There is no standard definition of community economic developmen

There is no standard definition of community economic
development (CED). From theoretical and practical
perspectives, CED has been commonly described as a
quintessentially local project, one in which communities
reconstruct dysfunctional markets as a way of reconstituting
social relations and building political strength. As social policy,
CED emphasizes local participation in the design and
implementation of affordable housing, job creation, and
financing programs. Regardless of its characterizations, the
modern CED movement is making strides to revitalize both
urban and rural communities. Significantly, community lawyers
and others specializing in CED have worked in partnership with
community organizers and other advocates. The Civil Rights
era, from the 1950s to the 1970s, is another important juncture
in the CED movement. Community organizations and
community development corporations act as financial
intermediaries, providing technical assistance to local
entrepreneurs and developing shopping centers, supermarkets,
and other real estate projects. The history of CED is the history
of social movements.
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Introduction: What Is CED?
There is no standard definition of community economic
development (CED). It has been described as a strategy that
includes a wide range of economic activities and programs for
developing low-income communities such as affordable housing

and small business development
from creation and expansion of neighborhood businesses to
larger commercial and retail services - and job creation, some of
which has been accomplished by financing and operating
shopping centers, industrial parks, retail franchises, and other
small businesses. CED also includes many other initiatives and
services to fight homelessness, lack of jobs, drug abuse,
violence and crime,1 and to provide quality child care and
medical care as well as homeownership opportunities.2
As a concept, economic development emerged in response to
tenacious poverty and the need for affordable housing, good
jobs, affordable health care, and other quality-of-life matters
needed for human existence. CED is broader than economic
development because it includes community building and the
improvement of community life beyond the purely economic.3
From theoretical and practical perspectives, CED "has been
commonly described as a quintessentially local project, one in
which communities reconstruct dysfunctional markets as a way
of reconstituting social relations and building political strength.
As social policy, CED emphasizes local participation in the
design and implementation of affordable housing, job creation,
and financing programs."4
Regardless of its characterizations, the modern CED movement
is making strides to revitalize both urban and rural
communities. Community development corporations (CDCs)
have been reported to be the largest producers of affordable
housing in the United States.5 At the same time, "for a field that
performs a significant function in our society, we do not have
much information regarding the important aspects of how it
functions."6 Moreover, "[rjecent community development
research explains that this lack of empirical knowledge is a by-
product of a field that is more art than science."7 And, today,

the industry is experiencing a number of challenges - a human
capital crisis that limits its organizational capacity; an aging
leadership; and pressure on CDCs to expand their reach while
responding to the demands of funders, intermediaries, and
neighborhood residents faster than they can respond. Many
industry observers view community organizing as the primary
hope for community revitalization nationwide.8
CED emerged in the 1960s in response to calls by activists in
lowincome communities to incorporate local residents into the
process of revitalizing their own communities. Supported
primarily by the federal government and the Ford Foundation,
the movement expanded in the 1970s to address further
deterioration of urban and rural communities. The
deindustrialization of the 1970s and 1980s intensified public
antipoverty and social welfare efforts, and community
organizations became the major vehicles for delivery of housing
and job programs in lowincome communities. The 1990s
ushered in the demise of welfare, devolution from federal to
state government, and a public policy emphasis on economic
self-sufficiency.9
While early legal representation focused primarily on such
activities as workforce development, business development,
manufacturing, and commercial and retail services, legal
advocacy expanded to embrace the creation of affordable
housing as well as microenterprises and worker-owned
cooperatives, affordable child care and health care, and the
creation of community development banks and credit unions.
Market-based CED initiatives such as the Low Income Housing
Tax Credit Program have spurred new programs such as the
New Markets Tax Credit, one of the most recent economic
development initiatives designed to stimulate investments in
low-income rural and urban communities from commercial real
estate to small business development using tax credits. At the
same time, CED advocates promote economic justice tools such

as living wages; equitable development; sector employment
intervention; and other income and asset accumulation and
wealth-building strategies, including individual development
accounts. The contemporary CED movement also highlights
human capital development; the importance of social networks;
and creative, environmentally prudent employment options such
as green jobs.
Throughout the evolution of the CED movement, lawyers have
worked with community residents to provide a wide range of
legal services from forming corporations for CDCs to serving as
general counsel for public and private affordable housing
developers. Significantly, community lawyers and others
specializing in CED have worked in partnership with
community organizers and other advocates.
A traditional discussion of the CED movement begins with the
redevelopment and community action programs of the 1960s,
but that discussion provides an inadequate account of CED in
the historical record. Similarly, conventional critiques of CED
fault the implementation of federal antipoverty programs for
narrowly excluding community input and, hence, undermining
community control.10 In this chapter, we place CED within a
larger historical, political, and social-struggle framework.
The Pre-Civil Rights Era
The concept of CED had its roots early in thel900s in the
notorious historical dialogue between Booker T. Washington
and WE. B. DuBois over the best way to achieve economic and
political power for newly emancipated African American slaves.
Washington, the founder of the famed Tuskegee Institute,
advocated an economic nationalist perspective urging blacks to
seek economic self-sufficiency, deemphasizing civil rights and
social equality. Arguing that black advancement would be
created through programs of industrial training and

entrepreneurship, along with pragmatic political views of the
existing legal and social order of the day he advocated the
importance of hard work, industry, thrift, and property
ownership. To implement these views, Washington instituted a
rigorous curriculum of vocational skills training in trades that
he believed would result in black wealth accumulation. He
established and presided over the National Business League,
promoting black business networks to support black enterprise
and organized "buy black" campaigns and counseling services to
help black-owned small businesses. Washington's overarching
goal was to build a viable black economic infrastructure as a
foundation for political and civil rights.11
Publicly rejecting Washington's strategy, DuBois became most
prominently associated with the ideas of cultivating college-
educated black leaders, the "Talented Tenth," to lead the charge
for racial equality. But basically, DuBois and Washington had
very similar views on the importance of economic independence
and black entrepreneurship. Later in his career, DuBois
advocated black economic development and the importance of
strong black communities in America and proposed the
organization of black-owned business cooperatives. Although
Washington is best remembered as the forefather of market-
based economic nationalism to uplift blacks, in reality,
Washington and Dubois both advocated the importance of black
business creation and expansion.12
Civil rights activism was also shaped in the 1920s by Marcus
Garvey leader of the United Negro Improvement Association
(UNIA), who advocated a "back to Africa" migration of blacks
and independence from white control through expansion of
black businesses and the creation of UNIA cooperatives. Black
business development continued to be a central tenet of other
groups, such as National Urban League created in 1920(13) and
the Nation of Islam established in the early 1930s.14 Economic
nationalist principles continue to be espoused today by many

other activists and scholars. Significantly, economic
development public policy decisions continue to be based on
nationalist assumptions about the importance of creating viable
market-based structures in communities based on geography and
homogenous neighborhoods.
The Civil Rights Era
The Civil Rights era, from the 1950s to the 1970s, is another
important juncture in the CED movement.15 Although economic
nationalism remained an important component of the movement,
the 1960s marked the advent of mass-based direct action,
grassroots campaigns to achieve legal equality and political
enfranchisement. This period reflected the complementary goals
of civil rights activism and large-scale political strategies,
which embraced local economic realities, to redress inequality.
Notwithstanding the success of the civil rights movement, by
the mid1960s many civil rights activists were dissatisfied with
the "mainstream integrationist strategies" that they perceived as
benefiting the black middle class and inadequately addressing
the needs of poor citizens.16 In response to this growing
dissatisfaction, civil rights organizations such as the South
Christian Leadership Conference (SCLC) devised strategies to
explicitly address economic disadvantage.17 To illustrate, in
addition to struggling for political equality in the South, SCLC
advocated for better economic conditions in urban ghettos. In
1968, Dr. Martin Luther King Jr. launched the Poor Peoples
Movement, a hallmark of SCLC's strategy. Dr. King demanded
an economic bill of rights, including full employment, decent
pay and housing. Other civil rights organizations, such as the
Congress of Racial Equality (CORE) started in 1942(18) and the
Student Nonviolent Coordinating Committee, which operated
from 1960 to 1966,19 also incorporated economic issues into
their missions.

As a direct result of grassroots attention to poverty and
inequality, the federal government began social policy programs
that created the foundation for the CED movement. Although
urban renewal initiatives had taken place in earlier decades, the
1950s and 1960s ushered in specific policy frameworks targeted
at geographically defined communities, aimed to redress
concentrated poverty and urban disinvestment.20
The federal government's neighborhood-based approach was
inspired by Ford Foundation programs, specifically, the
Mobilization for Youth in New York City and the Gray Areas
Project in New Haven, Connecticut. Created in the early 1960s,
these programs sought to provide education, job training, and
family services to disadvantaged communities.21
The Ford Foundation's approach to urban revitalization was
memorialized in President Lyndon B. Johnson's War on Poverty.
In 1964, that federal policy led to the enactment of the
Economic Opportunity Act (EOA) and the Community Action
Program (CAP). CAP delegated authority to local "community
action agencies," which were charged to conduct "education,
health, job training, housing, social services, and economic
development" programs. Its purpose was to create "maximum
feasible participation" in the programs by community residents,
thereby increasing community control over antipoverty
initiatives. Although EOA was criticized for being ineffective in
advancing political participation in local economic
development, it did lead to the creation of CDCs. Specifically,
the EOA was amended by the 1966 Special Impact Program
(SIP), which allocated federal funds to support CDCs, nonprofit
organizations designed to aid urban redevelopment. As a direct
result of the SIP, nearly one hundred CDCs were organized to
create jobs in low-income communities.22 In addition, EOA
funded the Insight Center for Community Economic
Development (originally the National Housing and Development
Law Project) to assist the over 2,000 legal service attorneys

around the country working on CED matters and to provide
legal support for federally funded community development
corporations. Over the years, the Insight Center has supported
the creation of over 500 CDCs. In the 1972 amendments to the
Economic Opportunity Act, Title VII greatly increased the
federal government's commitment to CDCs as a vehicle of
community-based development and authorized a more
comprehensive range of activities.
"If there is a 'ground zero' in the [modern] community
development field, it must be the events leading to the
formation of the Bedford Stuyvesant Restoration Corporation in
Brooklyn, New York."23 In 1966, Senator Robert Kennedy
toured Bedford Stuyvesant, a predominantly African American
community undergoing civil unrest because of race, poverty,
and political exclusion. This experience led Kennedy and his
staff to pursue a strategy that linked self-help to political power
and capital structures outside communities. The goal was to
break community isolation by linkages to communities of power
and prestige. The Brooklyn experiment captured national
attention, and it was used as the basis for supporting other
programs in urban and rural areas.24
The unifying thread in federal policies was devolution of
decision making from the federal government to the states.
Under the auspices of advancing local control and inspired by
civil rights advocacy, the Johnson administration instituted the
1966 Model Cities Program to help distressed communities
while involving local residents in the program. The Model
Cities Program was terminated in 1974 by the Ford
administration, which then created the Community Development
Block Grant Program (CDBG). CDBG funds are allocated to
states and municipalities through the Department of Housing
and Urban Development. Local jurisdictions then have
discretion to develop strategies appropriate for local needs.
Thereafter, the Carter administration continued the concept of

providing federal funding for discretionary spending with the
Urban Development Action Grants Program.25
The next phase of the CED movement was characterized not by
a "neighborhood-based, self-sufficiency paradigm" but an
alternative antipoverty model that stimulated grassroots
political action and a "broad-based, redistributive economic
agenda." In this model, influenced by community organizer Saul
Alinsky, founder of the Industrial Areas Foundation, advocates
"worked to build local power, creative indigenous leadership
and mobilize the poor." This phase of the movement represented
a blend of new insights from the civil rights movement along
with community-organizing principles to create "cross racial
alliances for economic justice."26
The community action agencies under CAP became laboratories
for welfare rights organizing that gained momentum because
thousands of qualified neighborhood residents were not getting
their benefits. Neighborhood-based organizations worked to
train welfare recipients to become advocates, and "mass benefit
campaigns" followed. In 1967, the National Welfare Rights
Organization (NWRO) was created by George Wiley, CORE'S
former associate national director, and the idea of a national
welfare rights movement developed from collaborations among
Wiley, Frances Fox Piven, and Richard Coward. Piven and
Coward, famed authors of the book Poor People's Movements:
Why They Succeed, How They Fail, argued that a movement to
expand welfare benefits to millions of needy Americans would
force the federal government to reform the system and impose a
national guaranteed income. It was also hoped that increased
welfare benefits would led to a national NWRO membership
base and a foundation for meaningful political power.27
NWRO was governed by Wiley and the "founding mothers," a
group of welfare recipients. Acting as a coordinating center for
the welfare rights movement, NWRO had 22,000 dues-paying

members at its peak. Collaborating with SCLC, which organized
the Poor People's Campaign, NWRO challenged welfare policies
forcing welfare offices to pay grants for rent, food, clothing,
and furniture (the availability of which few recipients knew
about). These campaigns educated others and helped NWRO to
grow to the point that it was even able to defeat President
Richard Nixon's Family Assistance Plan, an inadequate
replacement for Aid to Families with Dependent Children
(AFDC).28
By the late 1960s and early 1970s, faced with opposition and
declining membership, welfare rights advocates questioned the
limited focus on welfare and sought a broader reform agenda.
Wiley started a new organization, the Movement for Economic
Justice, which created grassroots coalitions of the working poor,
middle class, and welfare recipients. At the same time, the
Association of Community Organizations for Reform Now
(ACORN) was founded by Wade Rathke, formerly of NWRO,
after he moved to Little Rock, Arkansas, in 1970. There, he
worked on a multiracial, multiclass organizing strategy.
ACORN's goal as an issue-based organizing group was to
support the poor and working class. It accomplished this goal by
entering electoral politics and advocating a poor people's
agenda that included free medical benefits, elimination of the
state income tax for low-income taxpayers, lifeline electric rates
and property taxes, and higher welfare benefits.29
By the end of the 1970s, ACORN had expanded into twenty
states, promoting public participation in the democratic process
by low- and moderate-income people. Remarkably, what NWRO
and ACORN accomplished was a shift from a "nationalist
emphasis on community-based business ownership and the
locally targeted revitalization efforts of CDCs" to "the
emergence of a distinct antipoverty approach that used
grassroots political action to promote economic justice."30 The
1980s paved the way for yet another shift away from political

action to "a localized, marketoriented" approach to CED
characterized by public-private partnerships.31
The 1970s-1990s
The end of the 1970s and beginning of the 1980s witnessed the
creation of community development intermediaries such as the
Local Initiatives Support Corporation (LISC) and the Enterprise
Foundation, now known as Enterprise Community Partners,
which "presaged a move toward consolidation and
institutionalizing the best of the early programmatic
experiments."32 Housing became a major focus of CDCs in the
late 1980s with the advent of the Low-Income Housing Tax
Credit and the Community Reinvestment Act.33
The 1980s witnessed a strong backlash against the public
entitlement programs of earlier years, and the administrations of
Ronald Reagan and George H.W. Bush significantly cut back
government sponsored antipoverty programs. The efficacy of
federal spending on AFDC and other means-tested public
assistance programs was questioned given increases from $7.8
billion in 1960 to $40.7 billion in 1976.34 Fueled by a
neoconservative agenda, under the Reagan administration,
welfare cutbacks were the main target. Some of these benefits
were reduced or dramatically terminated when Reagan signed
the Omnibus Budget Reconciliation Act of 1981 during an
economic recession. The administration's program of supply-
side economics provided tax cuts to corporations and
upperincome individuals. Privatization and fiscal conservatism,
hallmarks of the Reagan years, created greater income
disparities. Many other benefits to the poor such as food
stamps, Medicaid, and housing assistance were also cut. At the
same time, the decade witnessed structural shifts to the
economy, the exodus of high-paying manufacturing jobs from
urban areas, low-wage worker insecurity, and the resulting
"spatial concentration of joblessness and poverty"35

Given the political and economic climate of the Reaganomics
era, CED advocates assimilated the dominant market-based
ideology into approaches to tackle urban poverty, and CDCs
became critical for implementing this approach. Given the
economic scarcity of the times, CDCs, proven vehicles for
dealing with local poverty, also presented a politically viable
self-help approach to antipoverty through the promotion of
public-private partnerships.36
Although the inauguration of President Bill Clinton signaled a
renewed hope for social justice, his administration's policies did
not substantially improve conditions in low-income, distressed
communities. His neoliberal agenda was characterized by
international free trade, deregulation of global financial and
capital markets, and privatization of public enterprises.
Domestically, the Clinton administration put an "end to welfare
as we know it" by abolishing AFDC and replacing it with
Temporary Assistance to Needy Families (TANF). This new
regime imposed mandatory work requirements and time limits
on benefits. Between 1992 and 1998, federal spending on family
supports declined along with funding for food stamps and other
nutrition assistance programs. Transfer payments to lowincome
families through the expansion of the Earned Income Tax Credit
did not make up for reductions in welfare. During the Clinton
years, there were also large spending cuts on education, income
security, science, and transportation while the wealthiest people
benefited.37
Counterintuitively, Clinton's neoliberalism, which facilitated
the creation of flexible markets, ultimately made it more
difficult for low-income workers to secure living-wage jobs.
Expanded global markets and liberalized trade drove down
wages and impeded union organizing. Welfare reform pushed
more workers into an already crowded labor market. The
Clinton administration's response to poverty represented another

major political shift - the Democratic Party's break from
historic commitments to traditional antipoverty programs and
the emergence of a neoliberal, probusiness agenda. Poverty-
alleviation programs became market-expansion programs. This
is most apparent with Clinton's 1993 Empowerment Zone
Program, an effort to expand business activities in certain low-
income communities by offering tax benefits to employers in
geographically defined zones. Toward the end of Clinton's term,
Congress passed his New Markets Tax Credit Program, designed
to spur private-sector equity investments in businesses located
in low-income communities.38 Both New Markets Tax Credits
and the creation of the Community Development Financial
Institution Fund of the Treasury Department have been credited
with encouraging commercial real estate development and small
business loans in some low-income communities.
The administration of George W Bush largely diverted attention
from domestic matters to the wars in Afghanistan and Iraq, and
the market-based focus of CED continued. That administration's
attention to faith-based initiatives may have accounted for a
renewed attention to strengthening faithbased community
development organizations.39
The Contemporary CED Movement
The contemporary CED movement is focused on market-based
principles to remedy poverty. The premise is that the markets in
low-income communities do not work well; accordingly, the
remedy is to stimulate them. The movement's goal is to
"restructure market incentives to leverage private investment
for the development of community-based-business, affordable
housing, and financial institutions."40 To that end, CED
strategies promote local business development as a way to
create jobs for low-income people. Community organizations
and CDCs act as financial intermediaries, providing technical
assistance to local entrepreneurs and developing shopping

centers, supermarkets, and other real estate projects. In addition
to affordable housing production, a mainstay in the field,
microenterprise and nonprofit business ventures have become
economic growth stimulants. Increasing access to financial
institutions is another CED tool that has been anchored by the
Community Development Financial Institutions Act of 1994.
The focus of this work is on localism, also called a place-based
strategy. It involves the notion that bottom-up social change
involving active community participation must take place within
geographic areas. Community empowerment is achieved by
"exerting ongoing influence over local decision-making in a
way that ensures the development efforts are responsive to
community needs."41
Market-based CED is not without its critics, who caution that
this approach does not adequately address poverty. They point
to studies that show that CDCs not only fail to alleviate poverty
but help make conditions worse by " 'disorganizing' existing
social and political structures and facilitating gentrification."
Another criticism is that market-based CED depoliticizes
antipoverty advocacy and hinders progressive social movements
by focusing on capital inflow. Some of these CDCs have had to
distance themselves from the kind of political engagement that
addresses the problems associated with concentrated poverty.
Critics further lament that this focus on market-based CED
privileges local incrementalism over broad structural reform.
The focusing on localism does not change the structure of
poverty. Finally, critics assert that the market focus of CED
impedes the formation of cross-racial alliances. Because the
focus is on "enclaves of economic distress,"42 this model relies
on "existing spatial distribution of poverty and does not address
the nexus between poverty concentration and residential
segregation - leaving unchallenged the racial cleavages that
dissect urban geographies."43 Providing a new lens on the

contemporary CED movement, this critique will, hopefully, help
to advance the field.
Conclusion
The history of CED is the history of social movements. At the
same time, it has matured into an "industry" complete with
internal supports in the form of CDCs; funding intermediaries;
and federal, state, and local agencies. Because resources have
been needed to support the industry's revitalization work, few
efforts have been devoted to understanding the industry itself.
Going forward, it will be important to address leadership
challenges as first-phase CED practitioners, charismatic leaders
who learned on the job, are "aging out."44 Many CED leaders,
after the 1980s, "came to the field after careers in law, banking,
the foundation world, and other allied fields. Better prepared for
leadership, they possessed more career mobility than did their
predecessors."45 The industry may hold steady with a stream of
"career changers," but there is no guarantee.46 Accordingly, the
industry could benefit from "a level of standardization and
rationalization of training efforts."
References
1. ROLAND V. ANGLIN, U.S. DEPT. OF HOUS. & URBAN
DEV., BUILDING THE ORGANIZATIONS THAT BUILD
COMMUNITIES: STRENGTHENING THE CAPACITY OF
COMMUNITYBASED DEVELOPMENT ORGANIZATIONS
(2004), available at www.huduser.org/Publi
cations/pdf/buldOrgCommunities.pdf.
2. Lauren Breen et al., An Annotated Bibliography of
Affordable Housing and Community Development Law, 13 J.
Affordable Housing & Community Dev. L. 324, 336 (2004). See
also Susan R. Jones, Small Business and Community Economic
Development: Transactional Lawyering for Social Change and

Economic Justice, 4 CLINICAL L. REV. 195, N.2 (CITING
NAT'L ECON. DEV. & L. CTR., LAWYERS MANUAL TO
COMMUNITY-BASED ECONOMIC DEVELOPMENT, at 1-1 to
-3 (rev. 1994); Rachel D. Godsil & James S. Freeman, Jobs,
Trees, and Autonomy; The Convergence of the Environmental
Justice Movement and Community Economic Development, 5
MD. CONTEMP. L. ISSUES 25, 30 (1993-94); John Little,
Practicing Community Corporate Law, CLEARINGHOUSE
REV. 889 (Nov. 1989); Frank Pommersheim, Economic
Development in Indian Country, What Are the Questions? , 12
AM. INDIAN L. REV. 195, 202 (1987); Anthony D. Taibi,
Banking, Finance and Community Economic Empowerment;
Structural Economic Theory, Procedural Civil Rights and
Substantive Racial Justice, 107 HARV. L. REV. 1463 (1994)
(examining the economic structures that produce substantive
injustices and supporting the need for a populist community
empowerment economic and public policy discourse).

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