Not By Faith Alone, by Darren Walker http://www.nhi.org/online/issues/115/Walker.

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January/February 2001

Not By Faith On a bright summer day last year, the Rev. Richard C.
Corbin, Sr. of Washington, DC’s First Rock Baptist Church
Alone proudly surveyed five beautiful new homes his church had
developed in one of DC’s most distressed neighborhoods. He
Faith-based had reason to be proud. First Rock, a small but growing
community church of several hundred devoted members, had purchased
development requires and rehabilitated a cluster of dilapidated government-owned
prayer, persistence properties, and the project had succeeded in reversing the
and proficiency decline of the block. The Rev. Corbin and the church
leadership had ambitious plans to become a major nonprofit
developer in the Southeast district neighborhood; they
By Darren Walker planned to use this project as a springboard for creating First
Rock’s own community development corporation.

Back to Table of Contents Unfortunately, pride was not the only thing the Rev. Corbin
felt that day. He also felt angry, exploited, and a bit naïve
that he could have thought that getting into the community
development business would be so easy. He couldn’t fathom
how the church had lost thousands of dollars on what was
supposed to be a profit-making venture. He had unanswered
questions that would have seemed unthinkable in 1988 when
the church first acquired the properties. Had he erred by
putting a development team together that consisted almost
exclusively of church members and their associates? Did the
church rely on the wrong professional advice when
negotiating with the government, banks, real estate brokers,
and vendors?

“The congregation and church board were totally committed

to this project,” says the Rev. Corbin. But, he adds, “we had
no systems in place to monitor the process, which is how we
ended up losing a lot of money and creating unnecessary
tension within the church family. It’s been a really painful
process.”

The Rev. Corbin, a retired army officer, says lessons he

learned in the military, particularly about the importance of
assessing failure and not making the same the mistake twice,
will drive First Rock’s development activities going forward.
The church has begun the process of setting up a community
development corporation and is hiring an experienced
professional as its director so it can compete more effectively
for government and private dollars. With renewed vigor and a
sobering experience under its belt, First Rock is planning a
$7.5 million tax credit project for 2001 and considering a
HUD 202 seniors project.

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The Allure and the Reality

First Rock is not alone in succumbing unprepared to the

allure of housing and community development. Across the
country, religious institutions, particularly black churches, are
feverishly engaged in a broad range of community building
initiatives: workforce development, shopping centers, charter
schools, homeownership programs, youth programs, micro-
enterprise lending, organizing, and other activities. And why
not? Religious institutions, especially in communities of color,
have for years been bedrock institutions of their
neighborhoods, serving as hubs for social capital
development and economic empowerment. It’s quite
reasonable to expect that these community assets would
become active in a broader and more sophisticated range of
community building projects.

The current political climate is fostering this trend. Indeed,

George W. Bush has said that a hallmark of his
administration will be the expansion of “Charitable Choice”
(see (Un)Charitable Choices) to include an array of programs
that reach far beyond social services.

Moreover, there are a few well-known examples of

phenomenally large and successful faith-based development
corporations that congregations across the country look up to
and aspire to match. Allen AME and Abyssinian Baptist
Development Corporation in New York City, Windsor
Village’s Power Center in Houston, and Los Angeles’s First
AME are some of these visible institutions. Led by
well-connected and charismatic ministers, they have created
thousands of units of housing, constructed major retail
centers, built schools, operated credit unions, and been
singled out by the two major presidential candidates. They
are catalysts for change in their communities, and massive
institutional presences.

But despite the attractions and the well-publicized successes,

community development is a complex and technical field,
and some religious institutions may be jumping headfirst into
it without fully comprehending the political, financial, or
organizational capacity implications.

“There are numerous examples of highly publicized national

models for faith-based community development,” says the
Rev. Dr. Fred Lucas, founder and president of the Faith
Center for Community Development, Inc., a nonprofit
technical assistance group based in New York City. “But the
preponderance of local religious institutions have not yet
found the proper equation for significant community impact.

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Although many may run soup kitchens or youth programs

successfully, expanding into building housing and economic
development is a huge leap that most churches do not have
the capacity to accomplish.”

The Rev. Lucas knows firsthand what it takes to build a

faith-based CDC. As the former pastor of Bridge Street AME
Church, he initiated what is arguably Brooklyn’s most
cutting-edge and effective CDC: the Bridge Street
Development Corporation. “It takes prayer, persistence, and
professional expertise to succeed,” he says emphatically.

But it’s easy for any congregation to overlook some major

issues when they make the decision to start a CDC. Here are
a few frequent stumbling blocks.

We Thought We’d Make Money

There is a saying: “A not-for-profit that doesn’t make a profit

is a bankrupt not-for-profit.” It rings loud and true in the
community development field. It is important to build a
strong balance sheet over time by developing projects that
produce revenue through developer and administrative fees.
This makes it possible to have equity for other projects,
attract financing and take risk when appropriate. Building
that little cushion, however, takes years.

In fact, as the Rev. Corbin and his congregants learned, initial

forays into community development can require significant
front-end investment, sometimes with little or no hope of
repayment. Many community development projects have
financing gaps, which government and banks are increasingly
looking to religious institutions to help fill. “Each church in
our collaborative had to put money up for a while before we
were able to form the partnerships with government,
foundations and banks that made us financially viable,”
remembers Susana Vasquez, deputy director of The
Resurrection Project, a partnership of Catholic churches in
Chicago’s Pilsen neighborhood.

Colvin Grannum, a former Wall Street attorney and the CEO

at Bridge Street, notes that when Bridge Street AME Church
started its CDC, it had to put up approximately $300,000 in
predevelopment funds to acquire land, pay architects and
engineers and order environmental studies. It took several
years to recoup those funds.

Bridge Street’s start up required investments of more than

money too; the CDC’s first projects were a huge drain on the
time of the pastor and church staff, not to mention hidden
overhead costs. “It was a huge up-front investment,” says

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Grannum.

The TA Dilemma

Assembling the right team of technical assistance providers is

the most critical element of project development. In
particular, the architect, real estate advisor/project manager,
attorney and accountant play pivotal roles. Although it is only
right that congregations look within their membership to find
these professionals, the selection process still needs to be
approached from a business perspective. For example, just
because the congregation has an architect as a member
doesn’t mean she is the right person for the job. If the
proposed project is a 100-unit, multifamily housing
development and the member’s experience has primarily
been in single-family detached housing, the congregation
would be ill advised to hire that person. “ At the end of the
day, if the project is over budget or behind schedule, the
congregation and the community get hurt, so it’s best to do
your due diligence, even if that makes some who don’t get
the business unhappy,” says Grannum.

The Rev. Corbin relied on a group of church members to

move First Rock’s project forward, which ultimately proved
untenable. “In working with church members the line was
blurred around issues of accountability, liability and who
really calls the shots,” the Rev. Corbin recalls. Looking back,
he says bluntly, “We probably didn’t do our due diligence on
the project. We relied too much on one or two people
because we didn’t know what questions to ask. We were just
unprepared to take on issues like construction management
and monitoring, completion guarantees, fee negotiation, and
the like.”

For help determining what constitutes effective due diligence,

religious groups can turn to organizations such as LISC and
the Enterprise Foundation; local professional associations of
architects, engineers or real estate advisory firms; or the local
chapters of National Organization of Minority Architects.

Public Accountability

In the United States, by constitutional mandate, religious

institutions operate free from government interference.
Unlike other 501(c)3 not-for-profits, they are not legally
obliged to file tax returns, produce annual audits, or prepare
disclosure for public review. Although religious institutions
have trustees, deacons, and lay leadership, the institutional
culture is generally insular, responsive only to the church
membership and sometimes to a national denomination.

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By contrast, most community development activity is funded

by government agencies and foundations and thus requires a
more significant level of disclosure, review and public
discourse than most congregations are accustomed to. For
example, the members of the board of a New York City
faith-based CDC were recently shocked to find that they had
to submit personal financial information and disclose personal
real estate holdings in order to be awarded a city contract. “If
I had known they were going to get this deep into my
personal business,” said one board member, “I would have
told them to keep the money.” Yet this is exactly the type of
information congregation leaders have to be prepared to
share if they expect to expand to broader community
development activities.

Incorporating Separately

Usually, successful faith-based CDCs are organized as

separate 501(c)3 nonprofit organizations. If not, the
sponsoring religious organization becomes subject to
government review and standards as described above as soon
as it accepts government community development funding
into its own budget. With a 501(c)3, the congregation itself
remains free from government scrutiny, while the CDC has
all the rights and responsibilities of a secular nonprofit. This
protects the congregation, but it means the CDC must be
prepared to operate very differently from its religious
sponsor. “The church has to run [its CDC] like a
corporation,” says Grannum, “based on best practices from a
business model.” For example, it is important that the CDC’s
board have a balance of passion and technical expertise, he
says, noting that CDCs usually require more professional
boards than do congregations.

The Omnipotent Leader Syndrome

There is a tendency, particularly in communities of color, to

vest clerical leaders with tremendous authority. Often they
are virtually omnipotent in the affairs of the institution and
the local community, serving as spiritual advisor, financial
overseer, counselor, political broker, job finder and the
community’s pitch person, emissary and ambassador.
Unfortunately, though, these leaders have rarely received
training in business administration, financial management, or
public policy. “Ministers operate on the basis of tremendous
charismatic gifts; however, most are not well versed in the
prerequisites for running complex business organizations like
CDCs,” says the Rev. Lucas. “Seminary education needs to
become more interdisciplinary,” he argues. (See sidebar.)

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Even with broader divinity school training, however, clergy

in congregations embarking on community development
often find they need to hire people to take responsibility for
it. At the very least, they find they need to delegate some
responsibilities to those with technical expertise. Such
delegating can be a tall order for ministers accustomed to
controlling every aspect of congregation business. It requires
putting ego aside, sharing power and placing control of
significant congregation resources in the hands of others.

The Case for Collaboration

Although successful collaboration is hard to achieve in any

environment – faith-based or secular – some of the most
successful faith-based CDCs are in fact collaboratives. In
New York City, Harlem Congregations for Community
Improvement represents over 80 religious congregations,
giving it a financial and political strength that has created
astounding success. The Resurrection Project, which has
garnered national acclaim for its innovative work, operates
through a consortium of parishes. Susana Vasquez,
Resurrection’s deputy director, sees virtue and practicality in
collaboration. “No church is an island,” she says, “and
speaking realistically, politicians recognize the power within a
group of churches.” Vasquez also notes that there may be
times when it is in the interest of the faith community to
collaborate with secular CDCs as well. “When the outcome
requires collaboration, we seek partnerships, regardless of
their faith or secular role, so long as we share a common
vision and some basic values,” she says.

Before partnering, particularly with private developers,

faith-based CDCs should have financial and community
objectives that are clearly defined. Religious groups often sell
themselves short. It’s not enough to say, “Well at least the
community got its new housing development or child care
center.” If the faith-based partner didn’t receive a developers
fee or other compensation, then the community is not being
served because that group will ultimately not be sustainable.

Foundations and corporations who fund faith-based

development organizations also see value in a collaborative
approach. Robert Rosenbloom is responsible for Chase
Bank’s Faith-Based Community Development Grants
Program. The program gives one-time grants of up to $25,000
to religious congregations for community development
projects and has made 110 grants totaling over $2.5 million in
the past three years. Rosenbloom sees collaboration,
especially partnering with an experienced nonprofit or
for-profit developer, as the best insurance of success by

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fledgling faith-based CDCs.

For example, an experienced developer could construct a

social service facility, such as a child care center or housing
project, that the faith-based group will ultimately manage. “In
the process of working with the developer,” says
Rosenbloom, “the staff of the faith-based groups can learn
the development process and gain the knowledge and skills
that allow them to serve as a developer on a subsequent
project.” Congregations in a neighborhood that already has
an established local CDC can also use such partnerships as a
way to have maximum impact on their neighborhood while
not duplicating others’ efforts.

Leveraging Our Greatest Asset

In spite of the challenges experienced by First Rock and

many other faith-based institutions, it remains true that in in
many communities, the religious congregations are probably
the best and most effective vehicle for community
empowerment. These institutions are rooted in a long
tradition of community service, seeking to transform the
community like they seek to transform the soul. As religious
historian Christine D. Chapman has written, “It is because of
this unique ability to minister to both the body and spirit that
the church remains a vital force.”

The ways in which congregations can pursue community

empowerment are myriad. Housing and community
development can be a powerful and transformative role for a
faith-based group – as long as they realize it will take more
than faith to succeed.

Copyright 2001

Darren Walker is chief operating officer at the Abyssinian

Development Corporation, a faith-based CDC in Harlem,
New York City.

Ask Yourself! Before You Start That CDC

1. Can we absorb the potential financial risk associated with

development? This means being committed to making an
investment and receiving no return beyond the physical
impact a project has on the community, and knowing the
congregation may actually lose money.

2. Are we willing to allow our clergy to divert significant time

away from ministerial duties to work with banks,
intermediaries, proposal writers, etc.? The same will be asked

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of other congregational employees.

3. Are there systems within our governance structure that

reinforce checks and balances and support objective due
diligence?

4. Does our institution have support within the broader

community, particularly with other community leaders and
government?

5. Does the congregation have contacts in the private sector

that can be used to its benefit?

Resources

Faith-Based Community Development: A Resource Manual,

Christine D. Chapman. Interdenominational Theological
Center, Atlanta, GA, 2000.
404-527-7700.

National Organization of Minority Architects; www.noma.net

Back to January/February 2001 index.

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