CPN is designed and maintained by ONline @ UW: Electronic Publishing Group.


E-mail us at cpn@cpn.org

Topics: Community

Community Impact Through Neighborhood Partnerships

United Way of America summarizes and highlights the capabilities, experience and lessons learned by local United Ways as they build community through neighborhood-based affordable housing and community development initiatives. Profiled communities include: Boston, MA; York, PA; Memphis, TN; Houston, TX; Chicago, IL; Providence, RI; and Denver, CO. 1997. Case study plus.

United Way of America

Copyright ©1997 by United Way of America. All rights reserved. Reprinted with permission. This report can be purchased for $15 including shipping and handling by contacting Sales Service America at 1-800-772-0008. Ask for item number 0998.

United Way of America Mission: To support and serve local United Ways to help increase the organized capacity of people to care for one another.

Index

Foreword
Acknowledgments
Introduction
United Way's Growing Suport for Housing and Community Development

Boston, Massachusetts—
The Model: A Shot Heard 'Round the World

York, Pennsylvania—
Small Cities Have Neighborhoods, Too

Memphis, Tennessee—
Leveraging Dollars and Legitimacy

Houston, Texas—
Starting a Community Development Industry

Chicago, Illinois——
Funding Community Development Corporations

Providence, Rhode Island—
Self-Sufficiency Through Community Economic Development

Denver, Colorado—
Strength in Partnership: Convening Is Key

Strategies for Success
Lessons Learned
List of Acronyms

Contents

Foreword
Acknowledgments
Introduction
United Way's Growing Suport for Housing and Community Development

Boston, Massachusetts—
The Model: A Shot Heard 'Round the World

York, Pennsylvania—
Small Cities Have Neighborhoods, Too

Memphis, Tennessee—
Leveraging Dollars and Legitimacy

Houston, Texas—
Starting a Community Development Industry

Chicago, Illinois——
Funding Community Development Corporations

Foreword

Is our great pleasure to present to you Community Impact Through Neighborhood Partnerships. The seven United Ways profiled in this publication have successfully developed and used creative community-building strategies to enhance their local neighborhood housing and community development efforts.

Throughout our 100-year history, United Ways have strengthened communities by addressing their health and human-service needs. Yet, we know that for the thousands of people United Ways help, there are thousands more we must touch. As our systemwide strategic plan states, United Way must strive to be ". . . the critical link in the community which brings together all community participants to build stronger, healthier and more sustainable communities."

Recently, United Ways are increasingly focusing their efforts on prevention- developing strategies end programs to prevent problems from occurring. Local United Ways across the country recognize that tackling the really tough problems of preparing all children for school, eliminating illiteracy, reducing the incidence of AIDS and increasing safe, affordable housing transcends a single fund-raising campaign, problem or concern.

Creating solutions requires building community—engaging our many community partners in creating visible, positive impact on people's lives and in our communities. Community-building activities, by their nature, thrust United Ways into new arenas and relationships with new partner; it is our best prevention strategy. We hope that Community Impact Through Neighborhood Partnerships will help others recognize the notable changes occurring within the United Way system and inspire all United Ways to recognize their community-building potential.

Paula Harper Bethea
United Way of America
Chair, Board of Governors

Deborah W. Foster
United Way of America
Vice President, Community Impact

Acknowledgments

Community Impact Through Neighborhood Partnerships presents common principles, strategies and lessons learned using information compiled from profiles of seven different cities. Such a cooperative effort depends on the support of many individuals, especially our local partners in the eight cities whose contributions made this publication possible.

We thank all our local partners and extend a special thanks to the following persons who served as our chief contacts: Chuck Shannon, Mile High United Way, Denver, Colorado; Chris Brown, United Way of Chicago, Chicago, Illinois; Alana Murphy, United Way of Massachusetts Bay, Boston, Massachusetts; New York; John Gervais, Housing Initiative Corporation, York, Pennsylvania; William Allen, United Way of Southeastern New England, Providence, Rhode Island; Tim Bolding, United Way of the Mid-South, Memphis, Tennessee; and Marshall Tyndall, New Foundations for Neighborhoods, Houston, Texas.

A special thanks to Ms. Ellen Gilligan, former director of community initiatives at United Way of America, for her insight and guidance on the publication Community Impact Through Neighborhood Partnerships.

This publication is a product of United Way of America's Community Impact group led by Deborah Foster, vice president, Community Impact. Eric Muschler, director of the Housing and Community Development Initiative, conceived Community Impact Through Neighborhood Partnerships and oversaw its development. Ms. Cheryl Buford, former senior associate with United Way of America's Housing Initiative Program, gathered all the research and served as the principal author. Ms. Cathy Jenkins provided valuable editorial assistance.

Introduction

The environment in which United Ways operate has changed dramatically recently, and it continues to evolve rapidly. Corporate restructuring, an expanding global economy, increasing competition for charitable dollars and the changing role of the federal government all have significantly influenced United Way's ability to demonstrate the impact of the dollars it raises each year.

Increasingly, local United Ways are enhancing their traditional fundraising and fund distribution roles with strategies focused on building community. United Ways' systemwide strategic direction articulated this expanded role stating, "We believe United Way should aspire to be the critical link in the community which brings together all community participants to build stronger, healthier and more sustainable communities as cost effectively as possible."

Many local United Ways have considerable experience as community builders-collaborating with other community stakeholders to identify and address critical local issues. Their community-building strategies are woven throughout each of the seven stories presented in this publication. The stories illustrate the remarkable changes occurring in the United Way system.

In Community Impact Through Neighborhood PartnershipsUnited Way of America summarizes and highlights the capabilities, experience and lessons learned by local United Ways as they build community through neighborhood-based affordable housing and community development initiatives. Several community-building strategies, including the following, have been consistent across the system:

  • Promote collaboration and partnership.
  • Promote systems change.
  • Foster leadership and diversity.
  • Enhance volunteerism.
  • Promote capacity building.
  • Emphasize prevention.
  • Influence public policy.

United Ways Growing Support for
Housing and Community Development

United Way's role in supporting local housing and community development efforts has been evolving since the early 1980s. Historically, many United Ways across the country have been instrumental in forming and supporting organizations that focus on fair housing, supportive services and special needs housing. In the early 1980s, when homelessness reached crisis proportions in many cities across the country, United Ways began to re-examine their role in relation to affordable housing. A logical next step toward preventing and alleviating homelessness was to address the issues of affordable housing needs in their communities.

In 1988, with support from the Ford Foundation, United Way of America began the Housing Initiatives Program. The program was designed to replicate the successful efforts of a local United Way housing partnership in Boston, Massachusetts. Beginning with five pilot communities and challenge grant funds from the Ford Foundation, local United Ways began to experiment and learn by convening local partners or joining existing housing partnership efforts. The partnerships focused their efforts primarily on building the capacity of local nonprofit housing developers, or community-based development corporations (CDCs), through the provision of operating support and technical assistance.

United Way of America began documenting and disseminating information from these pilot communities throughout the United Way system. In 1992, an independent evaluation of the Housing Initiative Program stated, "The added value of the United Way system's involvement in affordable housing has been clearly demonstrated and lies in its unique ability to serve as convener, legitimizer and leverager of resources."

In 1993, United Way of America received additional funding from the Ford Foundation to expand the United Way system's capacity in affordable housing and community development through training and technical assistance. As a result of continued efforts to disseminate information, train and provide technical assistance, United Way's involvement in affordable housing and community development activity expanded rapidly. In fact, a 1994 survey found that approximately 40 percent of United Ways reported involvement in affordable housing activity. Between 1989 and 1994, funding for affordable housing activity increased by 64 percent.

United Way efforts in housing and community development, as well as similar efforts that focus on children, literacy and AIDS, have demonstrated capacity to build community. By focusing on these capacities, as articulated in the community-building strategies, United Way has established a systematic approach to community building that will help individuals, neighborhoods and communities achieve their vision for the 21st century.

The seven communities profiled below illustrate efforts being made throughout the United Way system in meeting today's challenges to building community.

The Model:
A Shot Heard 'Round the World—Boston, Massachusetts

Like "The shot heard 'round the world," a neighborhood development partnership established by United Way of Massachusetts Bay and several key partners became a model that would breathe life into America's affordable housing and community development movement. Affordable housing was a recurring problem in many Boston neighborhoods and, in the mid-1980s, United Way volunteers recognized the need to do more about this critical issue. No role model existed because United Ways had not yet begun to support community-based development corporations (CDCs). Other local organizations also were grappling with the affordable housing issue. In 1986, United Way joined with Local Initiatives Support Corporation (LISC), the Boston Foundation, the Hyams Foundation, the Riley Foundation, the Boston Globe Foundation, the Clipper Ship Foundation and the Ford Foundation to form the Neighborhood Development Support Collaborative (NDSC). Local and national funders committed $4.5 million over five years, which included United Way's $1.8 million allocation. The payoff has been outstanding, as the NDSC has supported the development of more than 3,000 affordable housing units to date.

In the mid- to late-1980s, CDCs had bountiful opportunities, said Phillip Clay, an independent evaluator for the NDSC. "During the boom times, benefits flowed from public programs, foundations and corporate support. There was a sense that sharing the wealth in the critical area of housing was important. The question was whether the CDCs could ratchet up their capacity to the level of opportunity."

To help build capacity, NDSC committed to multi-year funding of operating support and technical assistance to CDCs with the possibility of long-term United Way affiliation. General operating support is "the venture capital for change," said Barbara Burnham, executive director of Fenway CDC.

NDSC's first initiative succeeded well beyond its direct benefit to participating CDCs because it also influenced systemic changes at United Way and in Boston's philanthropic community. For example, United Way gave more than $2 million in operating support to CDCs between 1992 and 1996, affiliated seven CDCs and increased funding to three organizations to support housing activities. With the success of the community-based housing development, United Way began looking at its funding strategies for other programs. In 1994, United Way adopted a new strategic direction that gives funding priority to programs that focus on prevention, capacity building and leadership development. United Way then shifted significant funds to agencies meeting these criteria.

The NDSC has launched a second initiative that supports emerging and mature CDCs. One new feature is the Capitalization Fund, which provides capital and a line of credit to the most experienced CDCs-a practice similar to what is available for for- profit businesses.

The NDSC is valuable mainly because "it was a way to share our expertise and pool resources to achieve far greater impact," said Beth Smith, executive director of the Hyams Foundation. She said that having United Way on board was key to getting Ford Foundation support. The foundation officials realized the Boston collaborative was precedent setting.

Accomplishments

Building Capacity. Various indicators show that CDCs participating in the NDSC increase their ability to develop affordable housing and revitalize the neighborhoods they serve. CDCs that subsequently became United Way-affiliated agencies nearly doubled their affordable housing production and multiplied their commercial square footage production by five.

Also, participating CDCs have developed into strong and resilient organizations that use strategic planning to maintain their vision and success. According to Ann Silverman, director of NDSC, "Strategic planning has become institutionalized in the CDC community." Even when faced with the early 1990 pressures of crime and violence, an adverse economic climate and drastically reduced public-sector support, CDCs used their extensive advanced planning skills to cope with downsizing, according to evaluator Phillip Clay. For example, "many organizations used NDSC resources to purchase computers, revise their management structures and introduce systemic board training," said Robert Wadsworth, program director at the Boston Foundation.

Such changes allowed those organizations to undertake increasingly complex projects. One such group was the Codman Square Housing Development Corporation, which is now the Codman Square Neighborhood Development Corporation. Formed in 1981, Codman had developed an extensive housing portfolio in a short time. Nevertheless its viability was threatened in the early 1990s due to inadequate staffing and financial management systems. With NDSC assistance, Codman stabilized internal operations, diversified development and expanded its mission, which its new name reflects.

In 1991, Codman renovated a key block of abandoned historic buildings into 25,000 square feet of commercial space, as well as 3 l housing units in the nearby Lithgow Building. The project included store-front rehabilitation, historic restoration and new retail opportunities such as a post office and Ben & Jerry's Ice Cream. "These buildings anchored the revitalization of the entire neighborhood," said Kim Comart, principal, Comart Associates and former manager of United Way's community development activities. Also, Codman is working in collaboration with local civic associations, businesses and social service agencies to address issues such as security, child care and small business development.

Promoting Systems Change. Another advantage to participating with the NDSC has been the dramatic, positive change in the funding community. During the economic boom in the late 1980s, funders assumed that mature CDCs could support their operations entirely on revenue from their affordable housing projects. "The accepted practice for foundations and government agencies was to make grants to support the staff and planning costs associated with developing a particular housing development," said Comart. Although CDCs generated program revenue to offset their costs partially, "they found it difficult to become self-supporting and achieve their social purpose."

The NDSC legitimized CDC needs for ongoing operating support, which helped organizations make changes that resulted in "sustained and sustainable growth," said Wadsworth. Clay's evaluation showed that multi-year operating support is the primary stimulus for increased CDC capacity. He said, "Groups were able to count on funds to do things that had not been possible previously. They could build their core operation to a new level, add program elements, test development ideas for feasibility, expand services to a larger area and address tenant needs-all without time consuming and uneven fund-raising activities interfering with the effort."

Moreover, the NDSC's Capitalization Fund promises to help CDCs soar to even higher levels of effectiveness and productivity by removing time consuming barriers and missed opportunities caused by the lack of working capital.

For United Way, working with NDSC and CDCs prompted volunteers and staff to rethink funding strategies. They witnessed the value in looking comprehensively at issues affecting a particular neighborhood, having neighborhood stakeholders join forces to address identified needs and using preventative and developmental strategies.

As a result of the review, in 1994, United Way began giving priority to funding prevention-oriented programs. United Way also examines the neighborhood impact its funded services have. Alana Murphy, United Way's community initiatives director, said, "Volunteers are looking at the whole community and the range of services United Way supports within particular neighborhoods." Comart added, "In so doing, United Way is fostering leadership and promoting collaboration and partnership."

United Way volunteers did not imagine the tremendous impact their efforts would have locally, nor the catalytic effect they would have nationally. In Boston, the NDSC has helped create a sophisticated network of neighborhood-based institutions with increased capacity and resiliency to address affordable housing and other neighborhood issues in a rapidly changing environment. Nationally, Boston's experience formed the basis for a $1.5 million Ford Foundation grant to United Way of America in 1988. This grant made possible a UWA Housing Initiative that leveraged $17 million and assisted five additional United Ways in starting operating-support collaboratives. The NDSC served as a model for these five partnerships and the NDSC concept has been replicated in cities across the country.

How Did These Accomplishments Happen? Boston is home to numerous CDCs with extensive track records, including Inquilinos Boricuas en Accion, Fenway CDC and Urban Edge Housing Corporation, which have developed affordable housing since the late 1960s.

When United Way convened a Housing Task Force, predecessor to the NDSC, to explore how to support CDCs and provide affordable housing in Boston, LISC and several local foundations also were investigating how to build CDC capacity. They began to pursue joint action and, from this common agenda, the NDSC was born.

Each participant played a unique role in creating the NDSC; each acknowledged that success resulted from sharing expertise. Richard Harter, chair of United Way's Allocations Committee, described one of the immediate benefits for United Way: "Having conversations with people who have done this for years brought us expertise instantly."

Likewise, United Way added value to the collaboration. Smith said, "United Way was critical to the success of the initiative; they knew how to allocate dollars to nonprofit organizations and brought a broader nonprofit management perspective to the table. Furthermore, United Way staff contributed to the program's administrative infrastructure."

To help CDCs expand their operations so they could benefit from opportunities on the horizon, the NDSC funded comprehensive organizational assessments and follow-up technical assistance, as well as multi-year operating grants. The NDSC designed the comprehensive organizational assessments and follow-up technical assistance to encourage CDCs to engage in prudent planning and take a business like approach to organizational growth.

Multi-year support was tied to specific strategic and management objectives rather than to specific housing development projects. This approach built organizational capacity instead of project-related growth alone. This practice has become the desirable industry standard for effective CDC capacity building. Furthermore, this system gave CDCs flexibility to pursue neighborhood- and board-driven programmatic strategies while maintaining accountability to funders.

Current Status

United Way's 1993 decision to affiliate seven CDCs and increase funding to three additional CDCs for their community development activities represented a significant commitment to affordable housing. This commitment is even more noteworthy because it occurred during a regional economic downturn when United Way campaign revenues dipped $3 million below their $47 million goal. Allocations to the CDC affiliates have since increased by approximately 15 percent between 1995 and 1996 to $586,000.

When the NDSC began its second program initiative in 1993, United Way decided its direct support to CDCs took priority over additional support to the NDSC. At that time, United Way became a non-voting planning member of the NDSC. In practice, however, United Way maintains its active presence because Harter leads United Way's Allocations Committee and the NDSC's Steering Committee. Silverman said, "Mr. Harter's continued role reflects the NDSC board's recognition that United Way is still a key player in this effort."

The NDSC's next program initiative has broader program goals and emphasizes its support for CDCs' role in comprehensive neighborhood revitalization, which includes, but is not limited to, affordable housing development. The NDSC continues to provide a forum for funders to increase their understanding of community-based development and to encourage the increased involvement of public-sector funders.

The NDSC has three categories of funds for CDCs: the Strategic Planning Fund, the Program Implementation Fund and the Capitalization Fund.

The Strategic Planning Fund. This fund provides resources for the strategic planning efforts of 13 CDCs who need to update their plans. An additional 12 awards enhance technical assistance to help organizations implement particular aspects of their strategic plans.

The Program Implementation Fund. This fund is available to organizations that have completed strategic planning; it provides operating support to approximately 17 CDCs for three years. One innovation from this program is the NDSC's partnership with the City of Boston, the first of its kind in the nation. The NDSC and the city's Public Facilities department co-administer the city's operating support program for a select group of CDCs that meet certain criteria and qualify as Community Housing Development Organizations (CHDOs) under the federally funded HOME Investment Partnership program. Ten of the operating support awards use HOME funds and are limited to CHDOs located within the city limits.

The Capitalization Fund. This fund will give up to seven awards to the most mature CDCs. The CDCs receive a combination of grant and loan funds that can strengthen their capital base and increase access to capital. This fund should accelerate the time it takes CDCs to complete development projects because it removes the need to piece together initial financing from a variety of funders.

The Capitalization Fund includes two funding streams: the Equity Fund and the Working Capital Fund. Designated CDCs will be eligible to receive approximately $150,000 per year of equity funding to: (1) implement financial and organizational development components of a strategic plan; (2) strengthen balance sheet and fund balance to enable greater access to lines of credit; and (3) provide collateral for working capital.

The Working Capital Fund will make between $250,000 and $350,000 available in the form of credit lines through Boston LISC to: (1) assist with short-term cash flow needs; (2) support improvements on current projects; (3) bridge front money sources on projects or programs and (4) bridge guaranteed receivables, such as contracts, grant commitments or earned income.

Outcomes and Supporting Data
Boston, Massachusetts

Community Impact
Quantity
1. Total completed housing units
during NDSC I (through 1994):

a. Rental units
b. Homeownership units
c. New units
d. Rehabbed units

2,968

2,413
555
787
2,181

2. Total $ value of affordable housing development $174.5 million
3. Square feet of commercial/industrial space 249,964 sq. ft.
4. Investment—NDSC I (1986-93)

a. United Way contribution
b. Investment of other partners
(private, public and philanthropic)


$1.8 million

$2.7 million

5. Investment of partners—NDSC II (1994-96) $3.4 million
6. United Way contributions
for CDC operating support (1994-96)
$1.2 million

Source: United Way of America consultant research, 1996.


Small Cities Have Neighborhoods, Too—
York, Pennsylvania

"If a community of our size is able to support a collaborative effort such as ours, most communities our size or larger can do it," says Al Hydeman, Jr., about York, a city of 42,000 residents.

The dynamic Hydeman was chair of United Way of York County's board in 1988 and the rallying force behind United Way's Housing Initiative Program. Community leaders representing the public-, private- and nonprofit-sector formed the program, which became the Housing Initiative Corporation (HIC), a spin-off corporation of United Way. Over the last seven years, HIC has secured more than $1.8 million in new funds. It has either facilitated the development of or directly developed 513 units of affordable housing.

In part, HIC owes its success to a unique cast of characters and set of circumstances. Having Hydeman champion the cause was fortuitous because he was also director of community development for the City of York. He was familiar with a financing mechanism for accessing a state-sponsored tax credit program that nonprofit organizations could use to defray operating costs. Concurrently, the opportunity to compete for a United Way of America $100,000 challenge grant arose.

United Way played a pivotal role in leveraging these and other non-traditional financing sources. United Way also convened a diverse group of corporate, philanthropic and religious leaders. This role was no surprise to United Way's president Robert Woods, "Capacity building and community problem solving is typical of United Ways. It is what we are about. Being involved in the community is an integral part of our mission."

Accomplishments

Visible Impact in the Community. HIC was incorporated in 1990 when United Way saw the opportunity to develop a piece of donated land. The result was Donnelly Place, a development of 30 single-family homes for first-time home owners. To keep the units affordable for low- and moderate-income families, HIC applied for and received a grant from the U.S. Department of Housing and Urban Development's (HUD's) Nehemiah program, which provided $450,000 in mortgage subsidies, $15,000 for each buyer.

Donnelly Place allowed three households to move from public housing to home ownership. One single-woman had lived in public housing for approximately 20 years. Her monthly payment at Donnelly Place is less than her public-housing rent. She was so excited about the house, she brought a camera to the settlement and took pictures of HIC's executive director, the settlement officer and the realtor.

Community feedback has been positive. Donnelly Place appears in United Way's campaign film and is discussed in campaign presentations. Woods said, "When we talk about HIC and especially the Donnelly Place development, we get lots of favorable remarks. Folks comment on how nice the houses look. They seem to identify with projects of that nature."

Building Capacity. "HIC's financial support helped the CDCs build capacity to undertake more complicated projects and begin thinking on a broader scale. It expanded our role in the neighborhood," said Armand Magnalli, former director of Crispus Attucks CDC and a current development specialist with the Enterprise Foundation. At Crispus, Magnalli was executive director and construction manager-multiple roles that divided his time, thus limiting what the CDC could achieve.

HIC operating funds allowed Crispus Attucks to hire a construction manager. Having a manager freed Magnalli's time and allowed him to focus on a major rental project involving 15 properties on South George Street, a main thoroughfare leading to city square and the sight of magnificent historic homes. Unfortunately, the neighborhood had deteriorated and had come to symbolize York's decay.

The success of the South George Street project made a striking statement about the neighborhood's redevelopment potential and Crispus Attuck's capabilities. This success catalyzed further redevelopment efforts, for example, the South George Street Community Partnership.

The South George Street Community Partnership was born as a broad-based planning and organizing entity after the chief executive officer of Susquehanna Pfaltsgraff Corporation became involved. He asked Magnalli how he could help revitalize the neighborhood. Magnalli, recognizing the value of his new volunteer's relationships, asked him to bring other agencies and businesses to join the redevelopment effort as partners.

Using technical assistance from HIC's executive director and the Enterprise Foundation, as well as HIC funding, the Partnership developed A Community Plan in Motion around six issues: safety, housing, health and human services, land use, education and economic development. The Partnership found that as some participants identified needs, other participants knew of existing resources that could be used to address them. They presently are working on how to harness those resources.

Leveraging New Resources for Affordable Housing. HIC opened the door for a variety of public and private resources that, but for United Way's effort, would have been unavailable for affordable housing in the community. For example, the nearly $1.1 million that HIC raised from the private sector using Pennsylvania's Neighborhood Assistance Tax Credit program represented new funding for the community. HIC's use of federal funds to defray a portion of Donnelly Place home buyers' costs represents additional investment dollars to help United Way serve low-income families and build healthy and safe neighborhoods.

Influencing Public Policy. In 1994, HIC asked United Way's board to support a bill before the county commissioners that would double the deed recording fee from $11 to $22. The increase would be placed in an affordable housing trust fund to provide part of the local match for the federal HOME program. Without hesitation, the board agreed to support the bill and talk with commissioners about their position. The legislation passed, resulting in $300,000 additional dollars to date and $1.4 million leveraged in federal funds to develop affordable housing in York County.

Enhancing Volunteerism. HIC has mobilized a variety of private-sector leaders. For example, one board member, a retired contractor, volunteered his time to oversee the construction of Donnelly Place. Another board member contributed his advertising skills to raise public awareness of the need for affordable housing.

In at least two affordable housing projects, United Way contributors donated property. In one of the projects, a HIC board member donated to York Area Development Corporation his 60 percent interest in a five-acre site. To secure payment for the remaining interest in the property, another United Way contributor bid on the site and held it until the CDC could pay for it.

How Did These Accomplishments Happen?

York is a small, but growing, metropolitan area that has become home to commuters working in Baltimore, Maryland, and in Harrisburg and Lancaster, Pennsylvania. The influx of commuters combined with the growth in the area's own employment centers has resulted in a county population increase of 42 percent over the last 30 years-to a high of 350,000 people in 1990.

In contrast, the population in York city's urban core is decreasing from a high of 60,000 people in the 1950s and '60s to 42,000 in 1995. These shifts in population and employment are causing related, albeit different, affordable housing and community development needs. For example, the city has older housing stock, a sizable portion of which is substandard, and a residential vacancy rate of 6 percent. Meanwhile, a waiting list exists for subsidized housing in the county.

Until the mid-1980s, the city and county governments were the primary agents responsible for meeting the area's affordable housing needs, and the two enjoyed a collegial working relationship. During the 1970s, for example, the county commissioners contracted with the city's Housing Authority to complete federal funding applications to build and maintain public housing, displaying a degree of cooperation not often found among various levels of government. The area received funds to build 300 units of public housing in York County, outside the city limits.

When federal funds for new public housing units dropped precipitously in the early 1980s, public-sector leaders in York looked for new ways to broaden the base of support for affordable housing and to build the capacity of nonprofit housing developers. It was clear to Hydeman that CDCs should be considered because, he said, "When you work with CDCs, you get more bang for the buck."

Hydeman learned of United Way of America's request for proposal (RFP) to provide $100,000 challenge grants to five United Way-convened housing partnerships. He encouraged United Way's board to approve the formation of an affordable housing collaborative and submit an application for funds.

United Way received one of the grants and was instrumental in convening all the key players in the local community development and housing finance communities to build an effective private-public partnership. United Way made a $150,000 initial commitment, and the partnership secured $120,000 in Community Development Block Grant funds from the city and the county. United Way volunteers Bob Pullo, chairman of the board of York Federal Savings Bank, and Arthur Glatfelter, president, Glatfelter Insurance Group, hosted breakfast and lunch meetings for local corporate leaders to raise funds for the emerging housing partnership effort. They raised $250,000 using the Pennsylvania Neighborhood Assistance Program, a state-sponsored tax credit program, as the vehicle.

The Housing Initiatives Program has the following four goals:

  • To provide ongoing operating support and extensive technical assistance to four CDCs and one housing counseling agency to increase their capacity to develop affordable housing and/or place buyers in homes.
  • To increase the awareness of affordable housing issues in York.
  • To develop a trust fund and financial resources to assist with affordable housing development.
  • To explore affordable housing and community development needs of additional emerging CDCs.
The Housing Initiatives trust fund has allocated approximately $500,000 to various CDCs to facilitate housing developments. The allocations ranged from grants to cover predevelopment expenses to rental subsidies and land banking properties.

"This is a conservative area, where the idea of a broad-based, local partnership strikes a responsive chord. It provides a means by which private-sector leaders can meet with CDCs and government agencies to develop programs specifically focused on this community. This is not a process where someone outside the community tells us what to do and throws money at us," said Kelly Adams, president, Kelly Adams Advertising and current chair of HIC.

Current Status

To broaden its focus and maximize limited financial resources, HIC is planning to expand its technical assistance and developer roles while decreasing the operating support it provides to CDCs. HIC wants to better assist emerging CDCs and other neighborhood-based organizations in moving projects forward.

HIC recognizes that the availability of resources for operating support is diminishing, making it more difficult for emerging CDCs to hire development staff, which is usually part of the a CDC's capacity building requirements. Therefore, HIC is creating an alternative model that will add construction manager and housing development positions to its staff, thus centralizing necessary housing expertise for CDCs. HIC expects that this shift will reduce operating expenses for a number of CDCs and community-based nonprofits. HIC already has one project using this new model: serving as the development staff for ACCESS , a nonprofit organization that provides services to battered women.

Although ACCESS has no development experience and does not plan to make housing development a part of its mission, the organization recently received a grant from HUD to build transitional housing. HIC is helping ACCESS in its contract negotiations with HUD. Subsequently, HIC will select a contractor, help with the design and structure and secure investors. When the transitional housing is completed, ACCESS will own and manage the program and its facility.

Outcomes and Supporting Data
York, Pennsylvania

Community Impact
Quantity
1. Total completed housing units:

a. Rental units
b. Homeownership units
c. New units
d. Rehabbed units

539

229
310
116
423

2. Total $ value of affordable housing development $21.1 million
3. Housing in pre-development 94
4. New funds raised for Housing Initiative $1.8 million
5. Investment-Partnership

a. United Way contribution
b. Investment of other partners
(private, public, philanthropic)



$150,000
$1.089 million
City & County $240,000
Local Corporations $250,000
6. Investment-Real Estate
Loans/grants provided by partnership
for projects
$575,769
7. Public sector investment in neighborhoods $200,000
8. Partnership's operating support to CDCs $1,170,135
9. Funds for technical assistance $100,000
10. Volunteer involvement Pro-bono
Technical Assistance (TA)
400 hours

Source: United Way of America consultant research, 1996.

Leveraging Dollars and Legitimacy—
Memphis, Tennessee

Minnie Peat is an elderly woman living in Memphis who had never owned her own home. However, since United Way of the Mid-South has focused its efforts on community building—and, specifically, affordable housing—Peat and her sister, Ella, were able to pool their pension income and buy one. "I have been living all of these years and never earned enough money to own a home. This is just a blessing," Peat said.

The Peat sisters have one of the total $10 million in mortgages that are available through United Way's HOPE III (Homeownership Opportunities for People Everywhere) grant. HUD awarded the $1 million implementation grant to United Way in February 1994. United Way used the grant to leverage an additional $1.61 million in grant funding from the U.S. Department of Health and Human Services, Tennessee Housing Development Authority, Community Foundation of Greater Memphis and the City Department of Housing and Community Development.

HOPE III builds on and significantly expands United Way's notable involvement in community building and affordable housing. Since 1986, United Way has provided startup funds for new and innovative neighborhood-based programs that address emerging needs through its Avron B. Fogelman Venture Fund program. As United Way staff and volunteers reviewed grant applications from neighborhood associations and CDCs, they concluded that affordable housing was a recurring need in many neighborhoods. They also recognized that CDCs needed assistance developing their capability to address affordable housing needs and development opportunities.

In response, United Way helped CDCs identify their training needs and subsequently contracted with the Development Training Institute in Baltimore to provide systematic training. From 1993-95, approximately 50 people representing 20 CDCs completed the training program.

In late 1992, a group of CDCs asked United Way to be the lead agency in a consortium to apply for a HOPE III planning grant, predecessor to the implementation grant. The bid was successful, and HUD awarded $54,000 to United Way in February 1993.

United Way and CDCs in five neighborhoods, the University of Memphis, Center for Neighborhoods and the Grants Information Center used the planning grant for an extensive study to determine the feasibility of converting government-owned properties into affordable housing for neighborhood residents. The study showed that CDCs could purchase, rehabilitate and sell the homes to low- and moderate-income households profitably. The study also showed that sufficient market existed to sell the rehabilitated homes and support services for low-income home buyers.

United Way again agreed to be the lead agency in applying for the HOPE III implementation grant, and United Way's board allocated $45,000 toward the effort.

HOPE III has given United Way an opportunity to leverage financial resources to support CDCs and affordable housing development in greater Memphis. The grant calls for United Housing—a United Way subsidiary corporation—to purchase, rehabilitate and sell 30 government-owned properties to low- and moderate-income individuals and families. In addition, United Housing agreed to provide training and counseling to perspective home buyers.

United Housing has fulfilled its grant obligations by subcontracting with CDCs. According to Tim Bolding, United Housing's director, "CDCs are used to giving away their services. This program allows them to do their critical work and get paid for it, too."

The response to the program has been overwhelming. Although United Way has done little marketing, word has spread throughout the community, and more than 700 people have gone through their homeowner training program. Reverend Kenneth Robinson, M.D., United Way board member and co-chair of the Housing Committee, attributed the success of the home buyer training to United Way's ". . . connectivity to community-based agencies. We not only have a track record, but we also have a practical pipeline from where home buyers might come."

United Housing also has compiled a variety of grants and mortgage products into a package for low- to moderate-income home buyers. This facet of the program has helped individual home buyers attain mortgage financing and expanded loan opportunities for financial institutions to help meet their Community Reinvestment Act (CRA) requirements. Dorothy Cleaves, community investment coordinator for NationsBank and United Way Housing Committee member, said of HOPE III, "I saw tremendous opportunity for Nations Bank. We have products that fit what United Way was trying to do."

With an abundance of interested and qualified home buyers and the availability of financing, the rehabilitated homes are selling quickly. "We had a contract on the house before the work was completed," said Steve Lockwood, executive director of Valentine Evergreen Community Association CDC and a contractor on one of the HUD homes.

Accomplishments

Fostering Leadership and Diversity. Fostering leadership and diversity is fundamental to how United Way operates. For example, Harry Shaw, United Way's president, meets regularly with African-American pastors to discuss how United Way and churches can work more closely together. Shaw said, "We are trying to sift out what we can do and look at how we can open doors opportunity."

United Way's Venture Fund grants are helping to open those doors with direct grants to neighborhood associations, home buyer training and HOPE III subcontracts to CDCs and small minority entrepreneurs. United Way zealously is pursuing every means possible to support and build the capacity of neighborhood-based leadership and organizations.

Building Community Capacity by Leveraging Resources. United Way has used a variety of means to provide people and neighborhood-based organizations with the tools and resources they need to implement neighborhood-driven housing and economic development programs. Most recently, United Way's participation in HOPE III uncovered yet another avenue to build community capacity. While renovating the HUD houses, United Housing realized there was a problem with lead-based paint in the homes. As a result, United Housing applied for and secured a $500,000 grant from the U.S. Department of Health and Human Services to train and pay welfare recipients to remove lead-based paint in those homes.

United Way support provides legitimacy for neighborhood-based programs and facilitates future fund-raising efforts. Lockwood said, "United Way typically supports experienced organizations. However, it has set up flexible funds that support fledgling organizations. Even at small funding levels, United Way's involvement helps legitimize CDCs."

Promoting Collaboration and Partnership. United Way's community-building efforts have stimulated collaboration among funders and CDCs. The program established around HOPE III has become a collaborative process that uses the particular strengths of the public-, private- and nonprofit-sectors. For example, Charlie Barnett, chief of HUD's Real Estate Owned Sales Branch, said, "The program gives us another vehicle to help put home ownership in reach of more Americans and get rid of properties we own through foreclosures. It makes good business sense for HUD."

United Way has combined various grants and loans from public and private funders to make financing work for low- to moderate-income home buyers. Robinson said, "HOPE III finds those who might be a higher risk without help. It reduces their risk to private financial institutions by providing financial assistance, training and packaging for their mortgages."

HOPE III also relies heavily on United Way's collaboration with nonprofit organizations, in subcontracting and in finding buyers. "One of the things United Way does best is to forge collaboratives. Many of HOPE III's home buyers have been recruited out of churches, as well as from United Way agencies," said Robinson.

Moreover, United Way is facilitating collaboration and partnership among CDCs. Howard Eddings, executive director, Neighborhood Housing Opportunities, said, "In Memphis, United Way has positive name recognition. It has pulled everyone together on neutral turf so we can work together toward a common purpose. United Way has a commitment to make things happen."

Bolding is president of the CDC Council which brings together CDC directors at United Way. Bolding has encouraged the group to consider collectively issues such as identifying specific training needs for CDC staff and how CDCs could secure group health insurance.

Enhancing Corporate Relationships. Bolding said that HOPE III strengthens United Way's workplace connections. For example, many employees working for major corporations in Memphis are long-time United Way donors and may actually qualify for HOPE III homes. This connection to employees enhances United Way's position with individuals as well as corporations. In addition, HOPE III's use of private lending institutions builds yet another connection to United Way. When Bolding made his presentation to the management at NationsBank for the annual campaign, he reminded them that the bank had already originated three mortgages for HOPE III low-income home buyers with more buyers on the way.

How Did These Accomplishments Happen?

When United Way's board established the Avron B. Fogelman Venture Fund program in 1986, no one could have imagined the opportunities it would bring. The board thought it would provide support to non-member agencies and test new strategies in social service delivery. The board had not predetermined the approach the fund should take, save this broad parameter.

Venture Fund Committee volunteers, including Bolding, encouraged the full committee to fund neighborhood-based efforts. Memphis has a strong tradition of neighborhood identity and of convening residents around issues that affect them. Particularly in African-American neighborhoods, residents historically formed block clubs, social clubs and political organizations. These organizations gave birth to neighborhood associations and, most recently, to CDCs. Venture Fund volunteers subsequently decided priority should be given to programs that use neighborhood associations and CDCs in policy- and decision making.

Since its inception, the Venture Fund has made grants totaling approximately $1.5 million, with annual allocations averaging about $170,000. The grants provide venture capital for new efforts that, by their nature, typically have difficulty securing funds. For example, the Venture Fund made a $10,000 grant in 1988 to the Church Health Center, a church-based health-care program to deliver medical services at minimal cost to uninsured, working poor individuals. Health-care professionals donate their time and resources; pharmaceutical companies donate their products.

Today, the program is considered a national model. People from across the country come to learn about the operation, so they can replicate it in other cities. The program had a 1995 operating budget of more than $2 million and serves more than 20,000 people per year.

Economic development has become one of the Venture Fund's top priorities. In 1995, more than 60 percent of the grants supported community and economic development projects, up from approximately 40 percent in 1994.

Airways-Lamar Business Association's Industrial Initiative is one of the economic development projects receiving Venture Grant funds. This association, an outgrowth of the Bethel Grove Community Organization, aims to promote a healthy business environment and facilitate growth in the Airways Road, Lamar Avenue and Park Avenue business and industrial corridor. Its members include a cross-section of more than 45 organizations who are stakeholders in the area. They range from Kelloggs to the Methodist Renewal Center. Because the U.S. Department of Defense announced that it will close a distribution depot within its boundaries, the industrial initiative is exploring redevelopment opportunities.

In 1995, the mayors of Memphis and Shelby County appointed a 30-member board to develop a Memphis 2005 plan, including potential civilian uses for the defense depot. "The mayors' board and the Airways-Lamar Business Association have almost identical recommendations," said Regina Walker, United Way's vice president of Community Initiatives.

United Way also collaborates with other funders in the Neighborhood Small Grants program, which is comprised of the Charles Stewart Mott Foundation, the Community Foundation of Greater Memphis, the City of Memphis and United Way. United Way contributes $40,000 annually to the $120,000 grants program, and the Venture Fund Committee serves as the grant review body for the fund.

Current Status

HOPE III is the most ambitious aspect of United Way's community-building and affordable housing efforts to date. To continue the momentum generated from the first implementation grant, United Way joined with Shelby County's Housing Department to apply for a second round of funding.

The application resulted in a 1995 HUD grant of $500,000. With this grant, United Housing will draw on the county's expertise to oversee activities such as home inspections and construction management. Also, United Housing's geographic focus will expand to encompass the whole county in addition to its current focus on the City of Memphis.

Outcomes and Supporting Data
Memphis, Tennessee

Community Impact
Quantity
1. Total completed housing units*:

a. Homeownership units
b. Rehabbed units

26

26
26

2. Total $ value of affordable housing development $1.2 million
3. Housing units under construction 4
4. United Way contribution to United Housing $45,000
5. Other grant funds received for United Housing $2.61 million
6. Development Training for CDCs

a. United Way investment
b. City & local banks



$20,000
$45,500
7. Technical Assistance Pool $24,000 annually
8. United Way Venture Fund $1.5 million total
$170,000 annually
9. Neighborhood Small Grants program $120,000 annually

Source: United Way of America consultant research, 1996.

*The number of housing units from the United Way in Memphis reflects only the units produced that relate to the HOPE III project for which its subsidiary corporation United Housing, Inc. is directly responsible.

Starting a Community Development Industry—
Houston, Texas

For one 17-year-old resident of a poverty-stricken Houston neighborhood, "building community" is a personal and deeply understood experience. His family was living in a dilapidated apartment and, as a gang member, he had fallen victim to a drive-by shooting. However, through efforts of an affordable housing partnership, he and his family moved into a home that accommodates his physical needs and supports his human needs. He has left the gang and is studying for his general equivalency diploma (GED). He has applied for an AmeriCorps position and wants to tutor children in his neighborhood. He has chartered a constructive future for himself.

This success story is one of many that United Way of the Texas Gulf Coast can tell about local affordable housing efforts in Houston. One of the Sun Belt's shining stars, Houston experienced explosive population and employment growth in the 1970s and early 1980s. Thousands migrated here, and private developers built a gleaming downtown and several planned communities on Houston's outskirts. In the best of times, economic activity did not benefit inner-city neighborhoods. When the bottom fell out of Houston's economy, homelessness and other human needs multiplied.

In 1988, staff and volunteers at United Way recognized that affordable housing was a critical community need. They believed that working through nonprofit, community-based housing developers (CDCs) held great promise. As a result, United Way helped convene New Foundations, Inc., a public-private housing collaborative, to build CDC capacity. This pioneering effort was risky because no CDCs were developing affordable housing in Houston at that time.

New Foundations focused on the following areas:

  • Providing technical assistance.

  • Creating a stable base of operating support and project financing.

  • Leveraging additional public and private resources.

Eight years later, Judith Craven, United Way's president, said their initial contribution was "the best investment we ever made." As of 1995, Houston has 40 CDCs that have produced 1,200 units of affordable housing and renovated 40,000 square feet of commercial space. Moreover, New Foundations used United Way's initial investment and a $100,000 grant from United Way of America to leverage $1 million in operating support, $2 million in recoverable grants and loans from LISC and $10 million from the National Equity Fund.

Stemming from the affordable housing effort is the broader transformation that occurs as residents and stakeholders rediscover hope and facilitate further self-help efforts. For example, residents take more interest in painting their houses, landscaping and initiating neighborhood clean-ups.

In one neighborhood, businesses are moving into the neighborhood again and finding it highly profitable. Overwhelming support from the local Fifth Ward and Denver Harbor communities has made their new Texas Commerce branch office its most successful branch. In the bank's first two years of operation, deposits and loans totaled $13.7 million and $8.2 million, respectively. Bank officials say they open new checking and savings accounts every day and operate one of Texas Commerce's five busiest local automatic teller machines.

Houston's experience demonstrates the winning combination of public, private and philanthropic funders joining forces with neighborhoods to work for lasting change. Gerald Smith, principal of Smith, Graham and Co., and the original chairperson for New Foundations, said, "Although United Way did not have all the expertise, it had the credibility to bring all the players together. United Way's support for CDCs is helping them rebuild decaying neighborhoods and serve as a prevention strategy. This is what United Way is all about—empowering people to care for one another."

Accomplishments

Building Community Capacity. By today's standards, it is hard to believe that just seven years ago, no CDCs existed in Houston. New Foundations, which became New Foundations for Neighborhoods (NFN), legitimized the concept of neighborhood-based development and built CDC capacity to a level where they can secure considerable outside resources. For example, the Fifth Ward Community Redevelopment Corporation (FWCRC) used the $120,000 it received from NFN to leverage an additional $186,000 in operating support, including $25,000 in donations from neighborhood residents; $25.3 million in project financing; land donations valued at $170,000 and a development fund of $525,000. Fifth Ward's development activities have produced $345,000 in organizational revenue.

Another example is the Tejano Center for Community Concerns, an emerging CDC incorporated in 1994, which planned, developed and pre-sold 10 single-family homes in approximately six months. This accomplishment is nothing short of amazing for a novice organization. Part of Tejano's success was due to the technical assistance and informal deal facilitation NFN provided.

The Tejano Center serves Port Houston, a primarily Latino neighborhood in Houston's East End, which has a poverty rate of approximately 98 percent. Before Tejano, the neighborhood had not enjoyed new housing for more than 50 years. Richard Farias, Tejano's executive director said, "Many of the families pay exorbitant rents to live in overcrowded and dilapidated housing. Now, for the first time, low-income families in our neighborhood have the opportunity to take part in the American way-of-life." These new homeowners work hard, set priorities for their lives and are frugal. A noteworthy fact is that 12 of Tejano's first 20 applicants qualified for a mortgage offered through a private lender, a rate that defies the national 1-to-10 average for such projects.

Enhancing Volunteerism. For several volunteers, NFN was the first time they had been part of a United Way initiative. Two such volunteers are John Walsh, president of Friendswood Development Corporation and the Reverend Harvey Clemons, pastor of Pleasant Hill Baptist Church and president of FWCRC. Walsh has served on NFN's advisory committee for more than seven years, personally mentoring CDC directors to cultivate their real estate development skills. Clemons, president of FWCRC since 1989, joined the NFN advisory committee in 1992 and has since participated on numerous United Way task forces. Such volunteers provided United Way with a stronger connection to neighborhoods and a broader understanding of community.

Emphasizing Prevention Strategies. To heighten community awareness and raise funds for homelessness programs, United Way helped form the "Campaign for the Homelessness," a collaborative with local churches. In its first year, the campaign raised approximately $1 million. They also leveraged the donated services of McKinsey & Company, a local consultant, to study the factors leading to homelessness.

McKinsey found that 10,000 people were homeless on any given night, with an additional 250,000 people temporarily living with relatives or friends. Such findings helped United Way recognize the need for long-term solutions, especially in the affordable housing area.

Since the early 1980s, the Houston Committee for Private Sector Initiatives (PSI) had been exploring how it could work with low-income neighborhoods to stimulate urban revitalization. PSI looked nationwide for models that integrated compassion and sound business principles and discovered the merits of working with CDCs.

PSI talked with representatives from the LISC about building CDC capacity in Houston. In 1985, PSI became the local sponsor for LISC and raised $425,000. LISC matched this amount and agreed to provide technical assistance to nonprofit housing organizations and social service agencies interested in undertaking affordable housing development. Two years later, United Way joined with PSI and LISC in supporting CDC capacity-building efforts and New Foundations for Neighborhoods (NFN) was born.

"PSI recognized United Way would broaden the base of support for CDCs in Houston and provide a mechanism by which they could receive ongoing operating support," said Jeff Baloutine, former program manager for Housing and Neighborhood Revitalization at PSI and now vice president for Community Reinvestment at Bank United.

Influencing Public Policy. Although private funding increased, emerging CDCs remained fragile. In the summer of 1990, they faced a major hurdle that threatened the viability of their first projects and their existence. Several CDCs planned to build single-family homes for low- and moderate-income home buyers. The linchpin to secure private financing and keep the homes affordable was the availability of mortgage subsidies; however, the City of Houston's 1991 Community Development Block Grant budget did not include such subsidies.

The combined efforts of United Way, PSI, LISC and the emerging CDCs convinced the city to commit $500,000 to mortgage subsidies so that CDCs could move forward. The newly formed Fifth Ward Community Redevelopment Corporation (FWCRC), which received $450,000 under this city program, leveraged $1.5 million of line-of-credit from Bank United. As a result of such leveraging, FWCRC constructed 30 single-family homes and provided $20,000 mortgage subsidies—$15,000 from the city and $5,000 from the Federal Home Loan Bank—to individual home buyers earning as little as $13,500 annually.

FWCRC's success resulted in numerous spin-off benefits. One benefit was that FWCRC served as a catalyst for more neighborhood redevelopment. As general contractor for the home construction, FWCRC employed 14 minority subcontractors, including nine from the neighborhood. For every newly constructed unit, they rehabilitated two other neighborhood homes. Another benefit was that this project demonstrated FWCRC's legitimacy and, by association, the legitimacy of other CDCs. To date, FWCRC has produced 476 housing units that total $25.4 million.

Current Status

One result of NFN's efforts is that FWCRC's experience is being multiplied across the region. Marshall Tyndall, NFN's director and former executive vice president of Texas Commerce Bank, described the partnership as "a greenhouse that will assist CDCs in qualifying for other sources of funding and demonstrating community impact."

Now NFN has stopped its initial practice of providing operating support and is assisting CDCs in securing other financing sources. NFN has provided $2 million in recoverable loans for CDC real estate development, with half of the funds raised locally from corporate donors and foundations and the other half procured from the national LISC office in New York.

Although financial resources for community development are more readily available, NFN recognizes that financing is only part of what will make community developers successful. Therefore, NFN now concentrates on providing technical assistance and training to improve and enhance CDCs' internal development and project-related expertise. In the last 12 months, 23 CDC project coordinators have received extensive capacity-building and affordable housing project training from NFN. In addition, NFN has used United Way's Management Assistance program to provide training and consulting that help increase CDCs' management capacity.

Finally, NFN has helped develop a variety of new opportunities and partnerships for CDCs. Its most recent venture is a resource team helping CDCs that want to develop agribusinesses. The five diverse CDCs participating range from Exceleco CDC, which serves a semi-rural area and has a 90 acre farm, to Chinatown CDC, which is seeking to develop a farmer's market for retail produce sale. Tyndall said, "The CDCs are realizing that instead of fighting for their slice of the pie, if they work together—one producing food, another buying the raw produce and processing it, another providing a means of distributing the raw and processed food—there is a real opportunity to make the pie bigger and so everyone benefits."

Another noteworthy development is the expanded role United Way enjoys as a trusted convener and consensus builder. In 1994, the mayor's office asked Craven to serve on the steering committee for Houston's Empowerment Zone application. Craven also co-chaired the Human Development Committee, for which United Way convened diverse stakeholders to develop a strategic vision and guiding principles for the Houston Empowerment Zone.

In 1995, Houston received an Urban Enhanced Enterprise Community Grant and an Economic Development Grant, which represents nearly $25 million, as well as $175 million in economic development loan funds.

Outcomes and Supporting Data
Houston, Texas

Community Impact
Quantity
1. New CDCs 40
2. Total completed housing units 1,2000
3. Square feet of commercial space 40,000 sq. ft.
4. Investment-Partnership

a. Local United Way contribution
United Way of America
b. Leveraged Operating Support
c. Recoverable Grants and Loans
d. Investment Equity



$50,000
$100,000
$1 million
$2 million
National Equity Fund
$10 million

Source: United Way of America consultant research, 1996.

Funding Community Development Corporations—
Chicago, Illinois

United Way of Chicago's Housing Initiative follows the rich tradition of neighborhood-based settlement programs that have helped economically disadvantaged Chicagoans since the late 1800s.

Seven years ago, with a $100,000 challenge grant from United Way of America and the Ford Foundation, United Way began promoting the long-term viability of CDCs. In total, 11 CDCs have received $4 million, making United Way the fourth largest funder of CDCs in Illinois. Since then, United Way has made 11 CDCs and two umbrella organizations permanent member agencies and is help ing two additional CDCs make the transition to membership. Also, United Way has added affordable housing to its list of 17 routinely-funded service areas.

Besides financial support, United Way committed in 1993 to be "a focal point for efforts to expand the availability of housing for those in need," according to Beverly Huckman, consultant for McCormick Barron & Associates and former chair for the Housing Initiative. "The affordable housing commitment was a springboard for United Way to dive into community building." It also is the first issue around which United Way has convened a public-private partnership.

United Way began implementing its expanded affordable housing vision in July 1994 with a $150,000 challenge grant from the John D. and Catherine T. MacArthur Foundation. Susan Motley, program officer at the MacArthur Foundation, said, "We have a history of working with CDCs and we recognize that institutional support for these organizations is important." Besides the MacArthur Foundation grant, Continental Bank (now Bank of America), Harris Bank, LaSalle National Bank and Northern Trust each gave $10,000 to cover United Way's administrative costs.

Continental Bank (now Bank of America) helped secure funding from other banks, a process that started with an informational breakfast that included representatives from five of Chicago's largest banks. Julie Chavez, a mem ber of the Housing Initiative Committee and executive director of what was then the Continental Bank Foundation, said, "Our bank is committed to supporting affordable housing, and United Way has a strong history of working with nonprofits, not only in terms of operating support, but also in providing technical assistance in organizational management."

To meet the MacArthur grant requirements, the Housing Initiative reached out to a number of smaller lending institutions. In the spring of 1996, the following institutions committed from $1,000 to $2,000 over a two year period: Argo Federal Savings, Avondale Bank, Bell Federal, Pioneer Bank, Standard Federal and St. Paul Federal.

The Housing Initiative's first project helps blend services offered by CDCs and social service agencies located in the same neighborhoods. Historically, these organizations have worked in isolation while social problems overwhelmed their neighborhoods. The Housing Initiative Committee concluded that a collaborative effort could improve the delivery of all United Way-supported services within community settings.

In its first year, the collaborative established a demonstration program and selected three community pilot areas. It is encouraging United Way-affiliated CDCs and social service agencies to develop innovative working relationships using referrals, service agreements and joint ventures. "United Way is looking at its strengths on the service side and asking how we can make that benefit CDCs," said Mike Rohrbeck, executive director of People's ReInvestment and Development Effort (PRIDE) and member of United Way's Housing Initiative Committee.

Accomplishments

Building Capacity. United Way's support of CDCs grew out of efforts by LISC and MacArthur Foundation. In 1988, the MacArthur Foundation awarded a $11.3 million grant to the Chicago LISC to create the Fund for Community Development (FCD). This fund provided $50,000 in annual operating support, as well as substantial technical and management assistance, to 15 CDCs over a five-year period. The program's overall goal was to help CDCs become stronger, more self-sufficient organizations by the end of the grant period.

During the first phase of the Housing Initiative, the combined efforts of LISC, MacArthur Foundation and United Way followed the example set by the FCD program. They helped participating CDCs become stronger and accomplish their missions more effectively. Between 1988 and 1995, participating CDCs produced 3,679 units of housing, valued at more than $221 million, and 160,733 square feet of commercial space, valued at more than $30 million. Compared to the eight years before the start of the FCD program, affordable housing production and commercial development increased 2.5 and 1.9 times, respectively.

Furthermore, the collaborative's efforts are helping CDCs in their community rebuilding efforts. For example, Lawndale Christian Community Development Corporation (LCDC), a separately incorporated extension of Lawndale Community Church, entered into neighborhood revitalization by rehabilitating and selling single-family homes. This strategy remains one of LCDC's primary redevelopment tools as it provides resident ownership and decent rental opportunities. Richard Townsell, LCDC's executive director, calls the rental units "incubators for homeownership" because many renters eventually purchase homes in Lawndale.

The combined technical assistance and financial support from FCD and United Way have helped LCDC develop a strategic plan. As a result of the plan, LCDC has expanded its activities—assembling vacant land for commercial development and undertaking new construction and multi-family rentals. For example, in November 1995, the highly acclaimed Lou Malnati's Pizzeria opened a store in Lawadale.

As LISC built CDC expertise in developing affordable housing, United Way helped build their organizational structures and carry on the provision of operating support. "One of the things I came to value was the rigor with which United Way looks at organizational management and finance. Take CDC boards, for example. United Way has high expectations of how they operate. I have come to believe that CDCs need to be pushed to adopt board structures that have more depth and expertise," said Tom Lenz, former LISC program director and Fellow at the University of Illinois at Chicago's Great Cities Institute.

A specific change that PRIDE made to conform with United Way membership standards involved adjusting its method of financial reporting. Rohrbeck said that although the change was painful, PRIDE operates more effectively and its new financial statements enhance communications with potential funders.

The ongoing operating support that FCD and United Way provide gives CDCs a base of flexible support that allows them to continue making programmatic decisions based on community identified and board directed needs and priorities. Funding from almost every other source is for a specified period of time, sometimes as short as one year. Also, such funding typically is tied to production or to limited program objectives. "The fact that United Way provides secure operating support allows us to concentrate more fully on the work we do. The organization is held accountable, as long as the work is being done," said Raul Romundo, executive director of The Resurrection Project, a church- and community-based organization serving a largely Hispanic Chicago neighborhood.

Promoting Collaboration and Partnership. The Housing Initiative Committee promotes collaboration and partnership on two levels. On one level, the committee draws on the collective wisdom and resources of public, private and philanthropic funders, as well as the CDCs. The process gives participants "a chance to hear and see what is going on in the city. People around the table are not sitting in judgment; it is an effective problem -solving environment," said Motley.

On another level, the initiative promotes collaboration among CDCs and social service agencies within a given neighborhood. Although originally perceived as a barrier to collaboration, the separate spheres in which social service agencies and CDCs tend to operate are creating rich opportunities for innovation. "We are finding many new and fresh areas to share," said Valerie Leon, family support coordinator at PRIDE. For example, PRIDE and the YMCA found a way to collaborate on the Y-administered Illinois Department of Family Services' Urban-Siblings Program, which keeps siblings together while they live in foster homes. When the YMCA could not find homes with enough space for large households, even with the program's rent subsidy, PRIDE realized that the vacant units in some of their buildings could be used.

Collaboration and partnership benefit the community and United Way. "Bringing people into partnership energizes the organization. Coherent, well-defined efforts in a particular area help volunteers and outside contributors better understand what we are doing and get excited," said Roger Fox, United Way's acting president.

Fostering Leadership and Diversity. United Way's involvement in housing has brought new volunteers into the organization. For example, the Membership Committee added Sonya Melinda, first deputy director for the city's Department of Housing, and Mike Mitchell, program officer with the Federal Home Loan Bank, because of their housing expertise.

Also, the Housing Initiative Program allows United Way to establish relationships and learn from a number of neighborhood leaders, such as Juan Rivera, executive director of Latin United Community Housing Association, and Paul Roldan, executive director of Hispanic Housing Development Corporation.

Building Consensus to Facilitate Systems Change. Like most United Ways, Chicago's Crusade funds agencies within given service areas. However, the neighborhood-based character of the CDC affiliates and the collaborative effort promoted by the Housing Initiative are erasing boundaries. The service-blending project could have "a major impact on how United Way operates in the future. The more we try to bring agencies together in a particular neighborhood, the more effective they will be in meeting the multi-faceted needs in the community. No one is better positioned to try to bring together resources from all various sources than United Way," said Huckman.

In addition, the Housing Initiative is using its neutral convener status to address looming affordable housing and property management issues. When two CDC directors asked the committee to examine property management issues, members realized that significant systemic changes needed to occur for CDC affordable housing development to have a healthy future in Chicago.

Their two-pronged approach included a "best practices" report, which addressed issues such as staffing, rent collection and evictions. It also included a series of recommendations to address problems in affordable housing property management. The recommendations fall into three categories: (1) preventing potential property management problems during the project's planning stage, (2) professionalizing property management and (3) involving residents.

The recommendations are not aimed at one entity nor at one group of entities. Some call for new resources or the realignment of current resources. Others call for program implementation that, while not costing money, will challenge the status quo.

In February 1996, the Housing Initiative convened the major players in Chicago's affordable housing arena to critique strategies, modify them and produce implementation steps. The meeting included 62 participants from upper-level management in the affordable housing industry to property managers, lending institutions, LISC, human service agencies and city, state and federal governments.

Broadening the Base of Support for CDCs and Affordable Housing. United Way's decision to add affordable housing to its list of service areas eligible for funding has "drawn attention to affordable housing needs and made it acceptable for other funders to give to housing," said Jack Markowski, deputy commissioner for the city's Department of Housing. It also opened the door for broader United Way support. For example, two housing umbrella organizations became United Way member agencies because affordable housing was named an eligible service area. Furthermore, community development priority grant funding has been used to support affordable housing issues, such as preserving the Department of Housing and Urban Development (HUD) assisted housing, developing cooperative housing and improving low-income property management.

How Did These Accomplishments Happen?

The "Windy City" of Chicago is well known as an international financial and industrial center; it is less known for its precedent-setting, neighborhood-based self-help efforts. In the late 1800s and early 1900s, Chicago was a leader in the development of neighborhood settlement houses. From Hull House to Chicago's Back of the Yards, neighborhood organizations proliferated. Then, in the 1970s, a resident of South Austin on Chicago's west side became concerned about "block-busting", in which absentee landlords "milked" buildings and deferred maintenance to buy and/or rehabilitate single-family homes. Her organizing efforts led to the passage of the Community Reinvestment Act (CRA).

Chicago has some of the country's most advanced CDCs, the latest iteration of neighborhood-based, self-help organizations. One example, Bethel New Life, which grew out of Bethel Lutheran Church, has produced more than 900 housing units valued at $36.5 million and developed more than 21,000 square feet of commercial space valued at nearly $16 million. Other examples include PRIDE and Lakefront SRO (single room ocupancy), which have developed 349 and 616 units of housing, respectively.

After LISC, MacArthur Foundation and United Way joined affordable housing forces, they realized that even the most advanced CDCs with extensive track records could not sustain their operations on developer fees alone. The CDCs needed a certain level of ongoing operating support, which is difficult for CDCs to raise. United Way decided to fill that void.

In 1989, United Way committed to accept into membership within the next six years up to 15 FCD supported CDCs that met membership requirements. Furthermore, United Way committed to provide interim funding and help the CDCs, as necessary, make the transition.

The Housing Initiative Committee facilitated that transition. With members from the Evaluation and Priority Grants and Membership committees, the housing group became a forum for building understanding between United Way and the CDCs and finding creative solutions to diffculties as they arose.

Although the primary emphasis was on helping CDCs conform to membership standards, United Way also modified its standards without compromising their integrity. For example, as real estate developers without liquid assets, CDCs could not meet United Way's requirement that member agencies not have a fund balance of more than 50 percent of their total budgets. Therefore, United Way modified this standard to accommodate CDC programmatic needs.

To date, United Way has accepted as members 11 FCD supported CDCs and two umbrella organizations that work to strengthen CDCs—Chicago Rehab Network and The Leadership Council for Metropolitan Open Communities.

Current Status

On March 17, 1993, United Way's board adopted a mission statement that expands the Housing Initative's role and brings United Way's expertise and influence to bear as a convener, legitimizer and leverager of resources to support community development.

Today, United Way is creating opportunities to inform donors about the housing collaborative and build future support. For example, United Way scheduled collaborative participants to make presentations at The Donor's Forum, a meeting for private funders, including philanthropists, foundations and United Way. Additionally, United Way is encouraging collaborative participants to submit proposals for United Way priority grants.

Outcomes and Supporting Data
Chicago, Illinois

Community Impact
Quantity
1. Total completed housing units:

a. Rental units
b. Homeownership units
c. Co-op units
d. New units
e. Rehabbed units

3,679

3,312
204
163
389
3,290

2. Total $ value of affordable housing development $221,073,777
3. Square feet of commercial space 160,733 sq. ft.
4. Total $ value of commercial development $30,041,649
5. Investment-Partnership

a. United Way contribution for core
operating support
b. Investment of other partners
(private, public and philanthropic)



$4 million*

UWA—$100,000
Foundations—$190,000

6. Partnership's use of other resources
to support CDCs

a. Funds for TA

b. Other funds

CDCs eligible for all TA services
through United Way Chicago and TA through LISC
United Way Chicago Priority grants

Source: United Way of America consultant research, 1996.

*United Way support supplemented and expanded on an $11.3 million investment from the MacArthur Foundation. United Way transitioned CDCs from MacArthur support to United Way support that will continue over time.

Index

Foreword
Acknowledgments
Introduction
United Way's Growing Suport for Housing and Community Development

Boston, Massachusetts—
The Model: A Shot Heard 'Round the World

York, Pennsylvania—
Small Cities Have Neighborhoods, Too

Memphis, Tennessee—
Leveraging Dollars and Legitimacy

Houston, Texas—
Starting a Community Development Industry

Chicago, Illinois——
Funding Community Development Corporations

Providence, Rhode Island—
Self-Sufficiency Through Community Economic Development

Denver, Colorado—
Strength in Partnership: Convening Is Key

Strategies for Success
Lessons Learned
List of Acronyms

Back to Community Index