New research shows that some U.S. communities are much better than others at attracting grants and financing for community development—even after adjusting for relative need. The numbers are clear, but the reasons for the disparity may not be.
You might think that community development funding in the United States—investments like small-business loans, federal housing grants, tax credits, and investments from community development financial institutions—go to local communities in rough proportion to their need. For example, in any given year, you’d expect communities to receive roughly the same amount of per-family and per-employee lending. And if any communities were prioritized, you’d hope they would be those that have higher levels of poverty and unemployment, as the public sector works to jump-start struggling economies.
As it turns out, that’s not the case. Urban Institute, through a grant from JPMorgan Chase, measured flows of federally sponsored or incentivized community development capital to all U.S. counties with more than 50,000 residents (which accounts for 88 percent of the U.S. population) using data from 2011 to 2015. We tracked funding in four dimensions: housing, small business, impact finance (loans from community development financial institutions and New Markets Tax Credit investments), and other community development programs. The upshot: some communities in the United States seem much better than others at attracting grants and financing for community development—even after adjusting for their relative needs. Here are some of the surprising trends we found:
Large counties get disproportionately more investment than small ones. You would expect that large counties with 300,000 or more residents get a lot more funding than small counties with less than 100,000 residents. But you’d also expect to see that difference go away once you adjust for the difference in size.
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