There is no standard definition of community economic development (CED). From theoretical and practical perspectives, CED has been commonly described as a quintessentially local project, one in which communities reconstruct dysfunctional markets as a way of reconstituting social relations and building political strength. As social policy, CED emphasizes local participation in the design and implementation of affordable housing, job creation, and financing programs. Regardless of its characterizations, the modern CED movement is making strides to revitalize both urban and rural communities.
Significantly, community lawyers and others specializing in CED have worked in partnership with community organizers and other advocates. The Civil Rights era, from the 1950s to the 1970s, is another important juncture in the CED movement. Community organizations and community development corporations act as financial intermediaries, providing technical assistance to local entrepreneurs and developing shopping centers, supermarkets, and other real estate projects. The history of CED is the history of social movements.
Introduction: What Is CED?
There is no standard definition of community economic development (CED). It has been described as a strategy that includes a wide range of economic activities and programs for developing low-income communities such as affordable housing and small business development from creation and expansion of neighborhood businesses to larger commercial and retail services - and job creation, some of which has been accomplished by financing and operating shopping centers, industrial parks, retail franchises, and other small businesses. CED also includes many other initiatives and services to fight homelessness, lack of jobs, drug abuse, violence and crime, and to provide quality child care and medical care as well as homeownership opportunities.
As a concept, economic development emerged in response to tenacious poverty and the need for affordable housing, good jobs, affordable health care, and other quality-of-life matters needed for human existence. CED is broader than economic development because it includes community building and the improvement of community life beyond the purely economic.
From theoretical and practical perspectives, CED "has been commonly described as a quintessentially local project, one in which communities reconstruct dysfunctional markets as a way of reconstituting social relations and building political strength. As social policy, CED emphasizes local participation in the design and implementation of affordable housing, job creation, and financing programs."
Regardless of its characterizations, the modern CED movement is making strides to revitalize both urban and rural communities. Community development corporations (CDCs) have been reported to be the largest producers of affordable housing in the United States. At the same time, "for a field that performs a significant function in our society, we do not have much information regarding the important aspects of how it functions. Moreover, "[rjecent community development research explains that this lack of empirical knowledge is a by-product of a field that is more art than science." And, today, the industry is experiencing a number of challenges - a human capital crisis that limits its organizational capacity; an aging leadership; and pressure on CDCs to expand their reach while responding to the demands of funders, intermediaries, and neighborhood residents faster than they can respond. Many industry observers view community organizing as the primary hope for community revitalization nationwide.
CED emerged in the 1960s in response to calls by activists in lowincome communities to incorporate local residents into the process of revitalizing their own communities. Supported primarily by the federal government and the Ford Foundation, the movement expanded in the 1970s to address further deterioration of urban and rural communities. The deindustrialization of the 1970s and 1980s intensified public antipoverty and social welfare efforts, and community organizations became the major vehicles for delivery of housing and job programs in lowincome communities. The 1990s ushered in the demise of welfare, devolution from federal to state government, and a public policy emphasis on economic self-sufficiency.
While early legal representation focused primarily on such activities as workforce development, business development, manufacturing, and commercial and retail services, legal advocacy expanded to embrace the creation of affordable housing as well as microenterprises and worker-owned cooperatives, affordable child care and health care, and the creation of community development banks and credit unions. Market-based CED initiatives such as the Low Income Housing Tax Credit Program have spurred new programs such as the New Markets Tax Credit, one of the most recent economic development initiatives designed to stimulate investments in low-income rural and urban communities from commercial real estate to small business development using tax credits.
At the same time, CED advocates promote economic justice tools such as living wages; equitable development; sector employment intervention; and other income and asset accumulation and wealth-building strategies, including individual development accounts. The contemporary CED movement also highlights human capital development; the importance of social networks; and creative, environmentally prudent employment options such as green jobs.
Throughout the evolution of the CED movement, lawyers have worked with community residents to provide a wide range of legal services from forming corporations for CDCs to serving as general counsel for public and private affordable housing developers. Significantly, community lawyers and others specializing in CED have worked in partnership with community organizers and other advocates.
A traditional discussion of the CED movement begins with the redevelopment and community action programs of the 1960s, but that discussion provides an inadequate account of CED in the historical record. Similarly, conventional critiques of CED fault the implementation of federal antipoverty programs for narrowly excluding community input and, hence, undermining community control. In this chapter, we place CED within a larger historical, political, and social-struggle framework.
The Pre-Civil Rights Era
The concept of CED had its roots early in thel900s in the notorious historical dialogue between Booker T. Washington and WE. B. DuBois over the best way to achieve economic and political power for newly emancipated African American slaves. Washington, the founder of the famed Tuskegee Institute, advocated an economic nationalist perspective urging blacks to seek economic self-sufficiency, deemphasizing civil rights and social equality. Arguing that black advancement would be created through programs of industrial training and entrepreneurship, along with pragmatic political views of the existing legal and social order of the day he advocated the importance of hard work, industry, thrift, and property ownership.
To implement these views, Washington instituted a rigorous curriculum of vocational skills training in trades that he believed would result in black wealth accumulation. He established and presided over the National Business League, promoting black business networks to support black enterprise and organized "buy black" campaigns and counseling services to help black-owned small businesses. Washington's overarching goal was to build a viable black economic infrastructure as a foundation for political and civil rights.
Publicly rejecting Washington's strategy, DuBois became most prominently associated with the ideas of cultivating college-educated black leaders, the "Talented Tenth," to lead the charge for racial equality. But basically, DuBois and Washington had very similar views on the importance of economic independence and black entrepreneurship. Later in his career, DuBois advocated black economic development and the importance of strong black communities in America and proposed the organization of black-owned business cooperatives. Although Washington is best remembered as the forefather of market-based economic nationalism to uplift blacks, in reality, Washington and Dubois both advocated the importance of black business creation and expansion.
Civil rights activism was also shaped in the 1920s by Marcus Garvey leader of the United Negro Improvement Association (UNIA), who advocated a "back to Africa" migration of blacks and independence from white control through expansion of black businesses and the creation of UNIA cooperatives. Black business development continued to be a central tenet of other groups, such as National Urban League created in 1920(13) and the Nation of Islam established in the early 1930s. Economic nationalist principles continue to be espoused today by many other activists and scholars. Significantly, economic development public policy decisions continue to be based on nationalist assumptions about the importance of creating viable market-based structures in communities based on geography and homogenous neighborhoods.
The Civil Rights Era
The Civil Rights era, from the 1950s to the 1970s, is another important juncture in the CED movement. Although economic nationalism remained an important component of the movement, the 1960s marked the advent of mass-based direct action, grassroots campaigns to achieve legal equality and political enfranchisement. This period reflected the complementary goals of civil rights activism and large-scale political strategies, which embraced local economic realities, to redress inequality.
Notwithstanding the success of the civil rights movement, by the mid1960s many civil rights activists were dissatisfied with the "mainstream integrationist strategies" that they perceived as benefiting the black middle class and inadequately addressing the needs of poor citizens.16 In response to this growing dissatisfaction, civil rights organizations such as the South Christian Leadership Conference (SCLC) devised strategies to explicitly address economic disadvantage. To illustrate, in addition to struggling for political equality in the South, SCLC advocated for better economic conditions in urban ghettos. In 1968, Dr. Martin Luther King Jr. launched the Poor Peoples Movement, a hallmark of SCLC's strategy. Dr. King demanded an economic bill of rights, including full employment, decent pay and housing. Other civil rights organizations, such as the Congress of Racial Equality (CORE) started in 1942(18) and the Student Nonviolent Coordinating Committee, which operated from 1960 to 1966, also incorporated economic issues into their missions.
As a direct result of grassroots attention to poverty and inequality, the federal government began social policy programs that created the foundation for the CED movement. Although urban renewal initiatives had taken place in earlier decades, the 1950s and 1960s ushered in specific policy frameworks targeted at geographically defined communities, aimed to redress concentrated poverty and urban disinvestment.
The federal government's neighborhood-based approach was inspired by Ford Foundation programs, specifically, the Mobilization for Youth in New York City and the Gray Areas Project in New Haven, Connecticut. Created in the early 1960s, these programs sought to provide education, job training, and family services to disadvantaged communities.
The Ford Foundation's approach to urban revitalization was memorialized in President Lyndon B. Johnson's War on Poverty. In 1964, that federal policy led to the enactment of the Economic Opportunity Act (EOA) and the Community Action Program (CAP). CAP delegated authority to local "community action agencies," which were charged to conduct "education, health, job training, housing, social services, and economic development" programs. Its purpose was to create "maximum feasible participation" in the programs by community residents, thereby increasing community control over antipoverty initiatives. Although EOA was criticized for being ineffective in advancing political participation in local economic development, it did lead to the creation of CDCs.
Specifically, the EOA was amended by the 1966 Special Impact Program (SIP), which allocated federal funds to support CDCs, nonprofit organizations designed to aid urban redevelopment. As a direct result of the SIP, nearly one hundred CDCs were organized to create jobs in low-income communities. In addition, EOA funded the Insight Center for Community Economic Development (originally the National Housing and Development Law Project) to assist the over 2,000 legal service attorneys around the country working on CED matters and to provide legal support for federally funded community development corporations. Over the years, the Insight Center has supported the creation of over 500 CDCs. In the 1972 amendments to the Economic Opportunity Act, Title VII greatly increased the federal government's commitment to CDCs as a vehicle of community-based development and authorized a more comprehensive range of activities.
"If there is a 'ground zero' in the [modern] community development field, it must be the events leading to the formation of the Bedford Stuyvesant Restoration Corporation in Brooklyn, New York. In 1966, Senator Robert Kennedy toured Bedford Stuyvesant, a predominantly African American community undergoing civil unrest because of race, poverty, and political exclusion. This experience led Kennedy and his staff to pursue a strategy that linked self-help to political power and capital structures outside communities. The goal was to break community isolation by linkages to communities of power and prestige. The Brooklyn experiment captured national attention, and it was used as the basis for supporting other programs in urban and rural areas.
The unifying thread in federal policies was devolution of decision making from the federal government to the states. Under the auspices of advancing local control and inspired by civil rights advocacy, the Johnson administration instituted the 1966 Model Cities Program to help distressed communities while involving local residents in the program. The Model Cities Program was terminated in 1974 by the Ford administration, which then created the Community Development Block Grant Program (CDBG). CDBG funds are allocated to states and municipalities through the Department of Housing and Urban Development. Local jurisdictions then have discretion to develop strategies appropriate for local needs. Thereafter, the Carter administration continued the concept of providing federal funding for discretionary spending with the Urban Development Action Grants Program.
The next phase of the CED movement was characterized not by a "neighborhood-based, self-sufficiency paradigm" but an alternative antipoverty model that stimulated grassroots political action and a "broad-based, redistributive economic agenda." In this model, influenced by community organizer Saul Alinsky, founder of the Industrial Areas Foundation, advocates "worked to build local power, creative indigenous leadership and mobilize the poor." This phase of the movement represented a blend of new insights from the civil rights movement along with community-organizing principles to create "cross racial alliances for economic justice.
The community action agencies under CAP became laboratories for welfare rights organizing that gained momentum because thousands of qualified neighborhood residents were not getting their benefits. Neighborhood-based organizations worked to train welfare recipients to become advocates, and "mass benefit campaigns" followed. In 1967, the National Welfare Rights Organization (NWRO) was created by George Wiley, CORE'S former associate national director, and the idea of a national welfare rights movement developed from collaborations among Wiley, Frances Fox Piven, and Richard Coward.
Piven and Coward, famed authors of the book Poor People's Movements: Why They Succeed, How They Fail, argued that a movement to expand welfare benefits to millions of needy Americans would force the federal government to reform the system and impose a national guaranteed income. It was also hoped that increased welfare benefits would led to a national NWRO membership base and a foundation for meaningful political power.
NWRO was governed by Wiley and the "founding mothers," a group of welfare recipients. Acting as a coordinating center for the welfare rights movement, NWRO had 22,000 dues-paying members at its peak. Collaborating with SCLC, which organized the Poor People's Campaign, NWRO challenged welfare policies forcing welfare offices to pay grants for rent, food, clothing, and furniture (the availability of which few recipients knew about). These campaigns educated others and helped NWRO to grow to the point that it was even able to defeat President Richard Nixon's Family Assistance Plan, an inadequate replacement for Aid to Families with Dependent Children (AFDC).
By the late 1960s and early 1970s, faced with opposition and declining membership, welfare rights advocates questioned the limited focus on welfare and sought a broader reform agenda. Wiley started a new organization, the Movement for Economic Justice, which created grassroots coalitions of the working poor, middle class, and welfare recipients. At the same time, the Association of Community Organizations for Reform Now (ACORN) was founded by Wade Rathke, formerly of NWRO, after he moved to Little Rock, Arkansas, in 1970.
There, he worked on a multiracial, multiclass organizing strategy. ACORN's goal as an issue-based organizing group was to support the poor and working class. It accomplished this goal by entering electoral politics and advocating a poor people's agenda that included free medical benefits, elimination of the state income tax for low-income taxpayers, lifeline electric rates and property taxes, and higher welfare benefits.
By the end of the 1970s, ACORN had expanded into twenty states, promoting public participation in the democratic process by low- and moderate-income people. Remarkably, what NWRO and ACORN accomplished was a shift from a "nationalist emphasis on community-based business ownership and the locally targeted revitalization efforts of CDCs" to "the emergence of a distinct antipoverty approach that used grassroots political action to promote economic justice. The 1980s paved the way for yet another shift away from political action to "a localized, marketoriented" approach to CED characterized by public-private partnerships.
The end of the 1970s and beginning of the 1980s witnessed the creation of community development intermediaries such as the Local Initiatives Support Corporation (LISC) and the Enterprise Foundation, now known as Enterprise Community Partners, which "presaged a move toward consolidation and institutionalizing the best of the early programmatic experiments. Housing became a major focus of CDCs in the late 1980s with the advent of the Low-Income Housing Tax Credit and the Community Reinvestment Act.
The 1980s witnessed a strong backlash against the public entitlement programs of earlier years, and the administrations of Ronald Reagan and George H.W. Bush significantly cut back government sponsored antipoverty programs. The efficacy of federal spending on AFDC and other means-tested public assistance programs was questioned given increases from $7.8 billion in 1960 to $40.7 billion in 1976. Fueled by a neoconservative agenda, under the Reagan administration, welfare cutbacks were the main target. Some of these benefits were reduced or dramatically terminated when Reagan signed the Omnibus Budget Reconciliation Act of 1981 during an economic recession.
The administration's program of supply-side economics provided tax cuts to corporations and upperincome individuals. Privatization and fiscal conservatism, hallmarks of the Reagan years, created greater income disparities. Many other benefits to the poor such as food stamps, Medicaid, and housing assistance were also cut. At the same time, the decade witnessed structural shifts to the economy, the exodus of high-paying manufacturing jobs from urban areas, low-wage worker insecurity, and the resulting "spatial concentration of joblessness and poverty"
Given the political and economic climate of the Reaganomics era, CED advocates assimilated the dominant market-based ideology into approaches to tackle urban poverty, and CDCs became critical for implementing this approach. Given the economic scarcity of the times, CDCs, proven vehicles for dealing with local poverty, also presented a politically viable self-help approach to antipoverty through the promotion of public-private partnerships.
Although the inauguration of President Bill Clinton signaled a renewed hope for social justice, his administration's policies did not substantially improve conditions in low-income, distressed communities. His neoliberal agenda was characterized by international free trade, deregulation of global financial and capital markets, and privatization of public enterprises. Domestically, the Clinton administration put an "end to welfare as we know it" by abolishing AFDC and replacing it with Temporary Assistance to Needy Families (TANF).
This new regime imposed mandatory work requirements and time limits on benefits. Between 1992 and 1998, federal spending on family supports declined along with funding for food stamps and other nutrition assistance programs. Transfer payments to lowincome families through the expansion of the Earned Income Tax Credit did not make up for reductions in welfare. During the Clinton years, there were also large spending cuts on education, income security, science, and transportation while the wealthiest people benefited.
Counterintuitively, Clinton's neoliberalism, which facilitated the creation of flexible markets, ultimately made it more difficult for low-income workers to secure living-wage jobs. Expanded global markets and liberalized trade drove down wages and impeded union organizing. Welfare reform pushed more workers into an already crowded labor market. The Clinton administration's response to poverty represented another major political shift - the Democratic Party's break from historic commitments to traditional antipoverty programs and the emergence of a neoliberal, probusiness agenda. Poverty-alleviation programs became market-expansion programs.
This is most apparent with Clinton's 1993 Empowerment Zone Program, an effort to expand business activities in certain low-income communities by offering tax benefits to employers in geographically defined zones. Toward the end of Clinton's term, Congress passed his New Markets Tax Credit Program, designed to spur private-sector equity investments in businesses located in low-income communities.38 Both New Markets Tax Credits and the creation of the Community Development Financial Institution Fund of the Treasury Department have been credited with encouraging commercial real estate development and small business loans in some low-income communities.
The administration of George W Bush largely diverted attention from domestic matters to the wars in Afghanistan and Iraq, and the market-based focus of CED continued. That administration's attention to faith-based initiatives may have accounted for a renewed attention to strengthening faithbased community development organizations.
The Contemporary CED Movement
The contemporary CED movement is focused on market-based principles to remedy poverty. The premise is that the markets in low-income communities do not work well; accordingly, the remedy is to stimulate them. The movement's goal is to "restructure market incentives to leverage private investment for the development of community-based-business, affordable housing, and financial institutions. To that end, CED strategies promote local business development as a way to create jobs for low-income people. Community organizations and CDCs act as financial intermediaries, providing technical assistance to local entrepreneurs and developing shopping centers, supermarkets, and other real estate projects. In addition to affordable housing production, a mainstay in the field, microenterprise and nonprofit business ventures have become economic growth stimulants. Increasing access to financial institutions is another CED tool that has been anchored by the Community Development Financial Institutions Act of 1994.
The focus of this work is on localism, also called a place-based strategy. It involves the notion that bottom-up social change involving active community participation must take place within geographic areas. Community empowerment is achieved by "exerting ongoing influence over local decision-making in a way that ensures the development efforts are responsive to community needs."
Market-based CED is not without its critics, who caution that this approach does not adequately address poverty. They point to studies that show that CDCs not only fail to alleviate poverty but help make conditions worse by 'disorganizing' existing social and political structures and facilitating gentrification. Another criticism is that market-based CED depoliticizes antipoverty advocacy and hinders progressive social movements by focusing on capital inflow. Some of these CDCs have had to distance themselves from the kind of political engagement that addresses the problems associated with concentrated poverty.
Critics further lament that this focus on market-based CED privileges local incrementalism over broad structural reform. The focusing on localism does not change the structure of poverty. Finally, critics assert that the market focus of CED impedes the formation of cross-racial alliances. Because the focus is on "enclaves of economic distress, this model relies on "existing spatial distribution of poverty and does not address the nexus between poverty concentration and residential segregation - leaving unchallenged the racial cleavages that dissect urban geographies. Providing a new lens on the contemporary CED movement, this critique will, hopefully, help to advance the field.
The history of CED is the history of social movements. At the same time, it has matured into an "industry" complete with internal supports in the form of CDCs; funding intermediaries; and federal, state, and local agencies. Because resources have been needed to support the industry's revitalization work, few efforts have been devoted to understanding the industry itself. Going forward, it will be important to address leadership challenges as first-phase CED practitioners, charismatic leaders who learned on the job, are "aging out." Many CED leaders, after the 1980s, "came to the field after careers in law, banking, the foundation world, and other allied fields. Better prepared for leadership, they possessed more career mobility than did their predecessors." The industry may hold steady with a stream of "career changers," but there is no guarantee.46 Accordingly, the industry could benefit from "a level of standardization and rationalization of training efforts."
1. Roland v. Anglin, u.s. Dept. Of hous. & urban dev., building the organizations that build communities: strengthening the capacity of communitybased development organizations (2004), available at
2. Lauren Breen et al., An Annotated Bibliography of Affordable Housing and Community Development Law, 13 J. Affordable Housing & Community Dev. L. 324, 336 (2004). See also Susan R. Jones, Small Business and Community Economic Development: Transactional Lawyering for Social Change and Economic Justice, 4 Clinical l. Rev. 195, n.2 (citing nat'l econ. Dev. & l. Ctr., lawyers manual to community-based economic development , at 1-1 to -3 (rev. 1994); Rachel D. Godsil & James S. Freeman, Jobs, Trees, and Autonomy; The Convergence of the Environmental Justice Movement and Community Economic Development, 5 MD. CONTEMP. L. ISSUES 25, 30 (1993-94); John Little, Practicing Community Corporate Law, CLEARINGHOUSE REV. 889 (Nov. 1989); Frank Pommersheim, Economic Development in Indian Country, What Are the Questions? , 12 AM. INDIAN L. REV. 195, 202 (1987); Anthony D. Taibi, Banking, Finance and Community Economic Empowerment; Structural Economic Theory, Procedural Civil Rights and Substantive Racial Justice, 107 HARV. L. REV. 1463 (1994) (examining the economic structures that produce substantive injustices and supporting the need for a populist community empowerment economic and public policy discourse).