You Can't Just Throw Money at Community Development

Living Cities set out to lend money to community development financial institutions in five distressed cities but were met with a mountain of challenges. Here are the lessons learned from addressing the lack of "capital absorption capacity."

You can't just throw money at a problem, right?

Living Cities knows that, says Robin Hacke, and so set out to lend money to community development financial institutions but soon ran into problems that prevented their dollar from making a big impact.

Says Hacke, "We defined capital absorption capacity as the ability to make effective use of different forms of capital to provide needed goods and services to underserved communities, and then asked: How can you create capital absorption capacity? What makes places effective at deploying community investment?"

So, Living Cities developed a tool that would help organizations go from getting the money to help distressed communities to implementing the money to help distressed communities.

"We are still at an early stage of exploration. We are curious about how places vary in the ways they approach the capital absorption functions and about what interventions will prove to make the biggest different in strengthening capital absorption capacity. We have begun to learn about challenges and opportunities to improve the system as a whole. For example, we have been surprised by the lack of available data about the subsidies used in community investment deals or about the volume and characteristics of such deals," Hacke says.

Full Story: Letting the Dollars Land

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