Essays on People, Place & Purpose

Investing in What Works for America's Communities

Integration and Innovation in a Time of Stress: Doing the Best for People and Place

by Ellen Seidman

Over the past decade, amid bubble and bust, community development has undergone a subtle but important transformation, broadening its outlook from a primary focus on investment in real estate, especially affordable housing, to include other types of real estate, such as charter schools and health clinics. But perhaps more importantly, it has broadened its outlook to encompass what goes on in those places (the quality of services); the total physical and social structure of the community (including issues such as transportation and public safety); and the physical, financial, and mental health of the people who live in those communities. As Alex von Hoffman demonstrates in his history of community development, the field has long pulsed between tighter focus, whether by geography or sector, and the search for comprehensive solutions. What may distinguish the current transformation, in which two leading organizing principles are “integration” (focused on process) and “healthy communities” (focused on results), is the coming together of so many fields in so many places, at a time when financial strain and advances in technology encourage true innovation in solving ever-more-difficult problems.

The essays in this book look at community development from many perspectives, but several themes emerge with some regularity. Perhaps the most profound is the recognition that community development is about the entire life of the community. That recognition generates a series of important corollaries: (1) a focus on the health and well-being of individuals and families, especially children, as well as of the places in which they live; (2) the need to bring many disciplines to the table and “bust silos,” including in particular the silos of government programs; and (3) the essential role of effective participation of residents in developing and implementing the strategies that will help their communities prosper. Several of the essays explore the role of the community beyond participation in decision-making to include community ownership and control of assets.

A second theme is that community development, although still largely focused in neighborhoods, must connect those neighborhoods with the broader economy to be effective. Families can neither live well in the present nor focus on the future without a stable household income. And because the jobs that can generate a stable income are often unavailable in sufficient quantity in a particular neighborhood, that neighborhood must be effectively connected to the broader regional economy, both physically (such as through transit) and organizationally (by having a true voice in the decisions that are implemented outside the neighborhood but affect it profoundly). Connection beyond the neighborhood can also help provide access to the education needed to obtain jobs that provide a steady income, as well as to other goods, services, and amenities not available in every neighborhood. Connection is also vital if people are going to have real choice in where they want to live.

A third theme is that because funding is severely constrained, the field must find new sources of financing and put what has been available to better use, both by focusing on what works and by establishing and using new financing systems and structures. Impact investors, who are interested in values beyond simple financial return—including foundation endowments, corporations and other institutions, and individuals—may be new sources of investment, but their demands for efficient investment vehicles combined with measurable financial and social returns raise serious challenges for an industry used to relying for subsidy sources on a combination of government programs, regulation-driven bank investment, and philanthropy.

Other potential new sources of funds arise from the recognition of the broader scope of community development: the fields of health care, transportation, and energy efficiency may have new funds available for well-integrated investments that meet multiple goals. Moreover, the sector is itself a job creator, in construction and the activities (such as education, health care, and supportive housing services) that are enabled by that construction, and in its support for business development in underserved communities, and thus should be able to benefit from funding for job creation. Both impact investors and new funding sources will require innovation in capital management, to reduce both the amount of funds needed and the risk of investment. In addition, the field will need to better leverage impact investments by making the most efficient use of subsidy sources and by accessing broader markets, including the capital markets, for nonsubsidy dollars. Over the past 10 years, and through the Great Recession, community development financial institutions (CDFIs) have proven their prowess in this area, but the future will challenge them, and others, to use capital more efficiently, think more broadly, and tap new resources in order to operate at the larger scale that will be necessary.

But more money cannot be the entire answer, partly because in a time of fiscal stress and greater need coming out of the Great Recession, it is unlikely to be available, at least to the extent needed. The field must also get better at directing money where it will be most effective. This requires collection, aggregation, and analysis of data at many levels—project and program; neighborhood, city, and region; national and international. Modern technology, including social networking, can facilitate this, especially through use of government data and open sources of private data. Several essays raise the exciting prospect that the methodologies of public health and the use of biomarkers can give us quicker and more accurate insights into the effectiveness of strategies than previously possible. But analysis is not enough. It will be essential to use the data and analysis to make difficult choices, including discontinuing programs that fail to produce results. A number of essays focus on establishing decision-making structures that improve our ability to make those choices, including the greater use of pay-for-performance funding.

A final theme is community development’s need to regain the entrepreneurial spirit that characterized its early years, which it lost for a host of reasons including funder risk aversion and excessive regulation. As Federal Reserve Governor Elizabeth Duke points out in the foreword to this book, the skills of entrepreneurship—spotting opportunities, managing complexity, rapid prototyping and revision, willingness to experiment and fail, and networking—are also the skills of effective community development. This is especially critical given the variation in circumstances and challenges of lower-income communities around the country. Many of the essays build on the entrepreneurship theme.

The remainder of this chapter explores the problems that community development is attempting to solve and the challenges and opportunities that face the field, using the themes the authors raise to suggest future directions for the field.

WHAT PROBLEM IS COMMUNITY DEVELOPMENT TRYING TO SOLVE?

The term “community development,” as this book demonstrates, means many things to its practitioners. However, it appears that the field is attempting to solve three main problems. First—and as von Hoffman points out, first in time as well—is the goal of lifting individuals and families out of poverty. Alan Berube demonstrates that although the nature of poverty is changing, especially with respect to age, ethnicity, location, and participation in the workforce, the amount of poverty in the United States is increasing in absolute terms and in terms of the percentage of the population who live in poverty. Moreover, although poverty did decline during the economic growth of the late 1990s, it increased in the first decade of the twenty-first century during both recessions and recoveries.1

The authors highlight different aspects of this persistent poverty: Clara Miller, Ben Hecht, and Angela Glover Blackwell point to the systemic nature of poverty in the United States—poverty is no longer a matter of the poor being at the edge of a prosperous society; Peter Edelman, Shirley Franklin and David Edwards, and Blackwell focus on the particular problems of concentrated urban poverty, especially among African Americans; Secretaries Shaun Donovan, Arne Duncan, and Kathleen Sebelius (together “the Secretaries”) highlight both concentrated poverty and homelessness; Gabriella Conti and James Heckman and Ted Howard pay special attention to growing inequality; and Cynthia Mildred Duncan cites the persistent poverty of the Mississippi Delta, Appalachia, and Native American reservations and the newer poverty of the depopulating areas of the Midwest and Great Plains. Community development is in part about overcoming persistent poverty and providing individuals and families with, among other things, long-term financial stability, reduced stress, and opportunities for both forward-thinking2 and intergenerational wealth transfer.

A second problem community development is attempting to solve is the creation of communities that work. The work of Purpose Built in Atlanta, the Neighborhood Centers in Houston, and the Cleveland Initiative (described in Part 2), as well as most of the other integrated activities that Eric Belsky and Jennifer Fauth describe in Part 1, is focused on turning individual communities into places where people, especially those of limited economic means, can live in safety and dignity and with access to economic opportunity and quality services.3 Edelman, tracing the history of community development from the early 1960s, emphasizes the importance of choice, in the sense both of people being able to freely choose where to live (which discrimination and related issues continue to make challenging) and of the neighborhoods in which many lower-income people live having qualities that would make them neighborhoods of choice. Edelman, John Robert Smith and Allison Brooks, Hecht, and Blackwell point out, however, that neighborhoods exist within the context of their cities and regions, particularly when it comes to jobs, and that a healthy neighborhood is a connected neighborhood. Duncan emphasizes that for rural America, connection to urban areas and the greater region is essential to community vitality.

Miller and Hecht, as well as the Secretaries, take community development one step further, tying the field to the bigger issues of establishing a base for a far more vibrant and inclusive economy over the long term. As Miller says, those working in community development must acknowledge “the need to rebalance the economy itself so it can fulfill the traditional American promise: full livelihood, democracy, and opportunity for all.” And Blackwell, citing both disproportionate and growing poverty among African Americans and Latinos and their increasing proportion of the population, makes the case that “equity . . . has become more than a moral issue. It is now an economic imperative.”

WHAT ISSUES ARE PARTICULARLY CONFOUNDING FOR COMMUNITY DEVELOPMENT TODAY?

Community development has always been about poverty, frequently concentrated urban poverty. But as Berube points out, the nature of poverty is changing. Concentrated urban poverty, in particular among African Americans, remains a serious problem (as Edelman, Franklin and Edwards, Blackwell, and others discuss), and in recent decades it has been compounded by increasing and persistent income inequality and an increase in severe poverty and intergenerational poverty. But Berube suggests that other dynamics are also at work: those in poverty are more heavily Latino, more suburban, more concentrated in the South and West, younger, and less connected to the workforce (and in particular to a steady job).

Duncan adds that although some rural poverty has been persistent, other rural areas have fallen into poverty as changes in agricultural and natural resources technology have combined with the lack of employment opportunities to depopulate whole regions. Each of these changes challenges some of the existing responses to poverty alleviation. In particular, the increasing number of poor people in suburbs, especially those beyond transit systems, makes service delivery more difficult and reduces the effectiveness of some of the old and new tools of community development, such as concentrated redevelopment of a single neighborhood.4 There may be opportunities to learn from rural America, where, as Duncan points out, poverty has always been exacerbated by distance and lack of concentrated resources.

Moreover, the Great Recession has amplified the challenges of poverty. Not only have individuals been affected by lost income from unemployment but, as Jennifer Tescher writes, the recession has resulted in depleted balance sheets (in particular, the loss of home equity and savings) and a reduced ability to access financial services in general, including credit. These problems have been especially acute in the African American and Latino communities.5 Berube and Miller discuss additional impacts on individuals of long-term unemployment, including its psychological impact and the increasing mismatch between an unemployed worker’s skills and the needs of potential new employers.

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