The Great Recession officially ended in June 2009, according to the National Bureau of Economic Research. However, many families are still feeling its economic impact, which has been far-reaching throughout the country but especially in low- and moderate-income (LMI) families and neighborhoods. During this time of austerity in community development, many organizations have faced funding cuts and limited resources, but demand for services has continued to rise, forcing organizations to create innovative strategies to meet the growing need.
In this current climate of funding cuts, what is ahead for our communities? How can we continue to provide community development services during these times of austerity? What are some best practices in leveraging resources?
The Federal Reserve Bank of St. Louis' Exploring Innovation Week 2013 featured national experts who provided insight into strategies to handle the many challenges faced by community development organizations.
Kristin Faust is the director of lending and network services at Partners for the Common Good (PCG), where her primary focus is successfully accessing and deploying capital in underserved markets for both financial and social returns. Faust defines a healthy community as one that is vibrant and diverse both racially and economically. She has tried to help create healthy, vibrant communities throughout her career.
As the first speaker of the day, Faust jump-started the conversation by describing four themes of innovation and sharing several examples of exciting and innovative strategies. She pointed out that innovation revolves around scale, technology, green sustainability and breaking down silos. One example of innovation is crowd funding, which allows individuals to make a loan anywhere in the country with a click of a button while sitting at a computer. Using this strategy, donations are pooled together to support the efforts of individuals or organizations. Crowd funding can support a variety of initiatives, including funding companies, nonprofit organization events and civic projects.
Other examples of innovation include impact investing, the influx of international development strategies in local community development efforts, and community development financial institutions (CDFIs). Faust believes CDFIs are one of the top innovative strategies available today. These organizations allow a space for creating, testing and producing ideas to take out into the marketplace (e.g., New Markets Tax Credits). CDFIs measure not only the financial consequences of any given strategy, but also the social impact on the community, which is a critical factor for community development initiatives.
Ben Brown is a principal/storyteller with PlaceMakers, an organization that addresses the full scope of placemaking, from planning and design to community engagement and implementation. Since 2005, Brown has concentrated his housing work on cottage neighborhood solutions in the Gulf hurricane zones. He believes we are currently at a dramatic stage in the community development story due to a combination of the Great Recession and the changing market demand for housing.
From 1950 to 2000, there was a suburban movement, with residents spreading out. There was an increase in population, but a decrease in density. Today's housing market is feeling a double impact from the retirement of baby boomers and the coming of age of millennials. Now more than ever, individuals are remaining single and having fewer children, increasing the need for a different experience than the traditional suburban lifestyle. Boomers and millennials want to live in neighborhoods of mixed housing prices, surrounded by locally owned businesses, sidewalks, transit systems and parks, attractive to both aging and young professionals. Finding this type of healthy and sustainable neighborhood has proven to be a challenge in many cities and towns.
Bill Taft is the executive director of LISC Indianapolis, which is committed to taking a holistic approach in transforming distressed neighborhoods into healthy communities. LISC community development investments have included affordable housing, small business, schools, commercial revitalization and green spaces. LISC serves as an intermediary between community-based organizations, local and state governments, financial institutions and other organizations focused on community development.
When the organization begins work in a community, there are a few key principles in play:
Ted Howard is co-founder and executive director of The Democracy Collaborative at the University of Maryland, a national leader in community wealth-building strategies and policy development. He discussed two great challenges facing community development today — wealth inequality and the growing level of poverty.
At The Democracy Collaborative, community wealth-building is an innovative method used to meet these growing challenges. One alternative is broad ownership over capital, a concept based on creating more business owners, who are a vital part of economic development. Another strategy centers on anchor institutions — those organizations that are not leaving the community, including universities and hospitals. These institutions have sizable purchasing power and can drive money locally. Howard also spoke about another wealth-building strategy — employee ownership/cooperatives, owned and controlled by the members. Today there are more than 11,000 cooperatives in the United States.
Among the key takeaways from Exploring Innovation Week 2013, community development leaders were encouraged to:
Links to presentations and summaries from the St. Louis Fed's Exploring Innovation Week 2013 can be found here.
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Fed in Print: An index of the economic research conducted by the Fed.
FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.