Section3). This Housing and Urban Development Act incorporates employment,training and contracting opportunities for low and very low-income persons in HUD funded Choice Communities.

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