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Management and organization in community development corporations
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Content
MANAGEMENT AND ORGANIZATION
IN COMMUNITY DEVELOPMENT CORPORATIONS
by
Robert Leonard Reiner
A Thesis Presented to the
FACULTY OF THE SCHOOL OF PUBLIC ADMINISTRATION
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF PUBLIC ADMINISTRATION
June 1979
UMI Number: EP64916
All rights reserved
INFORMATION TO ALL USERS
The quality of this reproduction is dependent upon the quality of the copy submitted.
In the unlikely event that the author did not send a complete manuscript
and there are missing pages, these will be noted. Also, if material had to be removed,
a note will indicate the deletion.
DIssÊftation ftjblisMng
UMI EP64916
Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author.
Microform Edition © ProQuest LLC.
All rights reserved. This work is protected against
unauthorized copying under Title 17, United States Code
ProQuest LLC.
789 East Eisenhower Parkway
P.O. Box 1346
Ann Arbor, Ml 48106- 1346
This thesis, written by
.................
under the direction of the undersigned Guidance
Committee, and approved by a ll its members, has
been presented to and accepted by the Faculty of
the School of Public Adm inistration in p artial fuU
fillm ent of the requirements fo r the degree of
MASTER OF
PUBLIC ADMINISTRATION
Date.„ ... ...............
Guidance Gmynittse: y n a
T / L < y £d U / ^
r Chairman
PREFACE
Very little information has been recorded which
clearly identifies the role of management and organization
within community development corporations. The Federal
legislation which allowed these community-based organi
zations to be formed is sufficiently vague to permit
individual interpretations ^ and yet there are striking
similarities among these groups in terms of organizational
structure, management systems, and socioeconomic goals
and functions.
The research in this document surveys much, of the
available literature on the thesis topic as well as
personal observations made while working in a community
development corporation — The East Los Angeles Community
Union. A great deal of in format ipn provided in this .
work is a result of contact with the Community planning
and development personnel of The East Los Angeles Community
Union's (TELACU) Community Research Group.
In my occupational capacity as Director of Design for
TELACU y there arose the opportunity to work with Syyed
Mahmood, Project Director and Editor of the recently
published. Handbook for Community Economic Developmeht.
ii
While researching case studies for the Handbook, and de
veloping conceptualizationsf it was possible to become
aware of the amazing resiliency and creativeness exhibited
by the various community organizations. Many organiza
tions whose primary purpose is economic development are
featured in the Handbook in an attempt to assist new
and existing groups with successful methods for imple
menting such projects in their communities.
The investigations in this document are geared toward
one particular kind of local development organization
which is funded, primarily, by the Community Services
Administration (CSA) as part of Title VII legislation.
Personal involvement with community development corpor
ations made selecting management and organization as a
topic less difficult. In working with the many funding
agencies in Washington, D.C., it was possible to perceive
the warm interactions between Federal officials and
representatives from communities, and the elaborate
management techniques they utilize.
The unique nature of community development corpor
ations — that of being both local service organization
and business developer — makes research into their
activities an exciting and dynamic experience. There is
still very little information available to the curious
investigator, but as these local corporations grow and
prosper, more will become aware of their impact.
iii
It is hoped that this thesis will provide a better
understanding of the role and responsibilities of commu
nity development corporation managers, and the capabil
ities and constraints within the organizational structure
of their groups.
IV
TABLE OF CONTENTS
Page
PREFACE ............................................... ii
LIST OF FIGURES ................... vi
Chapter
I. INTRODUCTION TO
COMMUNITY DEVELOPMENT CORPORATIONS ....... 1
II. MANAGEMENT IN
COMMUNITY DEVELOPMENT CORPORATIONS ....... 7
The Board ............ 8
The Executive Director ................. 14
The Community .......................... 17
Government ............................ . 2 0
Conclusions .................. 25
III. ORGANIZATION IN
COMMUNITY DEVELOPMENT CORPORATIONS ....... 28
Staffing and Hiring ........ 29
CDC Programs ....... 32
Organizational Structure ............... 36
Conclusions ............................. 38
FOOTNOTES .......................... 40
BIBLIOGRAPHY........................................ 42
V
LIST OF FIGURES
Figure Page
1. Board Members' Assocations ...... 10
2. TELACU Economic Development Programs
( excerpt 1 .......... 24
3. Sample Organizational Structure ..... 37
4. Sample Organizational. Relationship 37
5. For-Profit/Not-for-Profit
Divisions' Relationship . 39
VI
Chapter I
INTRODUCTION TO
COMMUNITY DEVELOPMENT CORPORATIONS
The concept of community-based economic development
institutions is still very new. Previously, nearly all
economic development activities in American cities were
provided by private entrepreneurs interested in estab
lishing profit-making enterprises for self-growth rather
than community improvement. In this capacity, the private
sector has been the pivotal device for employment, and
all the benefits associated with it, in depressed areas.
Unfortunately, the high crime rate, dilapidated housing
conditions and general lack of highly skilled workers in
many urban communities have kept investors and businessmen
from expanding their activities to include these areas.
Government agencies' provide many of the basic human
services to communities through local branch offices which
act as outlets for the central agency,but rarelÿ}reflect
a concern for the community as a unique entity. Although
such assistance is important and necessary for many of
those in depressed areas, the delivery systems and program
design are not tailored for the socioeconomic or ethnic
composition of the depressed area.
Among many private and public sector organizations,
the community development corporation (CDC) is an enigma.
A hybrid of both^ with, its own orientation, the CDC does
not act as a chamber of commerce, although one of its
primary functions is to stimulate and attract business to
its target area and to develop new businesses on its own.
Like most private enterprises, the community development
corporation makes: commercial investments for profit-making
purposes; but unlike other businesses^ the CDC relies on
seed capital provided by the Federal government. Further,
although these organizations are designed to generate
additional capital through profitable investments, they
are essentially service groups which attempt to provide
fundamental assistance geared to the needs of the local
residents,
Unlike other interest groups that lobby the Federal
legislature for support, CDCs were originally established
by an act of Congress, Gaining a legal entity under Title
I-D of the Economic Opportunity Act of 1964, and receiving
direct funding as a result of a 1967 amendment, CDCs were
devised as a long-term means of revitalizing depressed
urban areas through locally-controlled, community-sponsored
economic development groups.^
Sponsored by Senators Jacob Javits (R-New York) and
the late Robert Kennedy CD-New York), the Special Impact
Program (SIP) made it possible for established community
organizations to develop a plan for revitalizing their
neighborhoods. Known as Special Impact Areas (SIAs),
these districts Csome containing more than 100,000
residents)^ had had considerable experience with the
problems of unemployment, poverty, high crime rate,
inadequate housing, redlining and a lack of health facil
ities. The Special Impact Program made it possible for
neighborhood groups to receive funding for projects that
would alleviate the substandard conditions in these areas
and, with a new provision in 19 72, allowed these organ
izations to have special access to Federal programs being
offered by the Economic Development Administration (EDA),
the Small Business Administration (SBA) and the Department
of Housing and Urban Development (HUD).^
The SIP approach offered by Javits and Kennedy was
an attempt to solve major urbah iprob1 ems^ through :long-term
community sponsored programs and activities instead of
short-term. Federally-controlled projects which only -dealt
with the symptoms of economic depression and not the
causes. The "War on Poverty" campaign offered by the John
Kennedy/Lyndon Johnson Administrations addressed many of
the discrepancies which relate to depressed conditions, but
offered little in the way of developing solutions through
the efforts to communities themselves.
Previous programs brought Federal investigators who
may not have been familiar or sympathetic with minority/
low income communities.*^ Their reactions may not have
accurately depicted their research area because "outsiders"
often have difficulty in understanding the real problems of
a community. Without regard for the cultural heritage of
the resident population, a clear knowledge of the dis
trict's history, and an understanding of the socioeconomic
constraints of the area, an accurate assessment of the
needs of the community could not be made. The SIP concept
of urban revitalization gave communities the opportunity
to set their own goals and priorities, and a means for
achieving them.
Although there are only, approximately, forty CDCs
in operation at this time, they exist in all parts of the
United States. They can be found in as diverse areas as
the Bedford Stuyvesant district of New York; the Eastside
of Los Angeles ; in Durham, North Carolina; the Lummi Indian
tribal lands in Marietta, Washington; and in rural Alaska.
For the most part, these are locations which have little in
the way of revenue-generating natural resources but have
a large potential work force. The emphasis for most of
these organizations is on manpower development.^
Although some CDCs operate solely for the purpose of
providing and developing employment and/or vocational
training opportunities, most are also involved in ventures
which not only provide jobs, but community service as
well. Many CDCs have organized cooperatives through which
local residents, especially those with fixed incomes, are
able to purchase goods at little over the wholesale rate.
The types of programs and ventures undertaken by CDCs
include ;
Circle Power Demolition Corporation, a subsidiary
of The Circle Complex in Roxbury, Massachussets,
razes and demolishes hazardous buildings and em
bankments, and operates a snow-removal service in
winter.^
East Arkansas Plywood Company, a subsidiary of
Delta Area Developers of Forrest City, Arkansas,
employs residents as workers who prepare un
finished plywood for mobile and modular housing.^
Frakes Feeder Pig Co-op, owned by Job Start
Corporation of London, Kentucky, operates a
feed mill and grain storage facility for
better efficiency in raising feeder pigs
for the more than 120 nearby farms.®
Community Enterprise Development Corporation
of Alaska in Anchorage runs the Kuskokwim
Fisherman's Co-op, Incorporated, which pro
vides a fishing cooperative for locals.
Some CDCs operate thrift & loans which provide low-in-
terest loans to residents, or dial-a-ride services for
the handicapped or elderly. Primarily, CDCs are committed
to and concerned with five major activity areas :^°
1. The development of businesses and other types of
institutions which increase the income of impact
area residents
2. The creation of employment opportunities
3. The establishment of vocational/manpower training
programs
4. Management and ownership of CDC ventures by
community residents (or in partnership with out
side investors)
5. The creation of political, economic and social
organizations which will assist the community
in becoming self-reliant
The Community Services Administration, which took on
the responsibility of monitoring and funding CDCs after
the Office of Economic Opportunity (OEO) was disbanded,
aids the community corporations with technical assistance
along with the various Federal agencies that deal with
inner cities, minority/low income communities and small
business endeavors. When CDCs were transferred to CSA
jursidiction under Title VII of the Community Services
Act, greater emphasis was placed on agency cooperation
in promoting CDC activities. The interactions and rela
tionships of government agencies with CDCs provide the
basis for economic development in the depressed community.
Chapter II
MANAGEMENT IN
C0MT4UNITY DEVELOPMENT CORPORATIONS
The management structure of CDCs is usually well-
defined as a result of Federal regulations which demand
community control and involvement in CDC activities.
Within the areas of local participation, CDC-ownership and
organizational management, there are many role players who
influence and mold corporate activities. Governed by a
board made up of community residents, representatives of
private sector interests, and government aides, the CDC is
a means by which economic development can be shaped by a
pluralistic microcosm of society. The board is responsible
for assisting the CDC in setting policy, prioritizing goals
and monitoring the various projects and ventures. The
board works closely with the executive director who acts as
chief administrator for the corporation. His duties
include identifying projects and ventures, planning CDC
activities, securing financing, and coordinating with
community groups. The community, which the board and
executive director represent, is a mixed group of small
businessmen, renters, parents, the unemployed, newcomers
and all others living in the Special Impact Area. Some
speak little English, others have no skills, and many
are uneducated and impoverished. They depend on the
assistance provided by government agencies. In this
case, government refers to City and County agencies as
well as State and Federal departments and elected
officials concerned with, aiding depressed areas. r -
Thes^ / in addition^ to 5_tJle :CDC itself, are considered as the
principle initiators, supporters and recipients of eco
nomic development. When they work in unison, and coop
erate in social service and venture development activities,
the organization and community have an excellent chance
for success. Without a joint effort by all parties con
cerned, the CDC risks losing:
1. community support
2. effective leadership
3. political support
4. funding
The role of the CDC organization will be discussed in
Chapter III, but is mentioned here because it is the
functional machine which produces economic development.
The Board
In selecting members for the CDC board, certain cri
teria are considered which relate to the effectiveness,
8
commitment and support of its members. Although, most CDCs
attempt to have a cross-section of community residents on
their boards, they more often find greater representation
from special interest groups, such as local businessmen,
union leaders and service organization representatives.
Federal regulations state that 51 percent of the Board must
be made up of community residents.^ ^ CDCs see this as an
opportunity to bring together local leaders with prominent
outside individuals who are seriously concerned with as
sisting low-income areas. Usually, much attention is given
to selecting individuals who have social, political or
financial pull, either within or outside of the community.
This type of support assures assistance from all available
sources.
In identifying potential board members, the CDC must
decide where to look and what to look for. Ideally, a
board should represent a cross-section of the community,
but more often it assumes the identity of the existing
local power structure. An example of a fairly typical
board might look like this ;
Bank of America branch vice-president
State assemblyman's representative
Hardware store owner
Local newspaper editor
School principal
Union representative
It is important that low income residents are able to
work with their board representatives, and this is usually
possible through community meetings on a formal basis, and
at the board members' place of employment or residence, on
an informal basis. Most board members tend to be involved
in other community organizations, allowing for greater
visibility and accessibility. In getting support from the
maximum number of groups, CDCs rely on the outside acti
vities of their board members. An example might be a
small businessman who is affiliated with other organiza
tions such as the PTA, Rotary Club, Chamber of Commerce
and/or Credit Union. His participation and positive feed
back becomes a chain reaction for community acceptance and
support when compounded with the contacts other board
members have. Such a chain reaction in which a CDC board
is able to reach out to other concerned groups is illus
trated below:
Figure 1
Board Members' Associations
Kiwanis Club ---------- Bank V-P------Chamber of Commerce
School Board Local Political Party
PTA Principal-------- —pC D Ci-----—--News Editor---ACLU
Senior Citizen Group Socia Worker Health Association
Community Clinic■
ia
within the selection (or election) process, consider
ation is not only given to recruiting members with helpful
"connections," but with characteristics reflective of the
SIA. The most recent survey of boards of directors,
conducted in 197 3, showed that only 30 percent of the
members in urban communities were women, and only 20
percent for rural areas.^ ^ Although this may seem dis
couraging in terms of fair representation of the number of
females in the SIA, it does tend to be representative of
the lack of leadership positions given to women in most
organizations. It is significant to note that although
there is usually at least one woman on almost every CDC
board, there were no women board chairpersons or executive
directors in 1973.^® Perhaps this situation is reflective
of cultural biases found in many depressed communities with
ethnic bonds to societies which favor the secondary roles
of females, or because women are under-represented in the
fields which are deemed important to economic development.
Another explanation, which might be considered the most
accurate, is that sexual discrimination is still quite
prevelant in American society.
The ethnicity of CDC boards seems to be exceptionally
representative of the residents of the community. Due to
the minority emphasis of the Special Impact Program, most
districts receiving Federal assistance are non-white. in
11
X
the CDCs surveyed in 1973, 4 4 percent of the board members
were Black, 27 percent white, 14 percent Mexican-American,
4 percent Native Indian and 2 percent Puerto Rican, with
8 percent not responding.^**
The age of board members plays an integral part in
receiving support from many groups ranging from young
parents to senior citizens. The Abt Survey of 19 72 showed
that the largest percentage of Board members-- 41 per
cent — were between the ages of 35 and 49. The second
largest group were those over 50 -- roughly 33 percent, and
about 20 percent were under 35.^® The emphasis of most
CDC boards seems to be toward long-time residents of the
area and older, more established members of other organ
izations .
As mentioned earlier, it is required that at least 51
percent of each CDC board must be from the community. This
requirement significantly affects the average educational
level of board members. While those representatives who
work in major businesses, schools and other education
intensive professions have considerable experience with
institutions of higher learning, many have little formal
education. As Rita Mae Kelly of the Center for Community
Economic Development points out, 4 2 percent of the board
members in urban CDCs had a high school diploma or less,
and 58 percent had some college experience or a college
12
y
degree. In rural areas, 3 9 percent had no high school di
ploma . ^ ®
The associations the members have, as mentioned ear
lier, play a major role in their effectiveness as community
development facilitators. The Kelly Survey showed that
nearly two-thirds of the urban and rural CDCs had members
involved in church groups, over half with community agen
cies, about 50 percent with local political bodies, and
about 4 5 percent with neighborhood associations.^/
The actual power held by these board members is deter
mined by the CDC itself. In defining the responsibility
of the board, the CDC organizers may give them total
control, delegated power, a partnership role, or only a
token role. Clearly, it is up to individual CDCs who feel
that their boards have the necessary expertise to direct
economic development efforts to relinquish such powers.
The Abt Study showed that most board members feel that they
are overwhelmingly influential in selecting goals and
designing strategies, making CDC venture and project de
cisions, and in venture management and technical assistance
procedures. They felt that the only area where they ex
ercised only moderate power was in staffing and hiring,
which is usually the responsibility of the executive
director and his associated staff.
Since the "typical" board member knows his community
13
well, understands the problems faced by the CDC fn devel
opment activities, is committed to helping the SIA in every
way possible, the management structure is given a strong
support group with which to work and rely upon. In real
terms, the board can destroy a CDC with petty bickering
and self-interest, or can successfully implement projects
which can improve the SIA.
The Executive Director
The executive directors of CDCs are usually well-
educated individuals with an incredible capacity for work.
They have a responsibility to be able to relate to SIA
residents on a one-to-one basis, and to deal with busi
nessmen and politicians as a professional who is exper
ienced in his field. Although he may find himself lobbying
in the State or Federal legislatures for funds for his
community, or in heated sessions with potential coporate
investors, or in any of a hundred possible situations
calling for his particular expertise, he cannot afford
to be inaccessible or unresponsive to his constituency.
CDC directors must play many roles ranging from poli
tical activist to social worker, from business executive
to neighborhood organizer. They often find themselves
making tenuous partnerships with politicians for the
purpose of gaining government assistance for local projects.
They constantly work to build active, cooperative coa-
14
litions in the SIA as a base for unifying residents into
a partnership which can benefit the community. The case
of one particular situation in which the executive director
was successful in implementing a development program
through an unlikely alliance shows the innovative and
creative nature of many CDC managers. The East Los Angeles
Community Union found itself working to build a housing
project as shown in this case study:
With the help of an Economic Development
Administration grant, TELACU contracted
with a top-flight national community
planning organization for a three month
planning effort.,. a document called the
"Barrio Housing Plan." The major ob
jectives of the housing plan... included
replacing the existing housing project,
building a community facility to serve
the... area, and revitalizing the blocks
surrounding Maravilla.^ ® It was obvious
that TELACU's own ambitious plans for
Maravilla would get nowhere if the rival
neighborhood gangs that had come to be
an ELA institution, and the agencies
working with them, did not cooperate.
After many heated meetings with the
Maravilla area social agencies and gang
leaders, agreement was reached between
all three parties to work in unison for
the benefit of the area as a whole. The
groups formed a coalition effort, which
was eventually formalized as the "Feder
ation of Barrios Unidos." The current
orientation of gangs toward community
participation and activities is largely
due to TELACU's and other community-
based agencies' (such as Cleland House
and Casa Maravilla) efforts to evolve
relevant programs.^ °
The executive director employs many devices for
achieving economic development, continually consulting
15
community leaders for support and suggestions. In soli
citing responses from local residents, he uses the fol
lowing methods:
1. Surveying the community - This involves an in-
person or phone call questionnaire. While it
may provide the widest possible contact with the
community, some residents will see this as an
intrusion or inconvenience. In addition, some or
many of the residents in a depressed community may
not have phones while others, especially undocu
mented workers, are leery of those requesting
information.
2. Public meetings - Large public meetings are accept
able as forums for discussion, but are often badly
organized due to many concerned parties, each with
a different topic for discussion. Small meetings
with special interest groups or community clubs
and organizations provide a better opportunity for
getting collective responses.
Because of the ethnic minority nature of community
development corporations, two-thirds of all directors are
non-white, and all are men. Most are young, in their
thirties, and are active in many other organizations within
their SIA. Most are well-educated, with experience in
public service agencies or businesses.^^ The executive
16
director acts as public relations officer, manager of
supportive staff, budget allocator, program developer,
and administrator of daily operations.
The concept of "charismatic leadership" is not new,
but the case seems particularly prevelant in community
groups. Many organizations have been able to reach their
potential through the sole efforts of an energetic and
personable manager. The tendency for people to respond to
a leader with admirable traits is particularly effective
in generating support for development activities.
The Community
In terms of the Special Impact Program (SIP), the
community is not only the geographic district known as the
SIA, but also those people living within its boundaries.
The community is part of a vast economic network, joining
it with other neighborhoods in the nation, but in a state
of lesser means for financial survival. The character
istics which define a depressed area are not always spelled
out, but in general terms, they include:
1. overcrowding
2. lack of, or inadequate, housing
3. low median income of residents
4. high unemployment rate
5. lack of basic social services
6. poor public transportation
17
For the CDC to understand the needs and goals of the
community, it is necessary for the organization to involve
residents in every possible way. Usually, local residents
will make up the core of the CDC, providing a means by
which the corporation can informally gain information
concerning its constituency.
The problems and needs of the community are prior- .
itized so that appropriate attention can be given to each
area as necessary. These may be divided into two cate
gories :
1. Long-term goals - These require long-term invest
ments over the course of several years. Often
they are very general and address such vast issues
as bringing unemployment in the SIA down to the
national rate, improving the reading skills of
local students by ten percent, or developing a
mass transit system which links the community with
the larger, more industrialized manpower centers.
2, Short-term goals - These give quick returns and
help to build support for the CDC because they
are easily achievable tasks which require only
minimal investment and time. These might include
developing a day care center for working mothers,
providing a telephone health referral service,
or explaining tenant rights to renters.
Richard Keyes, contributing author to the Handbook
18
for Community Economic Development, states:
Since the 1960's, community-based organi
zations have shifted from being single
issue groups (around specific problems of
race, poverty or disease, for example)
operating from outside the mainstream.
Rarely do these groups use the techniques
of confrontation or the threat of violence
to achieve their ends; now they are organ
izations of compromise and accomodation. \ y
The community whose involvement they want
and need includes not only the many segments
of their own geographical area, but also ^
representatives from the private and public
sectors of the larger community.
The demographics of the community become the primary
determinant of programs and strategies for the CDC. In
areas where there are large concentrations of senior
citizens, for example, emphasis may be placed on trans
portation, health facilities and/or cooperatives for
those on fixed incomes. In SIAs where there are a great
number of young people, emphasis might be placed on job
placement, educational skills development and/or recreation
and cultural sites. Investigation of the socioeconomic
characteristics of the community determine: . .
1. Who will receive the bulk of the CDC's benefits
2. Where (physically) projects should be centered
In finding out the structure of the community, the CDC also
checks into the industrial and commercial land use of the
area. This helps to determine whether investment can be
made in manpower intensive ventures, such as an industrial
park; whether becoming involved with the development of new
19
housing is possible; or if there is a substantial need for
new zoning regulations. CDCs with a strong planning back
ground usually put together an overall economic development
committee, made up of local entrepreneurs, city and/or
county government representatives, educators, and other
interested parties. Through a Title III-301(b) Economic
Planning Grant, provided through the Economic Development
Administration, an assessment of the SIA can be made in
determining a framework for development activities. After
strategies are derived from the results of the assessment,
the CDC may seek funding from Federal, State or local
government, or turn to private investors. CDCs often find
it beneficial to leverage funding through matching grants
or through programs that are able to draw funding from
more than one source.
Government
Due to the exceptional nature of the CDC organization,
as a Congressional creation, the relationship between the
CDC and government agencies with which it works is quite
often cordial and supportive. Most government agencies
recognize the problems of depressed communities and have
offered their support in funding projects in such areas.
Recent efforts to help CDCs in developing their SIAs have
come about as a result of President Carter's National
Urban Policy Report for 1978. The report points out that
20
most central cities have experienced a decline or stag
nation in their private sector economic base. Furthermore,
there has been a notable population decrease in inner
cities, leaving a large, dependent population behind.
Although such revelations seem pessimistic, inner cities
are experiencing renovations and show hope for survival.
CDCs primarily receive funding from government
sources, but some are able to gain financing, in terms of
economic ventures, from private groups, such as the Ford
Foundation, or Carnegie-Mellon, Rockefeller and Astor
Funds. In addition, private trusts — public charities
created by bank trust departments — often provide signi
ficant funds for community projëcts. In return, these
groups receive tax write-offs and other financial in
centives. The recently introduced Community Reinvestment
Act is one such program which induces banks to set aside
loan money for their communities.
Government funding can come in many forms, from long
term, low interest loans to matching grants which provide
as much as half of the total necessary funding. Govern
ment programs, and government officials, change quite\,dften
and CDCs must keep up to date on legislation which may
affect them. Congressional Records, as well as State and
local reports, government reviews and personal contacts can
help to keep CDCs abreast of the latest happenings. Espe-
21
cially when developing ventures, CDCs attempt to solicit
funding from the Small Business Administration (SBA) or one
of its sponsored groups : a Minority Enterprise Small Bus
iness Investment Company (MESBIC), a Small Business In
vestment Company (SBIC), a Local Development Company (LDC),
or any of the related off-shpots.
Funding from government sources is available for
service activities as well, and there are a great number of
agencies which assist CDCs in such efforts. A brief list
would include the Department of Labor (DOL), the Economic
Development Administration (EDA), the Department of Health,
Education and Welfare (HEW), the Department of Housing and
Urban Development (HUD), and the Office of Minority Bus
iness Enterprise (OMBE), among others.
Federal grants and similar assistance require strict
compliance with guidelines for funding. There are well-
defined eligibility requirements, an often tedious appli
cation process, close monitoring of expenditures and ex
plicit descriptions of the project goals. Continuous
efforts are undertaken to insure that CDCs are not involved
in fraudulent activities or mismanaging funds, CDCs that
were unable to follow all the above stated criteria have
been defunded.
State programs involve similar procedures, but are
often more manageable because of the close proximity be
tween State capitals and impact areas. Regular monitoring
22
by State investigators of CDCs receiving such funding is
helpful in assuring compliance. State funding sources are
similar to those of the Federal government in that monies
are earmarked for particular types of projects. Through
State Housing Authorities, Transportation Agencies, Edu
cation Offices and Economic Development Departments, CDCs
are able to receive partial, or complete, funding of
related projects.
Local funding, from county and city agencies, provide
the remainder of government sector grants and loans. Some
of the monies available are taken from local tax revenue
while others come from Federal funds dispersed throughout
the country. CDCs often have access to such funds through
the Comprehensive Educational Training Act (CETA), Urban
Development Action Grants CUDAG), block grants and various
revenue sharing programs. A partial list of funding
sources, ventures and funding received for The East Los
Angeles Community Union appears on the following page.
Political activities which CDCs are often involved
with can either help or hurt their economic development
efforts. In planning CDC strategies, as mentioned earlier,
CDCs attempt to build alliances; with politicians, some
alliances can be devastating. CDCs can ill-afford to
become entangled in any scandal since such negative noto
riety can reduce governmental and community support. There
23
Figure 2
TELACU Economie Development Programs Cexcerpt)^^
Venture Funding Source Funding
TELACU
Industrial Park
Housing
Rehabilitation
Spanish Surname
Housing Study
Food Stamp
Outreach
CETA
El Zocalo,
A Community Design
Proj ect
EDA Planning Grant
Business
Consulting and
Packaging
Barrio Demolition
EDA
Lloyds Bank
Local Commercial Bank
Ford Foundation
Southern California
Association of
Governments
Office of
Economic Opportunity
Los Angeles County
Los Angeles City
California State
National Endowment
for the Arts
EDA
Office of Minority
Business Enterprise
Private Contractor
$4,500,000
5,000,000
13,000,000
123,000
95,000
25,190
102,296
48,600
81,360
100,000
66,667
140 , 000
29,837
is no real way to determine whether a political ally is
involved in some form of illegal activity, but CDCs are
usually careful, and will not openly endorse any candidate
or elected official. Rather, the CDC remains issue-ori
ented, and may extend its appreciation publicly to elected
officials for their support. When CDCs support, or work
24
^g^inst initiatives which aare ngt in the best interests of
their community, they ate careful not to identify them
selves as the CDC, Simply stated, CDC staff members may
work on political projects as individuals, but rarely as
a group. More information on what CDCs can and cannot do
in relation to political activity is further discussed in
Chapter III,
Cohclusiohs
Management within CDCs is a combination of role players
who represent diverse interests and their viewpoint and
direction for conducting community economic development.
The management hierarchy is vague because each entity sees
itself as the major decision-maker:
1, The board pictures itself as an accurate repre
sentation of the community at large. It feels that
it is best suited to direct the CDC in its service
programs and venture activities because it is com
posed of those most responsible for the social,
economic and political activities in the area.
2. The executive director, because of his education
and experience within the SIA, feels that he under
stands the total picture of the organization's ef
forts and can best determine in what areas the CDC
should be involved. He sees himself as the closest
person to both the community residents who are the
25
recipients of th,e corporation's success, and the
business interests who are willing to invest in
the SIA. In addition, he believes himself to be
the initiator for government support and funding
of his organization's activities.
3. The community is the location in which the CDC
operates as well as the people who make up the
organization. They are in need of the benefits
the CDC can provide, and they use its activities
in the hopes of securing basic rights. They
realize that the organization would not exist
without their support and willingness to work with
the CDC staff. They understand that as individuals
they have little economic or political power, but
collectively they can control the CDC and shape
their environment.
4. Government provides the seed capital and other
funding for the design and development of the CDC.
Without government assistance, the CDC would not
be able to operate financially, and would then be
reduced to a largely non-functional group. Govern
ment sees itself as the artist for community eco
nomic development, and is quick to assert itself
when CDCs claim otherwise through noncompliance
with government regulations.
The pluralistic nature of the management structure
26
of CDCs divides the real controlling power into diverse
interests that are willing and able to work with one
another. The cooperation and close relationship exhibited
by each managing group seems harmonious with the aims of
community economic development and provides a firm support
for CDC activities and projects. Although interactions
between some of these groups may cause friction to develop,
the experience of the forty or so CDCs shows that such
cases are not detrimental, and often lead to new and
better strategies. All these parties must work within the
organizational constraints of the organization and it is
through the CDC itself that economic development takes
place.
27
Chapter III
ORGANIZATION IN
COMMUNITY DEVELOPMENT CORPORATIONS
Although CDCs differ from each other in terms of
organizational capacity, size of impact area, ethnicity
of residents and available funding, they are similar in
their goals and responsibilities to their constituents.
Even the most modest CDC composed of a small staff and
limited funding employs as many community residents as
possible at all levels of the organization. Hiring pro
cedures dictate that community involvement is essential for
the success of CDC projects.
In terms of project scope, CDCs will gear their ef
forts toward programs which they are presently capable of
financing, staffing and carrying out. CDCs evaluate their
capacity to take on various projects and plan their prior
ities accordingly. It would be disastrous for a CDC with
no expertise in manpower development to take on such a task
and most CDCs will avoid such endeavors until they have all
the requisite training, personnel and financing.
When deciding on types of ventures in which to invest,
the CDC surveys the available opportunities to decide where
28
they can maximize profits with the least amount of risk.
Some CDCs are able to use their dual role as for-profit/
not-for-profit corporation in developing ventures with the
most effective use of resources.
The organizational structure, in terms of responsi
bilities and duties of each division, can determine the use
of human resources in achieving the aims of economic devel
opment. Through a well-devised breakdown of cooperative
departments, the CDC can specialize in diverse areas
without disrupting the entire program for development.
The CDC organization is the machine by which the
various interests mentioned in Chapter II can effect
economic improvement.
Staffing and Hiring
Ideally, the community development corporation should
be owned, managed and staffed by the community it serves;
unfortunately, this is not always the case. Quite often,
the SIA lacks individuals with the technical, academic
and political expertise to fully develop the organization's
capabilities. Most CDCs will go to nearby institutions to
hire, at least on a consulting basis, experienced personnel
to handle fundamental duties, such as proposal writing,
needs analyses and business coordination. In some CDCs,
such as the Lummi Indian Tribal Enterprises (LITE) in
the State of Washington, the principle of "shadow manage-
29
ment" is used to replace non-community CDC personnel with
local residents. In the case of LITE, Native Indians train
behind key management personnel until they are capable of
taking over those positions. ^ While most CDCs attempt to
locate qualified staff persons, most must hire from outside
the community. The structure used for hiring new employees
is based on the following priority system:
1. Experienced persons with the same ethnicity as
the community who reside in the SIA
2, Experienced persons with the same ethnicity as
the community who reside outside the SIA
3. Experienced persons with other ethnicity from
within the SIA
4, Experienced persons with other ethnicity from
outside the SIA
The reason for this type of priority system is because
there is an inherent uneasiness and distrust of "outsiders"
in many depressed areas. Residents of poor communities
are wary of "do-gooders" who come to the ghetto, regardless
of their intent or demeanor.
when CDCs are left with no choice but to employ those
from outside the SIA, they attempt to identify the person
as an expert who can help the community, rather than an
opportunist who is looking for a job or a "cocktail
liberal" waiting to do his part for the "poor folks."
30
These issues may seem ludicrous, but within depressed
areas where some political promises were not kept, where
unemployment is several times the national average, and
public health is ignored, any local activity is serious
business.
One of the major problems involved with the hiring of
experienced personnel, in terms of building a permanent
staff, relates to the often tenuous nature of government-
funded projects. Many of the programs administered by
CDCs have a limited lifespan, while others are affected by
unforeseen circumstances, such as elections, redistrieting
or budget cutbacks. Staff members with a large amount of
previous experience will often accept more stable, higher
salaried positions elsewhere. Some research, planning and
development arms of CDCs have taken to hiring graduate
students or recent graduates to fill research, and in
some cases, project director positions because:
1. They are more likely to accept positions at a
lower wage than more experienced personnel.
2. They are eager to put theory into practice and
want to "do good" in their first professional
position.
3. Some federal funds, such as CETA and Work-Study,
defray salary costs.
4. They often have access to university resources.
5. They bring new information to the organization.
31
In building community alliances, as mentioned earlier,
CDCs will often hire those who are either associated with
other organizations within the community or who have in
fluence and visibility in social, business or political
circles. It is most effective for CDCs to employ those
who are well known and respected in the community, but
when this is not possible, CDCs attempt to wage campaigns
for community support and acceptance by publicizing its
activities or inviting greater community participation.
Some CDCs find it beneficial to staff a communications/
public relations department whose sole purpose is to send
press releases to the local media, handle public relations
for the CDC, and promote projects through local get-
togethers and community meetings.
The method most used by CDCs in staffing their
organization is through the development of a personnel
management system. This calls for the listing of job des
criptions, salary levels, necessary skills and desired
background for each position. Through this, an easy
reference for staffing the organization can be made and all
necessary personnel are accounted for. Modifications will,
of course, need to be made as the organization grows or
changes direction.
CDC Programs
Most depressed communities suffer from so many diverse
32
problems that CDCs find the task of prioritizing the needs
of their community an almost impossible task. Generally,
CDCs are involved with one or more of the following within
their SIA:
1. Economic and business development which can in
crease the income of SIA residents
2. The development of additional, more desirable
employment opportunities
3. Community ownership, management and control of
the CDC
4. Vocational/manpower training programs
5. Transportation improvement
6» Development of public health facilities
7. Low-cost housing for low-income residents
8 « For-prof it CDC ventures which bring revenue to
the community.
Piroblems in the above areas will occur when the organization
finds itself in any of the following predicaments:
1. Lacks the technical capability to successfully
carry out a particular project
2. Lacks sufficient funding for a particular project
3. Has insufficient support from either the community,
business or government
The successful CDC organization employs an elaborate
planning stage before attempting major projects. It will
first assess its capabilities in relation to the needs of
33
the community, then plan a strategy for achieving its
goal. Lack of proper planning for a project not only
increases the chance of failure, but also risks the sup
port of the community, withdrawal of private and gov
ernmental funds, and wastes valuable time and resources.
Since there is considerable overlap within the CDC
programs, consolidation and intracommunication play a
vital role in project success. Whenever possible, and
usually due to limited resources, CDC programs tend to
share everything from offices, phones and typewriters to
research materials, individual project strategies, and,
quite often, personnel'. It is not uncommon for a housing
specialist who works in the profit-making portion of the
CDC as an estimator to assist a not-for-profit engineer
who is developing a low-cost housing structure. Simi
larly, if the not-for-profit health planner is studying
an area of the SIA which is in need of a pharmacy, the
information may be passed on to the for-profit venture
development director who then proceeds to gather funds
for such a project. The thin line between assistance and
collaboration between the two divisions of CDCs almost
seems to disappear, except in regard to funding re
quirements.
Although the not-for-profit entity may contract for
services or products from the for-profit division, as a
34
consumer might purchase goods from a store in which he owns
stock, there may be serious legal repercussions if govern
ment-funded, not-for-profit activities operate as revenue-
generating entities. For example, a dial-a-ride service
which is paid for by the County Transportation Office but
administered by the CDC may charge a nominal fee for normàl
operating expenses, but cannot have any excess funds after
such expenses. If this occurs, the CDC would come under
investigation and criminal charges could be filed. Careful
monitoring by government agencies reduce the likelihood of
such situations and most CDCs will not risk defunding or
loss of credibility by being a party to such actions.
Within the original design of CDCs is the responsi
bility of the organization to build political support for,
and within, the community. A paradox of conflicting
policies has allowed CDCs to elect to play an active role
in soliciting political support, as well as providing a
unified voting constituency for politicians who are re
sponsive to the community. Although government-funded
public agencies are generally forbiddent to engage in
political campaigns, simply by asserting the role of
for-profit, private corporation, the CDC can actively
support political issues [when it feels such a move would
gain political, economic or social strength for the
CDC) much in the same way that General Motors or AT & T
35
can contribute to political cajupa^igns. This duplicity
has allowed CDCs to exercise considerable influence in
gathering support for their SIAs, their continued funding
and their for-profit ventures. Before committing itself
to a cause or political issue, the CDC weighs the benefits
against the possible losses. One CDC whose SIA was in an
unincorporated area of a large county attempted to move
for incorporating the district as a city. While this
would mean that the community would be eligible for
Federal funds reserved for cities, it also would cause
redistricting, and result in taking away a large portion
of one County Supervisor's constituency. When the effort
failed, the Supervisor, who interpreted the incorporation
attempt as a threat, became less responsive to the CDC.
Clearly, the CDC should have spoken with the Supervisor
and attempted a compromise or other action which would
preserve the relationship.
Organ i z at ion ai Structure
The structure of CDCs seem rather complex for a
grassroots, community-based organization. It takes on
many of the appearances of a major corporation, with its
various divisions and levels of responsibility. It has
already been noted that the CDC, for the most part, is
a very informal organization in which what is seen on
paper — meaning organizational charts and job des-r
36
criptions — are not necessarily definitive for the roles
staff members play. Rather, the prescribed organizational
structure may look like this:
Figure 3
Sample Organizational Structure
Planning
Division
Community
Relations
Accounting
& Finance
Venture
Development
Executive Director
Board of Directors
Community
Social
Services
Economic
Development
Division
In reality, the working relationship for the structure
above might look like this :
Figure 4
Sample Organizational Relationship
Planning
Division
Board of
Directors
Community
Relations
Accounting
& Financing
Executive Director
Venture
Development
Community
Social
Service
Economic
Development
Division
37
This is not necessarily a definitive example of the in
formal CDC organization but rather a suggestion as to how
CDCs actually function as an informal corporation.
Most CDCs employ the function organization design
described in Figure, 3 rather than the program or matrix
styles. In the functional structure individual divisions
within the organization are responsible for specific acti
vities. Within the functional framework increased effec
tiveness and expertise may be developed through staffing
positions with only the most experienced personnel. A ran-
dom sampling of CDCs might show that the major divisions
are staffed by those with degrees or backgrounds in eco
nomics, business, accounting, urban planning, social work
and/or public administration.
Conclusions
The organizational role of CDCs is based on the two
divisions with which they operate. As a not-for-profit
institution the CDC must provide the best public service
possible to the greatest number of people in the SIA, the
emphasis being on personal approaches to helping the com^n
munity. Concurrently, the organization must be able to op
erate effectively in the business world, bringing a profit
to the organization and the community. It becomes a chal
lenge to operate in both capacities while keeping the over
all goal of economic development in mind.
38
CDCs function as tax exempt organizations, but are
allowed, and encouraged, to carry on profit-making
ventures in an attempt to build a strong economic base
for the community. Essentially, the relationship
between the for-profit and not-for-profit divisions can
be summarized as below:
Figure 5
For-profit/Not-For-Profit Divisions' Relationship
F or-pro fit provide s
employment
I
revenue
1
economic base
Not-for-profit provides
social services
I
community unity
1
socio-political base
community
development
The diagram above oversimplifies the roles of each
division, but the figure is essentially correct. In
terms of the actual purpose of the CDC organization,
its goal, as its name implies, is community development,
in all its aspects.
39
FOOTNOTES
^Ford Foundation, Community DeveTopment Corpor
ations (New York: Ford Foundation, 1973), p, 5,
^Unincorporated East Los Angeles currently hosts
a population of more than 120,000 according to the most
recent estimate by The East Los Angeles Community Union
(1978).
^Block, Barbara, "Information Service Report,"
National Council for Urban Economic Development Information
Service (Washington, D.C.: CUED, March 1977), p. 2,
^This situation was acknowledged by the Federal
Government when the need for Equal Opportunity Employment
was expressed through Affirmative Action and other similar
hiring policies.
^Center for Community Economic Development, Census
of Special Impact Program CDCs (Cambridge; CCED, 197 5) ,
p. 9 .
®Ibid., p. 69.
^Ibid., p, 153,
®Ibid., p. 255.
^Ibid., p. 117,
^ °Block, op, cit., p, 1.
^^Kelly, Rita Mae, Coimnunity Participation in Di
recting Community Economic Development (Cambridge: CCED,
1976), p. 49,
^ ^Ibid., p. 60.
^^Kelly, Rita Mae, Executive Directors of CDCs (Cam
bridge : CCED, 19741, p. 4,
^^Kelly, op. cit.
^ ^Ibid., p. 120. 40
^^Ibid., p, 66,
^ ^Ibid., p. 76.
^ °Ibid., p. 94,
^^Maravilla is a residential neighborhood located
in unincorporated East Los Angeles.
-°Parachini, Lawrence, TELACU: Community Devel
opment for the Future. (Cambridge: CCED, 1977), pp. 21-22.
^^Kelly Survey, 1974.
^ ^Keyes, Richard, "Community Involvement," Handbook
for Community Economic Development, ed. Syyed Mahmood
(Washington D.C,: United States Superintendent of Docu
ments, 1979), p. VII.2.
^^Parachini, op. cit., p. 65.
^ ^Center for Community Economic Development, News
letter (Cambridge : CCED, June-July 1977), p. 18.
41
BIBLIOGRAPHY
Periodicals
Block, Barbara. "Information Service Report." National
Council for Urban Economic Development Information
Service, 9:1-14, March 1977.
Finelli, Anton. "Business Development, Venturing, and
Risk." Center for Community Economic Development
Newsletter, 15-22, February-March 1978.
Michelson, Stephan. "On Profit Maximization by SIP
Ventures." Center for Community Economic Development
Newsletter, 1-7, June-July 1977.
Parachini, Lawrence. "The Future of CSA." Center for
Community Economic Development Newsletter, 1-5,
December 197 6-January 1977.
Books
Abt Associates, Incorporated. An Evaluation of the Special
Impact Program: Final Report. Cambridge: Abt/Office
of Economic Opportunity, December 197 3.
_________ . An Evaluation of the Special Impact Program:
Interim Report. Cambridge : Abt/Office of Economic
Opportunity, March 197 3.
Arnstein, Sherry R. Citizen Participation : Effecting Com
munity Change. New York; Praeger Publishing, 1971.
Block, A. Harvey. Impact Analyses and Local Area Planning:
An Input/Output Study. Cambridge: Center for Community
Economic Development, 1977.
CCED. Census of Special Impact Program CDCs. Cambridge:
Center for Community Economic Development, 197 5.
42
Delehanty, John A, Manpower Problems and Policies; Full
Employment and Opportunity for All. Scranton, Penn
sylvania: International Textbook Company, 1969,
Ford Foundation. Community Development Corporatiohs.
New York: Ford Foundation, 1973.
Hampton, David R., Charles E. Summer and Ross A, Webber.
Organizational Behavior and the Practice of Man
agement . Glenview, Illinois; Scott, Foresman and
Company, 1978,
Hatry, Harry, Louis Blair, Donald Fist and Wayne Kimmel,
Program Analysis for State and Local Government.
Washington, D.C.; The Urban Institute, 197 5,
Kelly, Rita Mae. Community Participation in Directing
Economic Development. Cambridge; Center for Community
Economic Development, 197 6,
_________ . The Executive Director s of CDCs, Cambridge :
Center for Community Economic Development, 1974.
Levitan, Sar A. Programs in Aid of the Poor for the 197 0s,
Baltimore: Johns Hopkins Press, 1969,
Lizarraga, David. Recommended Funding for Title VII of the
Community Services Act for Fiscal Year 19 78, Los
Angeles; TELACU, 197 7,
Mahmood, Syyed and Amit Ghosh, editors. Handbook for Com
munity Economic Development, Washington, D.C,: United
States Superintendent of Documents, 1979,
Marciniak, Ed, Reviving an Inner City Community, Chicago;
Loyola Marymount University Press, 1977,
Perry, Stewart E, Building a Model Black Community: The
Roxbury Action Program, Cambridge: Center for Com
munity Economic Development, 1978,
, Profiles in Community-Based Economic Development,
Cambridge : The Cambridge Institute/CCED, 1971,
stein, Barry. United Durham, Incorporated; A Case Study in
Commun it y Con tr o1. Cambridge : CCED, 1972,
TELACU, A Framework for Greater East Los Angeles Industrial
Development. Los Angeles : The East Los Angeles Com
munity Union/Economic Development Administration,
1978.
43
Greater East Los Angeles Health Needs Assess-
ment. Los Angeles: HEW/Elias Chico Health. Foundation,
1978.
. TELACU Personnel Management Systems, Los An
geles: Community Planning and Development Corporation,
1977.
44
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Reiner, Robert Leonard
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Management and organization in community development corporations
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