News

Mourning can be the key to growth

May 21st, 2011 by Joe Kriesberg

I just read an excellent article by Ann Houston from Chelsea Neighborhood Developers (CND) and Hilary Marcus from Neighborworks America. The article talks about the difficult, yet ultimately productive, process that the CND board of directors went through in deciding whether and how to expand their services to Revere. The article offers important lessons for all CDCs considering a geographic expansion or any other major shift in their organizational strategy or focus.

The major thrust of the article is the importance of discussing the governance implications of expansion early on in the process. For me, however, the the most interesting aspect of the article was the discussion of how important it was for the board to reflect on, and respect, both the sense of loss, and the actual loss that might come from expanding to another city. CND has been focused on serving Chelsea since it was founded and the board members joined the board specifically because of their commitment to Chelsea. Would expanding to Revere dilute that focus? Ann and Hilary talk about how the board approached this question with respect and care. The board ultimately decided that expansion would be good not just for the organization but for both Revere and Chelsea. But part of that process was to mourn in meaningful and tangible ways the loss that inevitably comes with change.

In reading the article, I realized that I often fail to respect that sense of loss and fail to take the time with others to mourn and honor the past. Expansion and change are often necessary and good - but they do not come free. Those who might oppose a particular change or expansion are not simply bad people who are obstructionists or narrow minded. They may simply be fighting for the same community and the same people for whom they have always fought. Their sense of loss is often real - expansion can mean dilution for some communities. This should not necessarily stop change, but it is important to give respect and voice to that which is lost.

I encourage others to read Ann and Hilary's important article. I'm glad I did and I hope to apply its lessons as MACDC continues to change and evolve in the coming years. Mourning loss and change may be the key to our future growth and success.

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The Washington Post Gets It Wrong

May 21st, 2011 by Joe Kriesberg

Earlier this week, the Washington Post ran  a series of articles alleging widespread failures in the federal HOME program administered by HUD and hundreds of local and state government agencies. The articles claim that hundreds of projects have died, millions of dollars have been wasted and that HUD and local housing agencies have failed to protect the taxpayer's money.

The articles certainly uncover some distressing stories and clearly HUD and our local housing agencies need to do a better job. The story also underscores the importance of providing non profit developers with support, oversight and capacity building services - especially during challenging economic times like these.

However, the Washington Post articles do the country a dis-service by grossly exaggerating the problems and failing to put the small number of problem projects in the context of the one million homes developed by this program over the years. Even Adrian Gonzalez strikes out occassionally and we cannot expect a federal program with thousands of projects underway across the entire country to never have any problems - especially during the worst real estate market since the Great Depression.

Perhaps the most glaring error is the claim that 1 in 7 HOME projects are delayed when in fact less than 2.5% are delayed, and most of those have either been resumed or are delayed due to market conditions. This is not a minor mistake. Check out HUD's response to the Post for more factual errors in the article.

By failing to get its facts right and by failing to put the problems in the context of the overall track record of the program, Post demonstrates either laziness or a desire to create a scandal where none exists. It is unfortunate that the Post seems eager to jump on the "government is broken" bandwagon, especially when articles like this will create real harm for struggling families and communities.

MACDC staff and leaders will be joining with our NACEDA colleagues to take this message to Congress during our annual NACEDA Summit this week. Let's hope our elected representatives take the time to look at the facts and not just the headlines.

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MACDC Explores Potential for Statewide Community Business Partnership

May 16th, 2011 by Joe Kriesberg

The Community Development Innovation Forum has helped to spur numerous efforts to expand and deepen collaboration with the goal of improving effectiveness and efficiency in the sector. With the help of new funding from Citi and Bank of America, MACDC is now leading a major planning effort to explore the efficacy and viability of a statewide partnership among CDCs and others who provide technical assistance to local entrepreneurs.

For years, MACDC members have helped entrepreneurs start, grow and sustain small businesses that provide jobs and opportunity for local communities. In 2010, our members served over 2,000 entrepreneurs develop business plans, find new locations and markets, access financing and deal with the slumping economy. CDCs have frequently partnered in these efforts with each other and with other organizations such as Small Business Development Centers, local governments, banks, and CDFIs (many of our members are CDFIs themselves.) Perhaps the most sustained and deepest of these partnerships has been the Community Business Network in Boston through which several CDCs have worked together since the mid 1990s.

Earlier this year, MACDC received funding from Citi and Bank of America to explore the potential for a statewide partnership that builds and expands on these earlier efforts. We formed a planning committee comprised of practitioners, public officials, bankers and scholars to guide our planning effort and hired two experienced consultants, Leslie Belay and Jason Friedman, to conduct research, planning and program design work.  Jason is examining best practices around the country and Leslie is conducting interviews and focus groups with stakeholders here in Massachusetts. At a recent meeting with the SBA and their partners, national SBA Administrator Karen Mills joined the meeting and voiced her strong support of the effort and specifically encouraged SBA partners like the SBDCs to partner with CDCs and vice versa.

The planning efforts has already identified several areas where collaboration could yield significant benefits. These could include: shared information technology and outcome measurement systems; shared protocols for intake, assessment and business plan assistance, shared expertise in specific sectors or areas of support (e.g. food industry, or green technologies); shared market research that would provide local businesses with access to better market data; joint partnerships with other organizations, professional development and training for practitioners, joint fundraising, and special projects.

We expect the planning process to proceed through the summer with the hopes of making a determination by early Fall as to whether such a Partnership makes sense. If we decide to move ahead, the next stage will include fundraising, recruitment of the initial class of members, and refinement of the program design, structure and services.

If you are interested in learning more or getting involved, please contact me.

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Is the Collaboration Trend Getting Old?

April 30th, 2011 by Joe Kriesberg

Collaboration has become such a popular word in our field that one wonders at times whether it has lost its meaning and importance. Has collaboration become a cliché? Is it a passing fad? Has it been oversold?

I would have to say, from what I am seeing in Massachusetts and around the country, that the answer is an emphatic no!

When the Community Development Innovation Forum was launched in 2008, we established a collaboration working group that produced a report on different models of collaboration around the Commonwealth. The Forum has promoted collaboration as a critical strategy for increasing impact and gaining efficiencies.

Recently, the Federal Reserve Bank of San Francisco has published a terrific new report that highlights examples of new collaborations from around the country – including one from Boston (the Fairmount Collaborative in Boston.)  The paper, The New Way Forward: Using Collaborations and Partnerships for Greater Efficiency and Impact, was written by Dee Walsh and Bob Zdenek, two of our country’s leading practitioners. I highly recommend it to all community developers.

Meanwhile, on a recent trip to South Florida to speak at the Annual Summit of the Florida Association of CDCs, I learned about the Broward Alliance for Neighborhood Development (BAND.)  BAND is a coalition of more than 30 CDCs and nonprofit organizations in Broward County (Ft Lauderdale) who are committed to providing decent, affordable housing in their communities. The mission of BAND is to foster non-profits that create quality housing and strong neighborhoods. The goal of the organization is to increase the capacity of its non-profit members so that the varied housing needs of all residents of Broward County are met. BAND members have pooled resources to hire central staff and to secure NSP dollars for their communities.

Back here in Massachusetts the Catalyst Fund for Nonprofits  has announced its first set of grants to nonprofits that are pursuing innovative collaborations and two of the initial grants are going to MACDC members.  A recent article in the Boston Globe describes grants to Chelsea Neighborhood Developers to develop a Family Economic Center and to Urban Edge and Allston Brighton CDC to pursue a joint asset management strategy.

I think it is clear that collaboration is here to stay in the community development sector.

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A Smarter Way to Reduce Health Care Spending

April 25th, 2011 by Joe Kriesberg

The first meeting I ever attended on behalf of MACDC – way back in 1993 – was at the Bowdoin Street Community Health Center. The purpose of the meeting was to strategize ways to reduce childhood lead poisoning by building a coalition of community development, housing, environmental and public health advocates to fight for changes in policy and practice that would better protect our children. Over the ensuing years, we successfully won major legislative change, new funding for lead abatement, and a robust effort of abatement, education, prevention and treatment that has nearly eliminated lead poisoning from the Commonwealth (although the risk is still serious in much of our older housing stock.)

The success of that collaborative effort came to mind the other day when I was attending the Health Communities Conference co-sponsored by the Federal Reserve Bank of Boston, the Mel King Institute’s Innovation Forum and several other partners. The conference explored the benefits of linking community development to community health efforts as a way to reduce chronic disease and improve wellness. The importance of this effort was underscored by Paul Grogan, President of the Boston Foundation, in his keynote remarks where he highlighted the fact that health care spending is now completely crowding out public investment in virtually every other area – education, recreation, housing, community development, food supports, and public transit. Yet by investing in these other areas we could actually reduce the need for costly medical care and improve the quality of people’s lives. Indeed, providing a homeless family with stable, safe housing might do more to reduce hypertension, asthma, and other chronic illnesses than all the medicine that money can buy.

The Conference included a number of interesting speakers from both the community development and the community health sectors. We heard about cutting edge research that documents that close correlation between socio-economic status and neighborhood quality with health outcomes. We also learned about innovative programs at the ground level that are beginning to make an impact. Materials from the conference are expected to be available soon on the Federal Reserve Bank’s conference web site.

MACDC intends to work with our partners in the public health field to build on the excitement from the conference to explore opportunities for innovation in public policy and community practice. With health care at the top of the priority list in both the State House and Congress, there will be many opportunities to gain traction. Perhaps someday, doctors will have the ability to fight the causes of disease by prescribing rental assistance subsidies, job training and T-passes instead of being limited to simply treating the symptoms of disease with costly medical procedures and pharmaceuticals

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The Secret Formula for Effective Advocacy

April 3rd, 2011 by Joe Kriesberg

 

I recently read an book review by Anthony Lewis about a new biography of Justice William Brennan (Justice Brennan: Liberal Champion  by Seth Stern and Stephen Wermiel .) For those who don’t know, Brennan was a Supreme Court Justice from 1956 to 1990 and was one of the leading progressives who helped shape Constitutional Law throughout that period. He was known as a liberal who could actually get the votes for a majority opinion – not just write powerful dissents. Anthony Lewis explains how Brennan was able to get his colleagues to vote for his opinions.  Lewis’ summary nicely articulates what I believe is the secret formula for effective advocacy:

Brennan’s success “came from intellect, conviction, a strong tactical sense, an eye for the essentials rather than a wish list, and a relationship of good faith and confidence with his colleagues.” 

In my 25 years of advocacy work, I have seen the importance of these qualities time and time again, although I have never seen this formula so neatly summarized.  Anthony Lewis has provided MACDC, and all of us who engage in advocacy, a succinct and helpful guide for our ongoing efforts.

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How can we drive performance in the Community Development Field?

March 16th, 2011 by Joe Kriesberg

Performance and accountability are the subject of substantial discussion these days throughout the nonprofit sector. Government agencies, private funders and non-profit leaders themselves are increasingly focused on taking steps to ensure that we fund programs "that work" and stop funding those "that don't".   Last week, I wrote about Social Impact Bonds, a new approach for doing this about which I have serious concerns. Today that I want to share an idea that I think has great promise.

Obviousely, no one can disagree with the view that we should "fund what works." But this statement simply begs the question of what we are trying to achieve. While this may seem easy to determine, in fact it is often not. Most non-profit organizations and programs have multiple stakeholders, each of whom have their own set of goals – goals that are sometimes in conflict, and are almost always different in terms of emphasis, time frame and priority. Balancing the interests of these different stakeholders is one of the key challenges of being a leader in the nonprofit sector.

At the same time, it is precisely this balancing act that I believe drives innovation and ultimately better, and more sustainable, long-term outcomes. Simply put, this complexity mirrors the complexity of the real world so it produces solutions that will work in the real world. Communities and people are complicated. There are no silver bullets or simple solutions to deeply rooted, complex social challenges, and success looks differently to different people. Equally important, all activities and interventions have multiple impacts and externalities – positive and negative – and they all have short term and long term impacts. This is especially true in the community development field where we are trying to have an impact on individuals and families as well as the broader community. I believe that having multiple stakeholders at the table helps to ensure that all of these impacts are considered, and that negotiating these competing interests results in more balanced, creative and effective solutions.

MACDC hopes to promote this framework through our campaign to enact the Community Development Partnership Act.  This bill, co-sponsored by Rep. Linda Dorcena Forry and Senator Sal DiDomenico and 46 other legislators, (and modeled after similar programs in other states) would use tax credits to leverage private donations to genuine and authentic community based development organizations, i.e. CDCs. Rather than creating static, rigid, or one-dimensional outcome metrics for the program, the CDPA will use three levels of accountability to ensure the program’s success while maintaining local flexibility and driving innovation.

  • -  First, and foremost, community members would have a voice because only those organizations with meaningful community representation on their board of directors would be eligible to compete for the tax credits. This helps to ensure that programs and activities funded are relevant and appropriate to the particular local community.
  • -  Second, state government will have oversight because they will review each application and determine which groups receive an allocation of tax credits. Those applications will specify how the CDC will evaluate and measure success. The state will then collect data and reports to measure progress and outcomes.
  • -  Third, the CDCs will need to convince private sector donors – corporate and individual – to make donations with the tax credit creating an incentive, but no guarantee, that funds will be provided.

We believe that having three levels of accountability increases the likelihood that the CDPA will be successful as compared to a program that is designed to simply meet the needs of a specific funder or stakeholder.  To be successful, CDCs will need to innovate, partner, measure, learn, and adapt. CDCs that don’t will surely lose the support of at least one of their key stakeholder groups – if not all of them – and fall out of the program.

Performance and ensure accountability are core values for MACDC. Look for future blog posts about other ways that MACDC, its members and our partners are seeking to advance those values. And, please, share your own!

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I Think Teddy Roosevelt Would Have Liked CDCs

March 7th, 2011 by Joe Kriesberg

My 15-year old son is required to declaim a speech or poem each term as part of his English course at his high school. This requires memorizing the text and reciting it with clarity and conviction.  Last week, he declaimed one of President Roosevelt’s famous speeches - the Man in the Arena speech delivered at the Sorbonne, in Paris, France on April, 23 1910. 

One wonderful passage in the speech reads as follows:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

I think this a great message - not only for my teenage son - but for all of us.  Indeed, it makes me think about one of the major reasons I chose to enter the community development field years ago when I finished law school. Prior to that time, I had spent my career fighting against environmental pollution and dirty energy. When I learned about how CDCs fought for something positive, I knew that I wanted to be part of that effort.  For me, community developers and CDCs exemplify what Roosevelt was saying. Community developers don't sit back and simply complain about what's broken. They put themselves "in the arena," projecting a positive vision for our communities. Community developers are certainly not "cold and timid souls who know neither victory nor defeat;" but rather community developers "strive to do the deeds" and "spend [themselves] in a worthy cause."  In so doing, they take risks, endure criticism, "err [and] come short again and again" and often, albeit not always, succeed in "high achievement." Every time I attend a CDC annual meeting, ribbon cutting, graduation or community event I am reminded and newly inspired by those who do this work on the front lines.

The community development movement emerged long after Theodore Roosevelt passed away, but I'm fairly certain that if were alive today he  would have admired community developers just as much as I do.

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Will Social Impact Bonds Really Improve Nonprofit Performance?

March 2nd, 2011 by Joe Kriesberg

The Obama Administration has appropriately placed a high priority on driving better performance in both the public and nonprofit sectors as they seek to tackle serious social and economic challenges. This includes a heightened emphasis on research, evaluation and funding “programs that work.”  All of this is certainly welcome news. Unfortunately, as part of this effort, the Administration has embraced a new idea that I fear could take us in the wrong direction.

In the FY 2012 budget, President Obama has proposed  $100 million to fund co-called Social Impact Bonds. The purpose of the Social Impact Bond is to create a new capital market that will encourage private, profit-motivated investors to fund social programs that “work.”  Essentially, an investor would front the money to pay for a particular program. If and when the program achieved the designated benchmarks, the government would pay the investor for the cost of the program plus enough to cover their risk and earn a profit. The theory is to create a market where investors can make money by investing in effective social programs.

Sounds good right? The government only pays if the program works. Taxpayer money is no longer wasted on ineffective programs. Private sector discipline and oversight is brought to bear on the nonprofit sector!    But wait! Is this really going to work? Is creating a Wall Street-like investment market the best way to strengthen nonprofit performance? Judging from the performance of Wall Street in recent years (have you read The Big Short?), one has to at least ask the question!

While I understand the appeal of this idea – and would welcome new sources of funding for high performing social programs – we need to carefully examine the implications of this approach to funding non-profit social service programs.  I see many serious questions that advocates of these bonds need to answer before tax dollars are invested.

First, Social Impact Bonds are likely to encourage functional specialization and silo-thinking. Money will flow to programs that can hit a single key benchmark so programs will be designed to do just one thing – achieve that benchmark. This will take the idea of “teaching to the test” to an entirely new level. Programs with multiple positive social impacts will be undervalued (like housing which provides economic, educational, health, public safety, and quality of life benefits) while programs with high externalities will be overvalued  just as they are in the private economy (i.e. programs that improve outcomes in some areas at the expense of others.) What makes this all the more puzzling is that in other programs, the Obama Administration is promoting comprehensive, placed based approaches that seek multiple quantitative and qualitative outcomes through multiple interventions. I don’t understand why they would support a new funding scheme that drives in the opposite direction.

Second, will these bonds discourage collaboration because this funding approach places much more emphasis on which nonprofit should “get the credit” for the “success?  If a student’s test scores improve, who should get the credit and therefore the money? The school? The tutor? The afterschool program? The social worker who helped the student deal with early life traumas? The parents? The next door neighbor who helped with math homework? The Little League that gave her an opportunity to grow and mature and have fun? The library where she did her homework and used a computer? How much time and money do we want to spend sorting through all the possible reasons and their relative impact on the child so we can sort out who gets how much money?  Does that create a collaborative culture?

A third potential problem with this approach is that it may over-estimate our ability to identify the correct metrics and to measure them correctly. Long term data is very difficult to secure and causal relationships can be very hard to discern. In our quest for market clarity, we are certain to over simplify and choose metrics that are easy to collect, count and standardize, even if they don’t tell us the full story or even an accurate story.  This is particularly true when attacking complex, systemic problems such as educational and health disparities, environmental justice, or land use development.

A fourth problem is likely to be cream skimming. Organizations will have a powerful financial incentive to cherry pick the best clients that maximize their chances for hitting performance benchmarks. Supporters say that they can guard against this, but history shows that powerful financial incentives work – they will motivate performance but they will also motivate people to “screen” clients before enrolling them in programs.  And now we will have powerful investors pushing in this direction!

Fifth, advocates say these bonds will promote innovation, but I think it is much more likely that investment dollars will flow to safe, well-known, programs. New, untested ideas, will have a very hard time attracting investors – and those who are attracted may seek returns that taxpayers cannot afford.

I also wonder whether a Bond Market can really think about long term solutions. Will investors be willing to wait 5, 10 or even 20 years to see transformative impact? Or will they only be interested in programs that can achieve benchmarks within 1 or 2 years.  And if we are looking at long term impacts, do we have the ability to measure impact and causation sufficiently well to ensure that the right programs are getting paid? And how would we control for macro economic impacts that may cloud our ability to see the impact of individual programs?

Finally, a Social Impact Bond Market will undoubtedly become a massively complicated system as investors seek to bundle investments, guard against losses, shift risk to other parties, scale up, and otherwise replicate traditional investment markets. Lawyers, accountants, advisors and intermediaries will be needed and they will all need to be paid (handsomely, no doubt.) A program designed to save taxpayer money could easily end up costing far more. Remember, this program will leverage private capital, but at the end of the day, the taxpayer must pay for all the costs plus the profit or return. There is no free lunch and if investors start to lose money the bond market will dry up very quickly.

Everyone wants to fund “what works” and no one wants to pay for programs that don’t achieve real outcomes. But the world is complicated and it does not help to pretend otherwise. Positive social outcomes are usually the result of multiple interventions, programs and causes – including some that operate at the macroeconomic level that is far beyond the scope of a single nonprofit program. And performance metrics can only capture so much. When a new playground opens it may significantly improve the quality of life for children and families nearby. But will a new playground translate into measurable and statistically significant reductions in obesity? Or increases in family incomes? Or improved educational attainment?  Probably not. Does that mean we should stop "wasting" money on playgrounds because the "don't work?"

We absolutely need to fund programs that work. But my concern is that program evaluation is too important for us to dumb it down into numerical measures that Wall Street investors can understand but don’t tell us the true story of what is happening in our communities.  Instead, we need to build capacity in the nonprofit sector to conduct robust and meaningful program evaluation and to take advantage of new information technology that can improve our understanding of program impacts.  And we need to fully fund those activities. I fully support public-private partnerships and programs that leverage private investment (MACDC has filed its own legislation designed to do just that) but we have to be very careful how we design these programs less we suffer serious unintended consequences.

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New Report is Required Reading for Community Developers

February 25th, 2011 by Joe Kriesberg

A new report by Enterprise Community Partners provides an insightful analysis into the financial challenges facing community developers and offers thoughtful recommendations for how to address them at the organizational and system levels. It should be required reading for all community developers and their supporters.

The report, Building Sustainable Organizations for Affordable Housing and Community Development Impact, affirms many of the conclusions and recommendations developed by the Massachusetts Community Development Innovation Forum over the past three years.  Enterprise conducted an in-depth analysis of 10 nonprofit organizations that have faced financial crisis in recent years and examined systemic issues that contribute to financial weakness. The report also identifies the particular strengths and weaknesses facing neighborhood based organizations. Finally, the report offers recommendations for both community development organizations and for funders/lenders.

According to Enterprise, community development organizations should:

  • - Strengthen their financial reporting and management,
  • - Beware of one-time cash receipts and manage them effectively,
  • - Diversity revenue streams, but only by growing strategically into business lines that align with organizational mission and can be profitable in the long-term,
  • - Prioritize financial sustainability to ensure that long-term organizational health is not endangered by a single project or program, even one that has high mission impact, and
  • - Collaborate to reduce costs, improve quality, and expand impact.

Enterprise offers the following recommendations to funders and lenders:

  • - Incentivize long-term ownership and stewardship of affordable housing assets by allowing cash flow to be paid to a project’s sponsor,
  • - Set realistic property and asset management fees and structure deals with sufficient cash flow to pay them, and
  • - Embrace an early warning system to address problem properties and weak organizations quickly before they grow beyond repair.

Here in Massachusetts we are already taking action to implement many of these recommendations. We are promoting the implementation of the Strength Matters TM financial reporting system and providing other training and support to improve financial management. We are offering training for asset management and advocating for increased asset management fees. And we are engaged in an active discussion about how to improve cash flow and reduce reliance on one-time developer fees. And, of course, we are implementing a host of new collaborations. The Enterprise report will hopefully fuel these efforts and secure broader support for making the changes needed to sustain and grow the community development field.

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