City Funds (CDBG): NeighborWorks® Organizations' Total
Contributions to Operating Expenses

Table III shows the amount and the percentage distribution of NeighborWorks® organizations' operating expenses by the source of contribution during 1990-1993. NeighborWorks organization's actual operating expenses increased from $33.7 million in 1990 to $50.9 million in 1993.

The amount of contribution from city funds during these four years did not change significantly. In 1990 and 1993, city funds contributed to NeighborWorksR organizations' operating expenses were $9.3 and $9.9 million, respectively. The relative size of city funds, however, shows a significant change. In 1990, cities contribution to NeighborWorks organizations' operating expenses constituted 28 percent of the total; in 1993, the respective figure was 18 percent. It may be noted that in 1990, the public sector's (local/state/federal governments) contribution to NeighborWorks operating expenses amounted to 40 percent of the total expenses. By 1993, this figure declined to 30 percent.

Contributions made by the private sector (including foundations) during these four years remained stable at approximately 25 percent of the total NeighborWorksR organization operating expenses. Thus, the main source of funding to compensate for the declining contribution by the public sector has been the NeighborWorks® organization's program income increase. In 1990, NeighborWorks® organization's program income constituted less than 10 percent of operating expenses. In 1993, program income constituted nearly 25 percent of NeighborWorksR organization's total operating expenses. We believe that reducing the share of public funds in NeighborWorksR organization's operating expenses is a healthy trend in organizational effectiveness.

In conclusion, the most pertinent trend seen in the last four years is a dramatic increase in NeighborWorks® organization's total programmatic investment from $146.5 million in 1990, to $252.6 million in 1993. At the same time, the overall relative share of public and city funds, for both programmatic services and operating expenses, have decreased quite significantly. NeighborWorks organizations have increasingly utilized private market and partnership resources while building their organizational self-sufficiency. However, city funds remain a very important part of NeighborWorks® organization revitalization efforts.

"Carryover" refers to carry over from previous year's budget.

EXECUTIVE
DIGEST

B

y far, the greatest challenge to the economy and future of the United States is the persistence of poverty and the unravelling of the social fabric of distressed communities. Yet, while the news from inner cities and decaying suburbs and towns sounds discouraging, there is tangible and quantifiable evidence, unheralded in the media, of the remarkable accomplishments of community-based development organizations.

These CBDOs have been gaining strength over the past 30 years-producing new and renovated housing, constructing and rejuvenating commercial facilities, supporting business startups and expansions, creating jobs, attracting private sector investments, helping families move to self-sufficiency, building strong neighborhood institutions, and restoring the sense of community. A fledgling community development industry, composed of thousands of organizations across the country, is having a visible impact on areas of "market failure.”

Many experts in the field believe that CBDOS and the institutions that support their activities have successfully laid the foundation of a broader community revitalization delivery system. In their view, such a system is now sufficiently widespread and reliable to serve as the pillar of public and private revitalization policy.

Despite these positive signs, however, significant weaknesses in the human capital of the field raise serious questions of whether community-based development is on the verge of making a great leap forward or will collapse under the weight of their new efforts. None of the workforce flaws is fatal-nor unexpectedin a young, highly entrepreneurial field, whose major accomplishment of the past decade has been to achieve breadth rather than depth. Nevertheless, the impact of the human resource deficiencies in community-based development is particularly

severe.

This report proposes the first comprehensive and strategic set of initiatives to improve the workforce of the nation's community-based development organizations. (See page 5- Proposed Program Plan.)

These 14 initiatives, organized within four main goals, are a set of program alternatives to be launched over the next five years. By the year 2000, the field will have increased its direct, sustained investment in human resources to a level $15 to $20 million a year above current investments, and will have modified its programs and practices to address this human resources agenda. These improvements will boost the ability of the community-based development workforce and result in an estimated five-fold increase in productivity and effectiveness.

Over the last 30 years, the community-based development movement has emerged as an industry of 4,000 community-based development organizations with a workforce of 20,000, producing $2.1 billion worth of housing a year along with impressive achievements in economic development, community building, policy advocacy, and social service delivery. The industry has been distinguished by.

⚫ continuing growth, of new groups, of proficiency, and of the scale of production among leading organizations,

PROFILE
OF A

STRONG,
EMERGING
INDUSTRY

The profile of the community-based development field and its workforce that
emerged from this report shows that":

An estimated 4,000 community-based development organizations are at
work across the nation today.

88% of all CBDOs produce housing.

• They produce $2.1 billion worth of affordable housing every year.
over 42,000 units.

Production is up: over the five-year period ending in 1991, groups
increased their production by 60%.

• Among all CBDOS, the average production is 12 units a year, a
production number that compares favorably to homebuilders. Like
homebuilders, the larger groups are more productive-50% of all
1988-1990 housing production was performed by the largest 15% of the
CBDOS, those with 10 or more staff.

Investments from the private sector have risen dramatically ... for
example, conventional long-term debt and construction financing of
CBDO projects by banks and thrifts increased by a thousand-fold over
the past 10 years.

61% of the CBDOs are 10 years and older, while 16% have been in
existence five years or fewer

92% are involved in nondevelopment activities such as job training and
placement and homeownership counseling.

More than half of all CBDOS have a staff of 6 or fewer

Among the estimated 4,000 CBDOS in the field today, the workforce is
projected to number 20,000.

The turnover rate among the executive directors is one-fifth per year, or
800 vacancies annually, while among senior development staff, the rate
is one-third, or 1,346 vacancies annually.

• Salaries (1991-1992) for executive directors range from an average of
$32,000 among CBDOs with staffs of less than 4, to $47,000 for CBDOs
with 10 or more staff. These salaries are not competitive with other
nonprofits of comparable size nor with the private sector

• Fringe benefits offered are lower than comparable small businesses,
social service agencies or other nonprofits.

Beyond these statistics which profile organizations and their activities, the dynamic analysis of change shows that the field has created mechanisms for growing stable, productive CBDOS. Growth is achieved not only by increasing the number of functioning organizations but also by deliberately increasing the scale of production and operations of small to modest-sized groups through a systematic approach that

• provides multi-year general operating support to the organization, to
allow better compensation, recruitment and retention of talented,
committed staff, and

pays greater attention to human resources, to advance skills,
leadership development, and organizational stability.

*See Chapters 3 and 4

NEIGHBORHOOD REINVESTMENT CORPORATION AND DEVELOPMENT TRAINING INSTITUTE