Table of Contents

1. What is a CDC?

2. How do we become a CDC?

3. What are Individual Development Accounts?

4. How do they work?

What is a CDC?

The term CDC refers to a type of non-profit entity known as a "community development corporation". Although there is no established legal definition for CDCs, they are characterized by their community based leadership and their work primarily in housing production and/or job creation. This is what differentiates them from other types of non-profit groups.

CDCs are formed by residents, small business owners, congregations, and other local stakeholders to revitalize a low and/or moderate-income community. CDCs typically produce affordable housing, homeownership, and job counseling, community services such as daycare and adult education, and create jobs for community residents. Jobs are often created through small or micro business lending or commercial development projects. Some CDCs also provide a variety of social services to their target area.

According to a national census of CDCs conducted by NCCED in 1998, there are an estimated 3,600 such groups across the United States. Since the emergence of the first CDCs in the late 1960s, they have produced 247,000 private sector jobs and 550,000 units of affordable housing.

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How do we become a CDC?

A CDC is legally the same as any other non-profit entity organized under section 501 (c) (3) of the Internal Revenue Code. Local residents that are interested in forming a CDC get together and develop a set of by-laws, file for incorporation with their state government and once that is completed apply to the federal Internal Revenue Service for designation as a tax exempt non-profit organization. The IRS designation is necessary in order for your organization to obtain tax- deductible grants and gifts from any government, corporation, foundation, or individuals.

There is no national entity that certifies an organization as a CDC. Federal programs that fund CDCs are scattered among many different agencies and each program has its own eligibility criteria.

CDC’s in North Carolina are funded through various sources including intermediaries such as NC Community Development Initiative, NC Rural Economic Development Center, and NC Association of CDC’s; Federal pass-through programs such as HUD-CDBG; and, self-sustaining programs such as childcare.

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What are Individual Development Accounts?

Individual Development Accounts (IDAs) are dedicated savings accounts, similar in structure to Individual Retirement Accounts (IRAs), that can only be used for purchasing a first home, post secondary education or job training expenses, or capitalizing a small business.

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How do they work?

IDA programs are implemented by community-based organizations (CDC’s and other non-profits) and are funded by a broad base of public and private sources. Participant accounts are held at local financial institutions. Contributions from lower income participants are matched through the program allowing for faster growing savings accounts. Additionally, all participants receive economic literacy training that helps them to clean up their credit, establish a budget and savings schedule, and manage their money over the long term.