History: Our Three-Decade Journey
It started with a 1980 phone call from Michael Svirdoff of the Ford Foundation in New York City, to a lawyer in Chicago named Allison S. Davis. Svirdoff asked if there would be a market in Chicago for loans and grants to help community development projects.
“I said, ‘Sure,’” remembers Davis, who had witnessed the birth of non-profit developers in Chicago. “The problem was that there were no resources available. The banks weren’t interested.”
Thus was born LISC/Chicago, the first regional office of the Local Initiatives Support Corporation and a newfangled tool for channeling corporate and philanthropic resources into local initiatives.
The core concept for this “financial intermediary”was that community development corporations, or CDCs, would have a better understanding of local needs and conditions than most bankers or other funders. Davis found plenty of demand for the LISC “product,” moving loans and grants for multi-family apartment rehabilitations, retail projects and pre-development “soft costs.”
By 1982 a local advisory council had been formed and the first LISC/Chicago capital campaign brought $2.5 million into the capital pool. It was a prescient move, because non-profit development was about to take off.
In 1984, Andy Ditton became Chicago’s full-time program director and took full advantage of local and national forces that would triple the Chicago offices’ output over two years, and then triple it again. Ditton hired Barbara Beck, a financial expert who had worked for Uptown developer Voice of the People, and they were ready when the federal Community Reinvestment Act encouraged banks to direct lending into once-shunned neighborhoods.
With national LISC, they helped craft the Low-Income Housing Tax Credit in 1986 and then created a financial intermediary, the National Equity Fund, that would allow corporations to pour millions into affordable housing. It was a heady time for CDCs and LISC alike. More fund-raising added $3.5 million to the pot, and by 1989 LISC/Chicago was putting $5 million a year into local communities.
But as new non-profits sprouted across Chicago, totaling more than 100 groups, the future was threatened by a serious lack of experience and organizational capacity. There was a learning curve for everyone, LISC included, and a general understanding that if community developers were to “go to scale,” they’d have to bone up on finance, construction, property management and a dozen other skills.
The John D. and Catherine T. MacArthur Foundation made that happen. The foundation committed $11.3 million to the nation’s largest CDC capacity-building effort, a Fund for Community Development that would provide trainings, organizational assessments, technical assistance and, importantly, support for staff and overhead. Sixty-two groups applied, 28 were accepted and a few “emerging” CDCs were added soon after.
Results? In the five years through 1993, Chicago-based CDCs produced 4,300 units of housing and several hundred thousand square feet of commercial space, leveraging $300 million. LISC/Chicago had invested $37 million since inception and the National Equity Fund had put $72 million into Chicago projects.
And yet it wasn’t working exactly as hoped. Though CDCs turned around retail strips and saved numerous corner apartment buildings, the general direction in many neighborhoods continued downward. Housing and retail weren’t enough, and certainly weren’t immune to what was happening on the sidewalk. Drug dealing, gang activity, nonpayment of rent and weak economic times brought severe pressure on overstretched organizations, and in 1995 the dam burst as three large non-profit housing developers collapsed.
The retrenchment and introspection that followed led LISC/Chicago’s new senior program director, Andrew Mooney, and MacArthur vice president Rebecca Riley to convene the Futures Forum in 1996, a year-long series of meetings and discussions to help refocus community development work in Chicago.
The 100 or so participants included many wizened veterans of the maturing field, and their conclusion was both simple and complicated: CDCs should build “healthy communities.” That meant stretching their activities into education, health, neighborhood safety and beyond.
LISC broadened its range of potential partners, embraced “comprehensive community development” and set a goal of connecting neighborhoods to the economic mainstream. “We changed from working only with non-profits to include for-profits and others who are best equipped to serve the neighborhood,” says Barbara Beck.
Today’s LISC/Chicago grew out of that Futures Forum and a three-neighborhood pilot program called the New Communities Initiative, launched in 1999. LISC had always been a broker of financial instruments, but now it was coaxing unlikely collaborators to the table and more aggressively partnering with the City of Chicago and others.
The NCI pilot gained enough traction that, again with substantial support from MacArthur, the much-larger New Communities Program was launched in 2003. More than ever before, LISC was a broker, facilitator, grant-maker and lender, and as always, a conduit to “local initiatives.”
“Beginning with the Futures Forum, LISC has led the way to the acknowledged best practice— comprehensive community development that addresses the full range of challenges and opportunities,” said Julia Stasch, Vice President of the Program on Human and Community Development at the John D. and Catherine T. MacArthur Foundation. “LISC itself has evolved with the demands of the times—from financing housing in its early years to a thought leader, broker of resources and good ideas, and lender for child care centers and charter schools.”
“LISC has become a hub of information,” says John G. Markowski, Commissioner of the Chicago Department of Housing. “It is uniquely positioned for relationship-building and has been a reliable, flexible partner for the city and community groups.”
Its current portfolio, $20 million constantly moving in and out of deals, is invested in several Chicago Housing Authority mixed-income developments; child-care centers; rental preservation projects from Logan Square and Woodlawn to suburban Woodstock; the Westside Health Authority building; even land-banking in North Lawndale.
But even as it intensified its investments, LISC kept its’ eye on the prize’. “If LISC was involved you knew there was a standard of quality in a project,” says Sandra Guthman, President of long-time LISC-supporter, the Polk Bros. Foundation. “The combination of quality with the ability to leverage dollars makes LISC an attractive investment and has enabled us to impact a number of communities across the city.”
Still, there are no ‘silver bullets’ in community development. “This work is not a fad, it requires a sustained effort of involvement and partnership, with all constituencies in the community, to flourish,” says Perry Pero, Chair of the LISC Board of Advisors and recently retired Vice-Chairman of The Northern Trust Company. “LISC has been successful because it has a long term commitment to the city’s neighborhoods.”
And as it reached its 25th year of operation, LISC/Chicago was seeing strong results in the nation’s largest demonstration of comprehensive community development, the New Communities Program. “I often times worry about intermediary organizations defining community development,” says Joy Aruguete, executive director of the 38-year-old Bickerdike Redevelopment Corporation, an NCP lead agency and long-time LISC partner. “But LISC has kept it local. NCP has given us the opportunity to bring true collaborative efforts to fruition.”
“The landscape of community development in Chicago is going to change,” says Steven McCullough, CEO of Bethel New Life, among the new generation of community development leaders. “The key will be people and organizations that manage complex and diversified programs while remaining focused on the goal of sustaining, growing and building strong communities. LISC’s continued partnership in this work is critical.”
– from the “2005 Donors Report,” Patrick Barry, Author