By Smith, Wayne
Partners in Community and Economic Development , Vol. 15, No. 2
As needs outstrip available resources, market forces drive stakeholders to cut costs through structural or functional combinations and greater standardization in order to grow--or merely to survive. The community development industry stands at an important crossroads, and new approaches are essential for its continuing viability. "Sustainability" and "scale" are indeed more than just new buzzwords.
Funding pressures call for greater efficiency
In a world of limited resources, all industries experience pressures to increase productivity through gains in efficiency to remain competitive. Community development is no different, and service providers have always grappled to make the most of their budgets.
But now more than ever, organizations are being forced to look at additional ways to cut expenses, increase productivity, or both in response to funders' expectations. Funding is becoming so scarce and difficult to obtain that many community organizations may face demise unless they implement major changes.
Some might argue that increased government spending is the solution to sustaining community development. But it's unrealistic to expect government funding to serve as a cure-all, given current policies and competing priorities. Nor can the collective resources of financial institutions or philanthropy keep pace with growing demands.
The bottom line is that many community development organizations will need to rethink long-range plans as they evaluate program costs and assess their effectiveness. Maximum internal efficiency will become increasingly the starting point in seeking and justifying resources.
Leveraging resources through alliances
Besides striving to maximize efficiency internally, organizations can increase efficiency through leveraging externally. For example, two organizations providing different yet complementary services can combine forces in serving the same community through an alliance or merger. Combining two smaller organizations with the same mission is another form of external leverage. Leveraging can also be achieved through joint ventures or various contract arrangements.
Granted, recommending leverage through alliances is easier said than done. Issues often arise concerning leadership, control, and inevitable staffing cuts in a merged organization. A successful alliance requires that both groups understand and recognize the quantifiable value of a combination--without ever losing sight of clearly defined goals about what's best for everyone, especially the community being served.
Clear communication that builds trust among all parties is vital, especially among the boards of directors. In addition to evaluating the structural aspects of a merger, risks should be explored thoroughly, including legal matters. Third party professionals can be engaged to provide guidance any step along the way.
Improving marketplace sustainability
In addition to looking at the sustainability of individual organizations, community development must also strive for sustainability through efficient markets. For example, community development efforts that attract market-rate investment stand a greater chance of creating momentum to benefit the entire community over a shorter period of time. This success reduces the need for additional subsidies, allowing funds to flow into other projects. Serving more people with fewer resources further enhances efficiency.
In considering sustainability at the level of individuals and families, it has become apparent that creating affordable homeownership must be complemented by access to mainstream banking products and services. Continuing reliance on expensive, fringe service providers drains precious wealth-building opportunity and threatens personal financial sustainability. At all levels of community building, best practices maximize use of limited resources.
Encouraging more standardization
What do we mean by the term "attaining greater scale" in community development? …