This hidden Biden-Harris proposal could revive community reinvestment

What do communities need to thrive? The answer seems obvious: jobs that pay living wages, affordable housing, reliable transportation, and access to quality food, education and health care.

So why are those things so hard to come by in some communities? Because cornerstone community projects — the schools, grocery stores, health care centers, housing, and community centers that neighborhoods rely on — don’t deliver the high returns and quick turnarounds of many traditional development projects.

As mission-driven investors and community partners, we do things differently. We take the time to build trust with communities. We intentionally prioritize communities of color and seek innovative strategies to restore wealth and power where it has been historically extracted. We prioritize impact over profit, and we finance projects that traditional banks can’t, or won’t, underwrite. We have hacked the alphabet soup of programs and tax credits to cobble together the right combination of resources to pull off amazing, beautiful, community-driven facilities.

When our efforts work, the outcomes can be transformational. But scarce resources, program restrictions, and compounding inequities often thwart our efforts — and our neighbors end up paying the price. 

That’s why we are eager to support a promising new proposal, announced June 1 by the Biden-Harris administration, that could be the key to unlocking investment in cornerstone community projects: Community Revitalization Fund (CRF).

The CRF is a new approach to place-based investment that emphasizes innovative, community-led redevelopment projects that build wealth in communities of color and rural communities that have suffered from years of disinvestment. In other words: The CRF would make efforts to build cornerstone community projects easier, more impactful, and more aligned with community-driven goals.

As leaders in the community development finance industry who have spent decades working with just about every fund and tax credit out there, we have learned a few things about what it takes to create a successful place-based investment program. Here’s our advice on how to design this fund in a way that truly represents communities’ needs, removes development barriers, and creates a long-term pipeline for future cornerstone community projects.

1: Embed racial equity. Complex community projects have long been hampered by disinvestment, but that challenge cannot be solved with money alone. To truly invest in racial equity — i.e., to truly support generational wealth-building — CRF should be structured to deliver large-scale and flexible assets to organizations that are led by people of color and accountable to communities of color. In that way, we are not just building buildings; we are increasing the capacity of local leaders to leverage resources and power on behalf of their communities.

2: Prioritize, fully fund and reimagine community engagement efforts. The community knows best what the community needs, and prior place-based revitalization efforts have failed because community leaders were engaged too little, too late. Successful cornerstone projects move at the speed of trust, and that timeline often doesn’t align with traditional program deadlines and funding requirements. CRF can be structured differently to ensure the community leads that process and has the time to let that process unfold. We must fund the planning and engagement stage before development begins.

3: Support anchor organizations. CRF can explicitly fund an independent entity that is solely dedicated to revitalizing the neighborhood. In the past, these organizations have had many names, from “community quarterback” to “harbormaster.” No matter what you call it, the anchor organization plays a central coordinating role across diverse funding streams, services and stakeholders, including community residents. The absence of a community anchor organization usually leads to the absence of a comprehensive strategy; fragmented or sporadic investments; and siloed efforts to leverage public-private resources — all of which leads to less positive impact in communities.

4: Focus on vital non-housing community infrastructure. There’s no doubt affordable housing is a critical part of strong communities. But affordable housing alone is not enough; we need fair housing, too. That means homes, not housing units, in communities that offer access to the same amenities many of us take for granted. To do that, we must invest in complementary community infrastructure: child care, health care, grocery stores, community centers and small businesses. This is so well acknowledged that the federal government actually allows some housing dollars to be spent on vital non-housing projects. Unfortunately, that policy is rarely activated, nor is it enough. Let’s use the CRF as a dedicated funding stream to support non-housing community infrastructure.

5: Invest at a meaningful scale. Government programs limit their impact when they are too small, too competitive, too cumbersome, or too vague. Too often, applicants spend significant time and resources to apply, with limited probability of receiving what’s ultimately very little funding that comes without clear guidance on expected deliverables. CRF can invest in community-led projects at a scale necessary to meet the demand on the ground, with an emphasis on flexible timelines and clear metrics for success.

We know the CRF won’t solve all the challenges of cornerstone community projects overnight; it’s taken decades of structural racism to create these problems, and it’ll take a sustained effort to correct them. But this kind of scaled, flexible, equitable, community-centered design will get us on the right path.

Community Development Financial Institutions have been at the heart of complex, hard-to-achieve community projects for decades. We embrace these challenges because we prioritize what our communities want, and therefore we make time to do things their way. But it should be a little easier. And with the right partners and the right framework, CRF could be just the ticket to helping communities build back better. 

Ellis Carr is president and chief executive officer of Capital Impact Partners, and chief executive officer of CDC Small Business Finance; Donald Hinkle-Brown is president and chief executive officer of Reinvestment Fund, and chairman of the Community Advisory Council for the Federal Reserve Board; Joe Neri is chief executive officer of Midwest-based IFF; and Daniel Nissenbaum is chief executive officer of the Low Income Investment Fund and is a board member of the Community Restoration Corporation. These organizations are four of the nation’s largest Community Development Financial Institutions, and have served in an advisory role in White House talks.