​How Federal Community Development Investments Affect the Nation's Bottom Line

Community development tax credits produce enough local, state, and federal tax revenue to more than offset their cost, explains the president of the National Development Council.

February 18, 2014

"Community development is an investment, not an expenditure," said NDC President Bob Davenport. And, he’s got the numbers to prove it.

NDC analyzed federal statistics on five tax credit and loan guarantee programs. They found that federal incentives for community revitalization produce enough local, state, and federal tax revenue to more than offset their cost. NDC published their findings in the recent white paper, Beyond Housing, Neighborhoods and Jobs: How Federal Economic Development Tools Pay Back the Government.

What the numbers show about tax credits and loan guarantees

The white paper analyzes these programs:

  • New Markets Tax Credits
  • Low Income Housing Tax Credits
  • Small Business Administration 7A and 504 Loan Guarantees
  • HUD Section 108 Loan Guarantee
  • U.S. Treasury’s Community Development Financial Institutions Fund’s Financial Assistance program

For more than 40 years, NDC has used federally funded economic development programs in distressed urban and rural communities in every state in the union. They have also worked with Congress and successive administrations to create innovative programs and to retool existing programs to maximize their efficacy at meeting national policy goals for small business, housing and community development.
Over the last three decades, federal outlays for programs that support community and regional economic development have fallen by 75% as a share of gross domestic product.

NDC is concerned that tax reform may decrease the flow of capital to under-served communities, ultimately hurting the federal government’s bottom line. “Key financing tools could be on the chopping blocks when Congress considers reforming the tax code by lowering rates and tax credits and expenditures” Davenport warned. “These programs are too important to lose.”

Community developers should be "loud and proud"

Davenport urges grassroots community developers to be “loud and proud” about their contributions and help prevent further cuts. “I think that the conclusions of the white paper should give community development practitioners in the field the confidence to beat their chest a bit about the fact that they are making a very positive impact in America,” he stated. “It’s really a shame that our work is not viewed more widely as an investment into America rather than an expenditure of government dollars,” he added.
NDC decided to do something about that. They created a campaign to educate elected officials and the public about how community development is an investment, not an expenditure. It’s called NDC ACT - Advocating for Communities Together.

Share your stories with NDC

“Community development tax credits and loan guarantees pay for themselves. That’s the message of ACT,” clarified Davenport. “We’ve always found that the congressional staffers are more interested in the human element than in the dry data -- the hundreds of thousands of taxes paid. You’ve got to include that information, but the telling part of the story has more impact.”

That’s where the NACEDA network comes in. Davenport needs community developers to help paint the picture of how federal investments contribute to the economy and improve the quality of life in communities across America.

“We’re using ACT to create a network and social media channel that shares information amongst the grassroots organizations across the nation. We’re broadcasting the message to elected representatives in DC who need to hear about the good work that is being done by the in the field,” Davenport explained. “The real power lies with the community developers in the field,” he added.

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