How to Form a Community Development Corporation

by Jiquanda Johnson
A Community Development Corporation is an organized way to address issues in your neighborhood.

A Community Development Corporation is an organized way to address issues in your neighborhood.

If you want to make a difference in your neighborhood, you may want to consider starting a Community Development Corporation (CDC). CDCs are developed for a number of reasons but typically have one goal--helping neighborhoods. A CDC is a non-profit organization established under section 501(c)3 of the IRS code. They are typically established in low-income areas to help develop and expand educational programs, create jobs and rehabilitate neighborhoods. They are an effective way to organize community efforts and address problems. In order to establish a CDC you should do a community assessment to identify the needs in the targeted area. You will also need to recruit volunteers, establish a board and by laws, file tax documents and open a bank account.

Establishing a CDC

A community assessment will help identify the needs of the community in which you are establishing the CDC. To asses your community, survey business owners and residents in the community. Check to see if local colleges, universities and other organizations have conducted studies on issues in the neighborhood that may need to be addressed.

Volunteers are a necessity for a CDC. Try to recruit volunteers from local businesses and encourage residents to participate. To generate interest in the CDC you could hold a public meeting. After community volunteers have been recruited, an elected board must be put in place. Your board, which has to be comprised of business owners and residents from the community, should at least consist of a president, vice president, treasurer and secretary. You will then have to establish goals, create a mission statement and develop a set of by-laws for your CDC. Volunteers and board members will be responsible for fundraising to help generate a cash flow to support the work and accomplish the goals of the organization. Your CDC may also want to recruit someone who handles public relations, marketing and grant writing.

Filing paperwork depends on where you live. There is no federal CDC entity and state requirements can vary. For example, both Minnesota and Massachusetts have criteria that CDCs must meet in order to qualify for various funding. You will have to contact your local or state government office to find out if there are any special requirements your CDC must fulfill. Even though there is no federal agency that handles CDCs there is some funding available for CDCs that is funneled through other agencies throughout the nation. Each agency has its own eligibility requirements.

Experts from the National Congress for Community Economic Development (NCCED) say CDCs are "legally the same as any other non-profit entity organized under section 501(c)3 of the Internal Revenue Code." To become a 501(c)3 your organization will have to contact the Internal Revenue Service (IRS) to have an application mailed to you or you can visit www.irs.gov, select the charities and non-profits link and download Form 1023. Follow the instructions given by the IRS to complete the process. Non-profit status is necessary to apply for various funding including grants and gifts.

After you are established as a 501(c)3, open a bank account. You may want to hire or find a volunteer accountant to manage funds for your organization. They should work with your CDC's treasurer.

At this point you can began fundraising for your CDC and seeking grants to help support various programs in the area of the CDC. Put together various committees of volunteers to oversee fundraising projects. They should be under the leadership of one or more board members.

Warning

  • When soliciting donations and grants, your organization is responsible for these funds. NCCED experts also say keep good records including payroll and various withholdings.

Items you will need

  • Community assessment
  • Volunteers
  • IRS Form 1023
  • Bank account

About the Author

Jiquanda Johnson has been writing since 1997. Her work has appeared in "The Seattle Times," the "Detroit Free Press," "The Detroit News," "The Flint Journal," "African-American Parent Magazine" and a public relations agency. Johnson has experience in marketing and works as a public relations consultant. She studies journalism at Wayne State University.

Photo Credits

  • Neighborhood image by Joelyn Pullano from Fotolia.com