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Thread: Setting up a CDC (Community Development Corporation)

  1. #1
    Cyburbian
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    Setting up a CDC (Community Development Corporation)

    What are good resources for finding out how to set up a Community Development Corporation?

    Thanks!

  2. #2
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    A bit of background, sourced from the recently-defunct National Congress for Community Economic Development:

    How do we become a CDC?

    A CDC is legally the same as any other non-profit entity organized under section 501 (c) (3) of the Internal Revenue Code. Local residents that are interested in forming a CDC should get together and develop a set of by-laws, file for incorporation with their state government and once that is completed apply to the federal Internal Revenue Service for designation as a tax exempt non-profit organization. The IRS designation is necessary in order for your organization to obtain grants and gifts from any government, corporate, foundation sources or from individuals.

    There is no national entity that certifies an organization as a CDC. In some states, Massachusetts and Minnesota for example, an organization must meet certain requirements in order to receive state funding as a CDC. Federal programs that fund CDCs are scattered among many different agencies and each program has its own eligibility criteria.


    Another good source of information:
    Durable CDCs and Organizational Effectiveness: A Summary of the Proceedings of a Conference Organized by LISC (February 2000)

  3. #3
    Cyburbian wahday's avatar
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    I think Bourbonism pretty much covered it. What you are looking to do is incorporate as a non-profit. This requires fulfuilling requirements at the state and federal level. I would advise making the state application be in accordance with the federal regulations from the beginning to avoid extra work (usually you incorporate with the state first, then the feds).

    Probably the best thing to do is to hook up with some other CDCs in your state and get copies of their Articles of Incorporation, By-laws and missions. As a matter of law, these are documents anyone can request and they must make them available. You can use them as a template for your organization so you don't have to reinvent the wheel.

    Also look around your area at any organizations that may offer workshops in this topic (non-profit incorporation). Arts organizations and universities often run such events to help groups like yours. For the mechanics, it really doesn't matter what kind of non-profit you are as you all must fulfill the same requirements (assembling a board of directors, defining your mission and vision, establishing by-laws and articles of incorporation). You will probably also have to have a visioning session with your founding board of directors to outline a mission and vision that is satisfactory to your goals.

    One other way to proceed to get things off the ground is to use another non-profit as an "umbrella" while you build your capacity. Many groups will allow you to do this and they will probably take a modest cut (3-6 percent) of any funding that goes through them to cover administrative costs. The key is finding a group whose mission or target population is in line with the CDC's and they will just run it as a "program" of theirs until you are up and running on your own. The benfit for them is that they get to claim some responsibility for your work (as a program of theirs) without allocating very much additional staff time and effort. The benefit to you is that you can begin your work before you have gone through the non-profit incorporation process.

    There are also many good books on forming non-profits which you can likely check out at your local public library.

    Hope that helps. Good luck!!
    The purpose of life is a life of purpose

  4. #4
    Cyburbian MacheteJames's avatar
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    Quote Originally posted by Tresmo View post
    What are good resources for finding out how to set up a Community Development Corporation?

    Thanks!
    What is it that you're looking to do, and where? The reason I ask is because CDCs are usually based in distressed urban neighborhoods, while EDCs (Economic Development Corporations) are more the norm in rural areas. Do you intend on serving a particular population, and do you have any background in community organizing?

  5. #5
    Cyburbian DetroitPlanner's avatar
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    Detroit has dozens of CDC's, I'd suggest contacting the planning department there. http://www.ci.detroit.mi.us/plandevl/Default.htm

    Here are links to a couple of them:
    http://www.mexicantown.org/
    http://www.grdc.org/
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  6. #6
    Cyburbian
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    CDCs in Boston and MA

    Boston has a lot of CDCs... there are fewer smaller ones in MA cities/towns and rural areas. Many of them are in distressed areas and formerly distressed areas, some are EDCs by name. Most of them are small, but a few have large portfolios of housing units, which keep them solvent, growing assets and development pipeline. A couple have recently ventured into commercial development, planning some of the largest mixed-use TOD projects in the city.

    For CDCs, microenterprise and small business counseling/lending often requires a hefty subsidy to maintain. Workforce development dollars are purely driven by grants, so difficult to maintain as a program without consistent, long-term support.

    The CDC world is full of academic and professional resources -- defunct or otherwise -- a lexicon with a bounty acronyms to decipher. Turns out I can't post links, but google NeighborWorks America and go to their links page for a bunch of resources. Look at the CDFI Coalition and Opportunity Finance Network too. LISC ... Shorebank in Chicago, Self-Help in NC, for multi-organizational models... many banks have CDCs...

    However, go beyond the web -- CDCs are highly socially networked and highly local, so talk to and get as many people involved as you can. Many states and regions have associations for TA and training, limited financial support. In my experience, a good CDC is usually a good community and political organizer as well as one that understands the nuts and bolts of housing development.

  7. #7
    Cyburbian
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    Their are alot of resources for setting up CDC's. . .what specifically are you interested in doing? Many CDC's are also CHDO's. . .

    To add to the other resources already posted, I would recommend enterprises foundation especially the organizational development section if you are starting out. http://www.practitionerresources.org/

  8. #8
    Cyburbian
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    Thanks for the information, it's been a great help.

    Specifically I'm interested in finding out how to set up a CDC that would redevelop housing in the downtown area where my COG is located. I need to find out how the COG itself could set up such a nonprofit and what the steps, challenges, etc. would be.

  9. #9
    Cyburbian
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    I've never heard of a COG (council of governments) set up a CDC. . but take a look at the requirements for a CHDO. This at least gets you some funding off the bat and helps in getting additional funding.

    It sounds like you might have some politics invovled. . .be careful whose toes you are stepping on. . .is their an exisitng organization whose mission is compatible and who alreay has the capacity to revitalize this housing?

  10. #10
    Cyburbian
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    Quote Originally posted by planner? View post
    I've never heard of a COG (council of governments) set up a CDC. . but take a look at the requirements for a CHDO. This at least gets you some funding off the bat and helps in getting additional funding.

    It sounds like you might have some politics invovled. . .be careful whose toes you are stepping on. . .is their an exisitng organization whose mission is compatible and who alreay has the capacity to revitalize this housing?
    I'm just doing the preliminary research (because of the stepping on toes problem). There are a few organizations that have something like this as their mission, but they aren't doing anything.

  11. #11
    Quote Originally posted by MacheteJames View post
    What is it that you're looking to do, and where? The reason I ask is because CDCs are usually based in distressed urban neighborhoods, while EDCs (Economic Development Corporations) are more the norm in rural areas. Do you intend on serving a particular population, and do you have any background in community organizing?
    We are currently a nonprofit organization in Texas that helps low income individuals with safe affordable housing. We are a 501C3 corporation. What I need to know is do we have to go through any other requirements to be considered a CDC

  12. #12
         
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    Quote Originally posted by SHHET View post
    We are currently a nonprofit organization in Texas that helps low income individuals with safe affordable housing. We are a 501C3 corporation. What I need to know is do we have to go through any other requirements to be considered a CDC
    Are you in a CDBG entitlement city, or do you have to apply to the state for CDBG funds? Either way, since a significant portion of most CDCs' budgets comes from CDBG appropriations, you should check with your city and/or state to find out what your organization needs to do in order to qualify for appropriations and to find out about the application process. Additionally, you may want to check on the requirements for becoming a CHDO or seek out an existing CHDO that you can work with to qualify for other federal funding.

    Finally, I would strongly suggest visiting the NeighborWorks website. NeighborWorks is a support system, clearinghouse, and training organization for CDCs.

    Best wishes.

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