At a time of dwindling federal support for cities, seven foundations and one insurance company have bet $62.5 million on community development groups to rebuild and upgrade neighborhoods. The new mechanisms will lure another $100 million in previously unavailable Federal Home Loan Mortgage Corp. (Freddie Mac) money and give low-income housing access to capital markets.
The National Community Development Initiative (NCDI) puts the Rockefeller Foundation, Lilly Endowment, Hewlett Foundation, Knight Foundation, Pew Charitable Trusts, MacArthur Foundation, Surdna Foundation and the Prudential behind a concept pioneered by the Ford Foundation.
The idea is to bring capital to community development corporations that spring up, often covering a few blocks, to build housing or commercial development, usually with an increase in neighborhood security, maintenance and improvement. This will happen through two groups that already aid grass-roots efforts, the Local Initiatives Support Corp. and James Rouse's Enterprise Foundation.
The new initiative puts major capital into an entity designed to give community groups access to financing. Community development corporations then will be offered credit support for mortgage loans that Freddie Mac will purchase with the backing of conservative investors.
The initiative, in other words, creates a giant capital pipeline to pump money into urban community development groups that often succeed because they are small, intimate, locally savvy and highly motivated. This should help compensate for the reluctance of financial institutions to lend in poor or fragile neighborhoods.
Baltimore is one of 20 cities singled out for backing, with a core amount of $1.35 million. The national stake in inner-city revival is obvious. Half of all Americans live in major metropolitan areas. These areas will not flourish if the core deteriorates. That is reason enough for this effort by the philanthropic and private sectors. Community development corporations have been one of the few bright spots in the urban renewal arena. Through this program, these groups will have a chance to get in the lending institution's door.