A community development corporation (CDC) is equally a part of the community development process. Its usage is as common as CBOs and they do have a similar role. Their involvement with community development warrants a further look into CDCs in order to provide information to those who need it.
This article will discuss CDCs and their relation to community development. Topics will include their legal standing, their similarities and differences with CBOs, and what purpose(s) a community may have for them. Information on active CDCs in the U.S. and abroad will also be available.
What Are CDCs?
Community development corporations, or CDCs, are institutionalized non-profits designed to assist communities in any kind of improvement efforts.1 As a corporation, they tend to have a wider range of services that they can offer to a wider audience. To some degree, CDCs act more like a regular business than a typical non-profit due to the scope of the services they offer and how those services are managed. Many CDCs are associated with government agencies and will work in tandem with them, but they themselves are not government-operated.
The prevalence of individual CDCs has decreased in recent years. It was estimated that there were 4,600 CDCs operating nationally as of 2006, with no clear numbers as to how many were active solely on the state level.2 Each CDC can have multiple businesses and services under their control, so their reach may be more than what one may expect from only 4,600 operations. Experts state that CDC services are still in high demand due to the economic difficulties in the last decade or so, despite a more accurate count not being conducted since 2006.
CDCs were the byproduct of the Civil Rights movement and Special Impact Program amendment to the Economic Opportunity Act of 1964.3 The act itself was one of the first federal community development movements since Franklin D. Roosevelt's New Deal of the 1930s, and was specifically designed as an attempt to curb poverty and the issues associated with it. Many CDCs in the early days doubled as activism groups in addition to focusing on community development; the activism interest is still a part of some CDCs to some degree, but it has largely died out.
Operationally, many CDCs have a demographic focus rather than a location-specified base. This means that a single CDC is most likely going to operate in multiple communities that are similar to one another in particular aspects. They will still work to generate improvements in a community or communities, but their efforts will be more directed towards their particular area of interest(s). An example would be a CDC focusing on poverty-stricken families with young children in urban environments. Improvements in those demographics will still use the facets of community development as they are applicable to their efforts.4
Their Legal Standing
CDCs are legally classified as 501(c)(3) non-profit organizations and are licensed as such by the federal government.6 That status also identifies them by another name, economic development organizations-which is much more applicable as they tend to not be isolated to a particular community.7 Like any other non-profit organization, this means that they have tax-exempt status and will not have to pay federal taxes in accordance with the law. The formation of a CDC will follow the same steps that a standard non-profit would, as it doesn't have any specialized classifications that make it a separate operation type.8 The only legal variations that there would be in the creation process would be if there are any extra state requirements or regulations.
As a non-profit, CDCs have all the protections and regulations afforded to them that any other non-profit organization would have. This means that they have to meet all of the requirements for their creation and the must adhere to any and all state and federal laws applicable to non-profits.9 Failure to do so can cost a CDC it's non-profit status and cause it to face repercussions for its actions. Since most CDCs operate in multiple states at once, there may be rules that apply to one branch but not another based on where they are located. Before a CDC registers to operate or fundraise in a state, they should thoroughly research what requirements there are before officially setting up operations.
Do Communities Need A CDC For Community Development?
Like with CBOs, CDCs are not a requirement for community development, but rather an option available should the community need it. Communities that want to use a CDC have the option to enlist the services of one that is already formed or create their own if they are so inclined. As many who use the services offered by CDCs, deciding to use one depends on what services are available and what the community needs. Finding a CDC, if a community chooses to do so, depends on what is in the area and what area of focus the CDC has. Remember: CDCs often focus their efforts on specific demographics rather than the whole of the community. Just because there is one operating in the area does not mean its services are going to be applicable to what the community wants or needs.
Communities that are actively going through the community development process may be approached by organizations like CDCs that offer assistance. They operate independently so there is a possibility of unsolicited assistance depending on the circumstances. In some cases where a community is not actively engaging in the community development process-whether by their choice not to or their inability to do for whatever reason-a CDC can still offer its services to community members. Most of them are going to be on the look-out for areas where their services are needed the most, even if the community itself is not doing anything to address problems. There is also the possibility that community members may seek out services that are associated with a particular CDC but not be aware of it. Many CDCs have other organizations and businesses that they offer their services through, whether it's through a partnership with that particular organization or because they own the business. In that regard, communities should do some research on what is available to them in their area before they seek out the assistance of a CDC.
National And International CDCs
There are quite a few options available when it comes to CDCs. In addition to the 4,600 nationally operating CDCs in the U.S., there are also international ones that also act domestically in addition to their efforts abroad. In the years since the last count was made of active CDCs, there may be hundreds, if not thousands more currently operating in the country. There is also the possibility of state and local level CDCs that may be available to communities in their operational jurisdictions; a simple internet search of local community development groups will usually turn up some results. There is also the possibility of membership with many of these CDCs, which provides access to certain resources and information that isn't necessarily available publically. Membership requirements are going to vary from group to group, so it's best to check out the rules before submitting an application.
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