Community Development Corporation (CDC)

What Is a Community Development Corporation?

A community development corporation (CDC) is a nonprofit organization that works to improve a specific neighborhood, town, or region. Most CDCs develop and manage affordable housing. Many also run homebuyer counseling, support small businesses, build community facilities, or organize residents. What sets a CDC apart from other developers is its tie to place: it is governed in part by people from the community it serves and stays involved after a building opens.

The model took shape in the 1960s. Bedford Stuyvesant Restoration Corporation in Brooklyn was formally established in 1967, building on an effort started by Senator Robert F. Kennedy with Senator Jacob Javits and Mayor John Lindsay. Its founding was linked to the federal Special Impact Program, created by an amendment to the Economic Opportunity Act of 1964, and it became a model for community development elsewhere.

How It Works

CDCs typically act as housing developers and long-term owners. A CDC might:

• Find and buy a site, often with a predevelopment loan
• Assemble financing from tax credits, public loans, and grants
• Hire architects and contractors, and oversee construction
• Own and manage the property, or partner with a management firm
• Reinvest any developer fee and cash flow in its mission

Funding comes from a mix of government programs, foundations, banks, and national nonprofit intermediaries that lend to and train local groups.

CDCs vs. CHDOs

A Community Housing Development Organization (CHDO) is a community-based nonprofit that meets specific federal criteria under the HOME Investment Partnerships Program. The rules of the U.S. Department of Housing and Urban Development (HUD) require a CHDO to:

• Be a private nonprofit with tax-exempt status under section 501(c)(3) or 501(c)(4)
• Keep at least one-third of its board seats for low-income community residents or for designees of organizations that serve them
• Show capacity to carry out housing projects, generally through paid staff with housing development experience
• Have a history of serving its community, in general at least one year

The state or local government that receives HOME funds, called a participating jurisdiction, certifies which groups qualify. Each participating jurisdiction must reserve at least 15% of its HOME allocation for housing that CHDOs own, develop, or sponsor.

Every CHDO is a community-based nonprofit, but not every CDC qualifies as a CHDO.

Why It Matters for Workforce Housing

Because they are mission-driven and stay for the long run, CDCs can take on smaller or harder projects that for-profit developers pass over. That includes housing for working households in small towns and neighborhoods where rents are too low to attract private capital on their own.