Taking up for CDCs
Howard Husock’s diatribe against community development corporations (CDCs) will bewilder anyone actually familiar with the extraordinary accomplishments of these organizations [May-June 2002, “Look Elsewhere”]. There are so many false notes, misleading statements, and erroneous conclusions in his piece it is hard to pick just a few, but here goes.
Husock asserts that CDCs are a bad remake of the War on Poverty, bent on creating gilded ghettos. Why, then, have they won for themselves so much private-sector support? Why are so many CDCs engaged in homeownership and commercial development activities? CDCs, far from immunizing neighborhoods from the market, are a potent force for market-building. Check out Harlem-the new renaissance, now market driven, was touched off by the affordable housing investments of CDCs. Even CDCs’ efforts in rental housing, targeted to the poor, have the effect of eliminating blight, one of the biggest impediments to market development of the inner city.
Husock asserts that CDCs are not really neighborhood based. Sure, they are professionally staffed; they have to be, to carry out complex development activities. But boards, composed of neighborhood residents who formed originally as all-volunteer groups, govern the overwhelming majority of CDCs.
Husock’s favorite CDC is the Banana Kelly group in the Bronx because they have received bad publicity for mismanagement. Ergo, reasons Huscock, all CDCs must be bad. By this logic, the Enron, Global Crossing, and World Com scandals must mean that capitalism is no good. The astounding thing is not that an occasional CDC screws up, but that so few do. Of more than 4,000 CDCs nationwide, the incidences of corruption and/or mismanagement are amazingly rare. Even Husock’s whipping boy Banana Kelly, a 25-year-old organization, accomplished great things in the 1980s, helping to spark the justly hailed turnaround of the South Bronx.
The real clue to Husock’s worldview is his statement that “the simple truth is that where a demand for products and services arises, investment will follow.” In other words, inner-city residents, instead of forming CDCs to do something about deplorable neighborhood conditions, should patiently await the arrival of the all-knowing market.
It really is charming to encounter such a quaint notion this late in the game. But fortunately for cities, the residents who formed CDCs were not beguiled by such fanciful ideas, and the CDC movement is one of organized philanthropy’s signal achievements.
-Paul S. Grogan
President of the Boston Foundation and
co-author of Comeback Cities
Howard Husock responds:
Paul Grogan, as is his custom, chooses to emphasize inner-city commercial development for which community development corporations are said to be crucial. An overwhelming number of CDCs, however, spend the vast majority of their time and resources on the construction and management of subsidized rental housing-for the simple reason that pots of various federal subsidies are available for such work. It’s not self-evident that renovating older buildings in order to house the single-parent households that predominate in these and other forms of subsidized housing is either wise social policy or good neighborhood development policy. Grogan also ignores the pressing capital and infrastructure needs of many of these projects, which have woefully underfunded the financial reserves that sound management practices require. As with all subsidized housing, there is a predictable cycle playing out: the euphoria that comes with the ribbon-cutting followed by the inevitable decline linked to the lack of revenue necessary for upkeep. Yes, some CDCs are involved in home-ownership projects, but these come with program-related strings that limit the rights of buyers to resell at a profit-a key to upward mobility.
The cookie-cutter subsidized houses built by CDCs are small in number and bear no resemblance to the vibrant immigrant neighborhoods in New York and elsewhere, in which private homes are bought and renovated in the time-honored fashion. As for governance, no one familiar with CDCs believes that community residents exert a strong influence on the direction of the organizations. If my essay was a “diatribe,” its tone was meant merely as a corrective to the consistent hype and exaggeration that accompanies the CDC “industry.”
On “Rich Kids”
Your interview with Howard Ahmanson Jr. [July-August 2002] was particularly well done. It explained clearly (for the first time) what this special group [of “rich kids”] was all about. Ahmanson deserves credit for the warmth and candor of the piece. Among the tidbits of value was the note of the importance to philanthropists of a “classical education of the Great Books sort” and the advice that “I could ruin most anyone by giving him a million dollars and never giving him any more.”
Alice and Stanley Goldstein Foundation
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