All too often, economic development excludes community members from the decisions affecting where they live, strains local resources and siphons financial returns to outside developers with no accountability to the community. There is a better way, one that provides communities with the infrastructure and support they need to access capital, address their needs, grow thriving businesses, build wealth and keep those dollars circulating locally.
Community economic development (CED) is a set of locally led actions to promote economic opportunities and improve social conditions, with a focus on benefits for low-wealth people. The approach was developed by people living in areas experiencing underinvestment, who came together to address the dearth of available capital, housing and economic development opportunities. These advocates assessed their needs and assets to create quality-of-life building blocks like affordable housing, good jobs, schools and health services, and they gave collective voice to a policy agenda that puts ladders to opportunity well within reach.
CED is a versatile, highly customizable toolbox, born of necessity and tailored to the people and places using it. In some towns, churches doubled as local lenders where people could access capital and non-predatory financial services. Many became the credit unions, community development corporations and community development financial institutions still providing critical services to rural areas typically overlooked by big banks.
In South Carolina, a set of groups emerged after Hurricane Hugo exposed the outsized devastation natural disasters deal to communities suffering from disinvestment due to racism and poverty. This network of organizations advances place-based development driven by local social entrepreneurs who know what their communities need: affordable housing to resist gentrification and displacement, grocery stores in food deserts, capital for small businesses and other public goods, and better state policy that helps drive capital to these efforts. This landscape consists of a range of people and organizations, including:
- Community development corporations (CDCs), locally controlled nonprofit organizations dedicated to revitalizing the places where they’re located. The first CDC opened in the 1960s in Brooklyn, and now they pepper the country. In South Carolina, Metanoia provides safe, affordable housing and resists gentrification in rapidly growing North Charleston. And in Greenville, Homes of Hope trains community members in building trades, and constructs and maintains affordable housing. In response to Greenville’s affordable housing crisis, Homes of Hope advocated for greater investment in affordable housing, prompting the city to create an affordable housing trust fund.
- Community development financial institutions (CDFIs), mission-driven nonprofit organizations that provide banking services in communities underserved by large corporate banks. CDFIs can be credit unions, loan funds or community banks. In parts of a state where 60 percent of people have subprime credit, predatory lending businesses are more bountiful than fast food restaurants. In underserved areas of the rural South, financial institutions like these are ending banking deserts by providing equitable access to capital. Greenville-based CommunityWorks makes projects like those developed by Homes of Hope possible. And though it opened to finance affordable housing development, it has expanded its services to personal loans and debt refinancing, offering sturdy financial footing for families. Similarly, the South Carolina Community Loan Fund started as a small affordable-housing lender in Charleston, and today helps revitalize communities statewide, financing grocery stores, schools, health centers and other critical infrastructure.
- Nonprofit organizations dedicated to community benefits. The Center for Heirs’ Property Preservation helps families clear title on their land and develop business models that will produce income sustainably for generations.
- Banks like Optus and South State that recognize the critical nature of community economic development and provide financing to the infrastructure under Community Reinvestment Act guidelines.
- Government agencies, including the departments of agriculture and commerce.
- Foundations that see the myriad ways CED can help them advance their mission. Funders support the network through general operating support grants, capital grants, insured deposits and program-related investments.
- The South Carolina Association for Community Economic Development (SCACED) is the glue that holds this infrastructure together, convening its more than 100 members to learn together, work collectively to solve complex problems, and recommend policies to decision makers. It is a symbiotic, diverse mix of urban and rural stakeholders supporting each other. With its growing influence, the network advocates for favorable policies at the state level, like tax credits and the flexibility to use them for targeted investments resulting in job creation, small business development, workforce development and affordable housing. SCACED also trains and equips leaders to advocate for their communities. The Babcock Foundation interviewed SCACED President and CEO Bernie Mazyck about the network.
A community economic development approach aims to be holistic, creating environments for healthy people, healthy families and healthy communities. It means local entrepreneurs can receive adequate financing to grow their businesses, create jobs and hire their neighbors. It means families can buy homes, build assets, create generational wealth and break the cycle of poverty. It means parents can repair their credit, get out of debt, build nest eggs, send their children to college and retire comfortably.
CED is an engine of economic opportunity grounded in history, context and the intersections of power and place. It is aligned partners who are more powerful together, advocating for better policies and addressing a long history of racial injustice and public disinvestment. It is a factory for empowered new leaders, stronger organizations and higher quality of life. It is radically transformed lives. It is economic and social justice at work.
- Affordable Housing
- Capacity Building
- Democracy/Civic Engagement
- Economic Development
- Mission Investing
- Tax Reform