Community Development Groups Get Second Round of Funding

HENRY CISNEROS, secretary of Housing and Urban Development, knew what to do this week with a $68 million loan from some of the largest, most prestigious foundations and corporations in the United States.

With permission from Congress, he added $20 million in federal funds to the private money, and then handed a total of $87 million over to Paul Grogan and F. Barton Harvey, experienced leaders in the community development movement.

The objective? To give tangible federal credence and a new kind of support to this rapidly growing movement, a street-level, self-help approach that is gradually revitalizing many inner cities with affordable housing and other community projects.

``The movement is sweeping the country,'' said Mr. Cisneros at a press conference announcing the funding this week, ``and has the potential to change the face of communities as we know them.''

``This is faith and hope money for communities,'' said Mr. Grogan, president of Local Initiatives Support Corporation in New York (LISC), one of the nation's leading community development support organizations. Mr. Harvey, chairman of a similar organization, the Enterprise Foundation in Columbia, Md., agreed.

In a joint administrative effort, LISC and the Enterprise Foundation will allocate the $87.65 million in loans and grants to community development corporations (CDCs) in 23 cities around the country.

This effort, known as the National Community Development Initiative (NCDI), is the second round of funding for communities. In 1991, the Rockefeller Foundation raised $62.8 million from foundations and corporations to create affordable housing, day-care centers, and other community projects.

``What is different about this second round,'' said Grogan, ``is the participation of HUD. Cisneros is convinced that HUD has to behave more like a foundation, providing flexible funds that can be molded at the local level instead of the prescriptive and rigid way government usually dispenses money.''

NCDI also recognizes the viability and power now of most of the 2000 CDCs around the country, which have created 320,000 affordable homes in the last 20 years. ``They have progressed to the point of institutional strength and have become platforms for action,'' said Grogan.

In addition, he said, the foundations and corporations providing the majority of the money recognize the stability and success of CDCs. ``Our experience is that CDCs work as an investment proposition,'' said Douglas Warner, president of J.P. Morgan & Company. The banking firm is loaning $12 million to NCDI.

Other contributors include the Prudential Insurance Company at $15 million, the Rockefeller Foundation at $15 million, Metropolitan Life Foundation at $5 million, the MacArthur Foundation with $6 million, and both the Knight Foundation and Pew Charitable Trusts with $5 million each. Three other foundations are contributing $1.5 million each.

At the conference, through satellite hookup, the mayors of Philadelphia and Denver, Edward Rendell and Wellington Webb, respectively, appeared on television to praise CDC projects in their inner cities. ``These projects are not just building houses, but recognizing and encouraging the resources in our community,'' said Mayor Rendell.

In Philadelphia, the Neighborhood Development Collaborative is involved in construction and development of some 509 affordable rentals or homes. Other funds have gone to improving leadership and organizational skills.

Both LISC and the Enterprise Foundation actually borrow the major part of the new funds from the corporations, and, in turn, lend it to the community organizations. ``In the early days, this would have been ... grant[s],'' said Mr. Warner, indicating the growing strength of communities to handle loans.

``Its been difficult for the good works of CDCs to compete in the media with the latest shooting,'' says Grogan.

He adds: ``Now the accomplishments are indisputable for those who take the time to look at what's really going on. And the reality is that nobody believes more strongly in self-help than poor people - and the tangible outcome of CDCs appeals to conservatives and liberals alike.''