Introduction icon

In this section:

Why Policy Matters

Why does public policy matter for equitable community development?

Many of the inequities we see in our communities today are the direct outgrowth of inequitable public policies and government practices. Since America’s inception, our federal, state, and local governments have used law and policy to codify prejudice and discrimination, particularly in relationship to land and property. While overtly discriminatory laws are now outlawed, their imprint and ramifications linger.

Yet, we do ourselves a disservice by attempting to sidestep or relegate the public sector to the margins of our work. A rigorous effort to build a community development practice centered on equity must contend with both the historical policy context that frames our current reality and the enormous role public policy plays in shaping the field as a whole and our day-to-day work as practitioners.

Defining Community Development
Informally, we use the term community development to describe everyday people coming together to improve life for their neighbors and families. Formally, community development is a field of practice with its own conferences, magazines, and cultural norms. In this guide, we are talking about community development as a practice that invests in people and places that don’t benefit from conventional financial systems.

At the national scale, the most visible connections between policy and community development are funding sources (like tax credits and Community Development Block Grants) and the agencies and departments that oversee them (like the Department of Housing and Urban Development [HUD] and the CDFI Fund at the Treasury Department). But the federal government also has an impact on community development through how it intervenes in and regulates markets, for instance by influencing interest rates, which have a dramatic effect on who can access home and business loans, or setting standards for federally insured loans, which extend homeownership opportunities to people and families not served by traditional mortgage products3.

State and tribal governments shape community development efforts as funders, program managers, and regulators. They create, distribute, and manage funding streams and programs, such as federal funds, housing trust funds, and small business support programs. They are also in charge of things like insurance standards and tax codes that shape larger market forces.

Local governments—the focus of this guide—are where the rubber hits the road. In addition to ensuring that state and federal funding sources make it to the people and projects they’re designed for, local governments develop legislation and regulations (such as zoning codes, building permits, and business licensing regulations) and programs (such as tax increment financing, down-payment assistance programs, rental assistance programs, code enforcement, bond programs, and much more). Cities and counties also can tax and spend in ways that can either bolster existing funding sources or exacerbate over-reliance on private capital and dwindling federal and state funding streams.

In other words, when community development practitioners and investors focus on funding as government’s primary contribution to community development, we limit our field of vision. If we expand that field of vision, we can ask questions like:

  • What policies will ensure that public land remains a public good?
  • If no new sources of funding are available, how can a city’s general fund do a better job of supporting Black, Latinx, Asian-American, and Native business owners?
  • How can policy resolutions be used to align funding streams across cities in ways that expand equitable affordable housing production across a region?
  • How do we craft policies to ensure people’s basic needs are met regardless of their citizenship status?
  • Are we working on unceded tribal territory and what is our jurisdiction doing to grow in a way that honors and respects indigenous sovereignty today?
  • What policies and procedures can we create or change to expand tenants’ opportunities to purchase their apartment buildings or provide a right to return for Black families displaced by earlier government investments and policies?

How government leaders choose to answer questions like these determines not just the possibilities for individual community development projects, but how resources flow through a community and how people will live for generations.

As you think about how to move your community development efforts forward, you do not need to lead new policy campaigns or become a central player in policy decisions. Still, it is worth your while to consider the full spectrum of ways that government can contribute to your results as well as how government can help eliminate the compounding harms of economic inequity and systemic racism that you aim to dismantle.