Low- to Moderate-Income Community Development Outlook for Communities of Color in the Eighth District

November 17, 2021
Community Development Outlook Survey 2021 

The Community Development Outlook Survey (CDOS), conducted every two years, was administered this summer (June 15-July 6) to assess the economic conditions of low- to moderate-income (LMI) communities in the Eighth District and the impact of COVID-19 on these communities. More than 250 nonprofits, community-based organizations, government and education entities, and financial institutions serving in the region responded to the survey. This article highlights differences in responses from surveyed entities serving primarily white communities and those serving primarily communities of color.

Key Takeaways

  • Respondents were asked to compare current economic conditions to those of two years ago. More than 50% of respondents primarily serving communities of color reported declining general economic conditions, whereas less than 40% of respondents primarily serving white communities reported declining general economic conditions.The question was framed as: Does your organization primarily serve a Black or Indigenous community, or a community of color?
  • More than 60% of responses from entities serving communities of color and approximately 40% of responses from entities serving white communities indicated that recovery from the impact of COVID-19 would take at least 12 months from the survey date.

Attributes of the Respondents

  • Of responding entities, 37% were financial institutions, almost 29% were nonprofit/community-based organizations, 10% were community development organizations, 9% were government entities and 9% were educational institutions.
  • All surveyed stakeholders serve LMI communities.
  • About 50% of respondents reported primarily serving white communities, while 40% reported primarily serving communities of color.
  • Of the entities primarily serving communities of color, nearly all serve Black/African American communities, 25% serve Hispanic/Latino communities, 10% serve Asian communities, 5% serve American Indian or Alaska Native communities and 1% serve Hawaiian or Pacific Islander communities.
  • 54% of entities serve metropolitan communities, and 46% serve rural communities.

Racial Disparities Compared to Two Years Ago

General economic conditions:The question was framed as: Compared with two years ago, general economic conditions of the communities with low to moderate incomes that you serve are ... Compared to two years ago, general economic conditions of LMI communities have declined for about 40% of the responding organizations. (See Figure 1a.) Of the organizations primarily serving communities of color, more than 50% described economic conditions as declining, with less than 20% indicating that conditions were improving. Meanwhile, of the organizations primarily serving white communities, less than 40% described economic conditions as declining, and more than 35% described economic conditions as improving relative to two years ago.

Figure 1

Differences between White Communities and Communities of Color in CDOS 2021

Figure 1: Differences between White Communities and Communities of Color in CDOS 2021

NOTE: All indicators are relative to two years ago.

Ability to meet basic needs:The question was framed as: Compared with two years ago, the ability of individuals in your areas with low to moderate incomes to meet their basic needs has been ... Almost 45% of organizations shared that people in their communities were less able to meet their basic needs compared to two years ago. (See Figure 1b.)

Well-being:The question was framed as: Compared with two years ago, the well-being of individuals with low to moderate incomes has been … The well-being of individuals with low to moderate incomes is declining, according to 48% of respondents. Individual well-being has been improving in communities served by 25% of organizations primarily working with white communities, while at most 15% of organizations primarily serving communities of color reported improving individual well-being. (See Figure 1c.)

Impacts of COVID-19

Top impact on LMI communities:The question was framed as: At this point in time, what is the top impact of COVID-19 on the people and communities you serve? We continue to monitor the impacts of COVID-19 on our communities. (See Figure 2a.) About 40% of respondents indicated that the major disruption of COVID-19 has been its negative impact on small businesses, including short- and long-term closures, supply chain disruptions and reduced demand. About 30% of entities reported issues related to financial stability (including income loss or instability, and job loss) as having the top impact, while 15% answered that the top impact was on housing stability, including evictions, back rent, foreclosures and homelessness.

For organizations primarily serving white communities, COVID-19 impacted small businesses most. For organizations primarily serving communities of color, however, financial stability was most impacted. These results are consistent with prior investigations into the impact of COVID-19 on LMI communities and the fact that only 18% of U.S. businesses are minority-owned.

Figure 2

COVID-19 Impact and Expected Time to Return to Pre COVID-19 Conditions in CDOS 2021

Figure 2: COVID-19 Impact and Expected Time to Return to Pre COVID 19 Conditions in CDOS 2021

Recovery Time for LMI communities:The question was framed as: Starting from today, how long do you expect it to take for the people and communities you serve to return to the conditions they were experiencing before the impact of COVID-19? As LMI communities look toward the future, 35% of respondents expect recovery to pre-COVID-19 conditions to take longer than 12 months, 30% predict recovery will take six to 12 months, and nearly 15% predict their communities will never recover completely from the impacts of the pandemic. (See Figure 2b.) These responses are consistent with past findings that recovery is going to be slow and challenging. Additionally, more than 60% of responses from entities primarily serving communities of color indicated that recovery would take at least 12 months from the date of the survey, or may never happen. Approximately, 40% of entities primarily serving white communities indicated that their communities would take at least three months to return to pre-COVID-19 conditions.

The COVID-19 pandemic has brought significant disruptions to LMI communities. Of the efforts taken to stem the impact of the pandemic, stimulus checks, followed by unemployment benefits and the eviction moratorium, were the most frequently named policy measures with the greatest positive impact on LMI households. For a further recovery, it is important that future relief efforts be responsive to—and inclusive of—communities most impacted by the COVID-19 pandemic.

Notes and References

1 The question was framed as: Does your organization primarily serve a Black or Indigenous community, or a community of color?

2 The question was framed as: Compared with two years ago, general economic conditions of the communities with low to moderate incomes that you serve are ...

3 The question was framed as: Compared with two years ago, the ability of individuals in your areas with low to moderate incomes to meet their basic needs has been ...

4 The question was framed as: Compared with two years ago, the well-being of individuals with low to moderate incomes has been …

5 The question was framed as: At this point in time, what is the top impact of COVID-19 on the people and communities you serve?

6 The question was framed as: Starting from today, how long do you expect it to take for the people and communities you serve to return to the conditions they were experiencing before the impact of COVID-19?

About the Authors
Violeta Gutkowski

Violeta Gutkowski is a lead analyst within the Institute for Economic Equity at the St. Louis Fed.

Violeta Gutkowski

Violeta Gutkowski is a lead analyst within the Institute for Economic Equity at the St. Louis Fed.

Rose Shapiro
Rose Shapiro

Rose Shapiro is a community development intern at the Federal Reserve Bank of St. Louis.

Rose Shapiro
Rose Shapiro

Rose Shapiro is a community development intern at the Federal Reserve Bank of St. Louis.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


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