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

Adler’s essay makes some useful suggestions. Saying that it is time to test the link between community development and health outcomes, Adler focuses on the need to agree on data measures and research protocols and to establish databases that are of wide use. Adler recognizes the challenges this presents but points out that existing data sets and focusing on biomarkers and risk factors can reduce cost and overcome the problem that the impacts of community development activities may be slow to manifest themselves other than through health indicators, a point that Radner and Shonkoff also make. For example, Adler states that one widely asked survey question—“How would you rate your health relative to others your age?”—is extremely good at predicting actual health outcomes, and may be a key to measuring at least a portion of the impact of community development activities.

Pulling these strategies together successfully requires competencies beyond the professionalism, especially concerning investment, that has been the hallmark of successful community development for the past 30 years. Sister Lillian Murphy of Mercy Housing, one of the field’s most effective and successful practitioners, flatly asserts that the current business model, at least for producers and managers of affordable housing, “is not sustainable” and that a paradigm shift is needed “to develop a system that allows housing developers—those with a holistic, community approach to housing, including the commitment to long-term ownership—to get to scale.” She says the new model should allow for flexibility and diversification, encourage innovation, be funded at the enterprise level, encourage collaborations across sectors, promote public/private/nonprofit partnerships, and develop comprehensive impact measurement. Blanchard, Belsky and Fauth, Grogan, Pinsky and others echo this need for financially strong, highly competent institutions that can do the work of community development.

Other authors join in the call for elements of entrepreneurship— experimentation; rapid prototyping (including testing and modifying interventions in short cycles); networking and knowledge sharing; and dealing effectively with complexity, conflict, and the difficulty of replication. Whether, to what extent, and how entrepreneurship and enhanced institutional scale can emerge simultaneously in the field are major questions for the future.

Scale is made even harder by a theme that runs just under the surface of much of this book: there is immense variability among communities, reflecting different needs, different resources and opportunities, and different strategies that will likely be successful. The most extreme differences may be between the community development needs of rural areas that Duncan discusses and those of the urban neighborhoods that most of the other authors examine. But the differences don’t end there. As Howard and Berube suggest, major central cities, even those hardest hit by the Great Recession, have resources that are lacking in smaller cities and suburbs. Areas that came through the recession relatively unscathed have the opportunity to focus beyond rebuilding communities devastated by foreclosures and vacancies. But even within a city or metropolitan area, individual neighborhoods are subject to immense variability.14

These differences must necessarily lead to different strategies for community development, even within the common themes of integration and collaboration, connection, focus on what works, and entrepreneurship. For example, Franklin and Edwards are careful to point out that although Purpose Built’s highly successful intervention at East Lake in Atlanta is replicable, successful replication is most likely in a community that has some of East Lake’s characteristics, particularly the opportunity to completely rebuild a significant amount of mixed-income housing and to establish a neighborhood-targeted high-quality educational system. The Parkside-Kenilworth Promise Neighborhood in Washington, DC, for example, has had difficulty replicating Purpose Built’s success in part because open enrollment in the District of Columbia’s schools means that half the neighborhood children attend school elsewhere and half the children in local schools are from out of the neighborhood.15 As Hecht points out, the “one table” collaborations that Living Cities has undertaken have focused on different needs in different places, such as equitable transit-oriented development in the Twin Cities and the Bay Area, education in Cincinnati, and energy efficiency in Portland, OR. Living Cities has also discovered that each area has a different “capital absorption capacity,” which they define as “the ability of communities to make effective use of different forms of capital to provide needed goods and services to underserved communities.”16

SOURCES OF OPPORTUNITY

Although the challenges for community development are daunting, new opportunities will come from greater awareness of the issues community development tackles, new forms and sources of capital, and the focus on energy efficiency and environmental sustainability. Not long ago, there was little discussion of income inequality and less understanding of the wide and widening gap between rich and poor and the long-term income stagnation and more recent loss of wealth that has exacerbated the condition of those in the bottom half of the income distribution. The Occupy movement has been instrumental in changing that and in substantially raising awareness of both poverty and inequality. At the same time, the work of the Robert Wood Johnson Foundation on healthy communities and the Harlem Children’s Zone, James Heckman, and others on early childhood development has put the community—both social and physical—into the ongoing discussions in those fields. Integrated strategies at the federal, regional, and local levels, such as Choice Neighborhoods, Living Cities’ Integration Initiative, and Cleveland’s Greater University Circle Initiative, have significantly broadened awareness of the usefulness of community development to a broad array of programs and goals that benefit lower-income populations within the context of benefitting the broader community. The field’s greater interest in measuring impact and telling its story is likely to result in greater awareness and greater understanding of what community development can and cannot accomplish.

Although the field is under significant financial pressure from traditional sources, there are also opportunities in potential new sources of capital. As discussed above, CDFIs came through the recession in relatively strong condition, and several statutory changes, most notably those in the Small Business Jobs Act of 2010, including the CDFI bond guarantee program,17 create an opportunity for significantly more well-priced capital to flow into CDFIs. In addition, and most visibly in the Starbucks Create Jobs for USA initiative,18 corporations other than banks and local anchor institutions have begun to take an interest in helping to finance, as Pinsky puts it, disciplined and effective solutions to community problems. Whereas some impact investors, such as the F. B. Heron Foundation, with its focus on equity investment and its breakthrough strategy of using all its financial resources for mission accomplishment, as described by Miller, will be interested in enterprise-based equity investment, others will focus their attention on specific projects. Structures such as performance bonds may be useful to ensure that the projects “work,” but these structures are still in the exploratory stage and will not necessarily focus funds on areas most in need, especially when those needs are less susceptible to impact measurement within a reasonable time.19

Finally, as Howard and Duncan point out, the interest in energy efficiency and environmental sustainability opens some new opportunities for community development in both urban and rural America. To start, both strategies have the possibility to significantly reduce both capital and operating costs and improve quality of life in low-income communities, as the work of the Enterprise Green Communities and others have demonstrated.20 And Duncan cites opportunities in energy, “ecosystem services,” and local food production as three potential rural development strategies. A critically important role for community development as this opportunity develops will be to ensure that the costs and benefits are shared equitably; if improvements in technology or transportation merely serve to displace lower-income residents or communities or to increase their cost of living, the field will have not only squandered an opportunity but failed those who depend on it.

EMERGING MODELS

How does all of this fit together? That is the topic of the next chapter, but the essays in this book describe a number of strategies that fit the emerging themes in community development.

First, there are the intensely community-oriented programs, with an integrated focus. These include Purpose Built, Neighborhood Centers, the Harlem Children’s Zone, Promise Neighborhoods, Choice Neighborhoods, and LISC’s Better Communities Initiative. In each case, the focus is on a specific neighborhood of relatively small size. But in each case, the program is designed to respond in an integrated fashion to a broad range of community needs and opportunities. The anchor institution based strategies that Howard describes also fit into this group, with the additional focus of community ownership of the community’s capital, including through cooperatives.

A second group of strategies involves cross-agency coordination and “one table” to break through silos of both substance and strategy. Although Strive is focused solely on education, it is a broad initiative involving a large geography; public, private, and philanthropic entities; and those engaged in education of every type and at all levels. Some of the tables set by Living Cities’ Integration Initiative are similar, such as the transportation-oriented work in the Twin Cities, but others, as in Detroit, are broader. The federal programs encouraging this trend, such as the Neighborhood Revitalization Initiative and Strong Cities, Strong Communities (both described by the Secretaries), focus on bringing together federal, regional, and local officials with a wide range of responsibilities to break barriers to effectively meeting community needs and sparking economic development.

Finally, we cannot forget that one reason the community development field has accomplished so much over the past 30 years is because of the presence of institutions—both direct providers and intermediaries—with strong finances and highly competent and innovative staff. As Murphy and Falk (with respect to CDCs), Grogan (with respect to national intermediaries), and Bugg-Levine and Pinsky (with respect to CDFIs) point out, these institutions will continue to be critical to the field. Ensuring they have a business model that is consistent with new challenges and new opportunities is key.


Endnotes

  1. For more information see http://census.gov/hhes/www/poverty/data/historical/families.html.
  2. See Abhijit V. Banerjee and Esther Duflo, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty (New York: Public Affairs, 2011), p. 233.
  3. See also Robert J. Sampson, Great American City: Chicago and the Enduring Neighborhood Effect (Chicago: University of Chicago Press, 2012), p. 421.
  4. See also Matthew Soursourian, “Suburbanization of Poverty in the Bay Area” (San Francisco: Federal Reserve Bank of San Francisco, January 2012).
  5. See Pew Research Center, “Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics” (Washington, DC: Author, July 2011); Debbie Bocian et al., “Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures” (Durham, NC: Center for Responsible Lending, November 2011); and Ray Boshara, Testimony to the United States Senate, Federal Reserve Bank of St. Louis, October 2011, available at http://stlouisfed.org/publications/br/articles/?id=2208.
  6. Raphael Bostic, “The Future of Affordable Housing” (panel presentation at the National Interagency Community Reinvestment Conference in Seattle, WA, March 25–28, 2012) and slides presented at that panel, available at http://frbsf.org/community/seattle2012/presentations/CommunityDevelopment_Track/FutureofAffordableHousing.cfm. See also US Census Bureau, “Residential Vacancies and Homeownership in the First Quarter 2012,” April 30, 2012.
  7. See Lei Ding et al., “Risky Borrowers or Risky Mortgages: Disaggregating Effects Using Propensity Score Models” (Durham: Center for Community Capital, University of North Carolina, May 2010); Mark R. Lindblad, Kim Manturuk, and Roberto Quercia, “Sense of Community and Informal Social Control Among Lower-Income Households: The Role of Homeownership and Collective Efficacy in Reducing Subjective Neighborhood Crime and Disorder” (Durham Center for Community Capital, University of North Carolina, March 2012).
  8. For more information see http://federalreserve.gov/pubs/bulletin/2011/pdf/2010_HMDA_final.pdf.
  9. See Conner Dougherty, “States’ Tax Collections Inch Upward,” Wall Street Journal, April 19, 2012. Available at http://online.wsj.com/article/SB10001424052702303513404577354161334500688.html?mod=WSJ_economy_LeftTopHighlights.
  10. Details available at FDIC.gov.
  11. FDIC Quarterly Banking Profile, first quarter 2012, p. 4 available at http://www2.fdic.gov/qbp/2012mar/qbp.pdf.
  12. See Michael Swack, Jack Northrup, and Eric Hangen, “CDFI Industry Analysis Summary Report” (Durham, NH: Carsey Institute, Spring 2012). Available at http://cdfifund.gov/docs/CBI/2012/Carsey%20Report%20PR%20042512.pdf. This report, which studied 282 CDFI loan funds as well as CDFI credit unions and banks, concludes that CDFI loan funds are not most efficiently leveraging their capital and that “inadequate data and non-standardized auditing practices may present a barrier to CDFI capitalization.”
  13. See also John Kania and Mark Kramer, “Collective Impact.” Stanford Social Innovation Review (Winter 2011).
  14. Sampson, Great American City.
  15. Jennifer Comey et al., “Bringing Promise to Washington, DC, The DC Promise Neighborhood Initiative” (Washington, DC: Urban Institute, January 2012).
  16. “The Capital Absorption Capacity of Places, A Research Agenda and Framework,” Living Cities and Initiative for Responsible Investment, 2012. Available at http://livingcities.org/knowledge/media/?id=74.
  17. See Pub. L. 111-240 (September 27, 2010); see especially section 1134.
  18. For more information see http://starbucks.com/responsibility/community/create-jobs-for-usa-program.
  19. See Jeffrey B. Liebman, “Social Impact Bonds: A Promising New Financing Model to Accelerate Social Innovation and Improve Government Performance” (Washington, DC: Center for American Progress, February 2011). Available at http://payforsuccess.org/sites/default/files/social_impact_bonds_-_a_promising_new_financing_model.pdf; see also Nonprofit Finance Fund, Pay for Success Initiative, available at http://nonprofitfinancefund.org/pay-for-success.
  20. For more information see http://enterprisecommunity.com/solutions-and-innovation/enterprise-green-communities.

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