Pratt Center for Community Development

United Durham, Inc. Community Development Corp. (UDI/CDC), Durham, NC

Despite the problems of racial oppression that were prevalent throughout the South in the 1950s, Durham, North Carolina's African-American community had a strong base of power. In addition to a network of black-owned and managed businesses and financial institutions that were known as the country's "black Wall Street," Durham had numerous colleges and universities that provided a quality education to the city's future black professionals. One of the community's most vital assets was its cadre of black leaders committed to bringing about social and economic change. During the civil rights movement, Durham was among the first cities to use sit-ins, street demonstrations, boycotts and other nonviolent protest strategies to break down the barriers of segregation and halt the practice of racial discrimination. One of its most successful campaigns for social justice, a boycott of Durham's white businesses, capitalized on the black community's economic power. As R. Edward Stewart, a participant in those early days of nonviolent protest recalls, "There was a movement to say, if we can't do things on an equal basis as whites, then we would not shop downtown."

Building Leadership to Fight Poverty

The struggle for social justice in North Carolina during the early 1960s required more than breaking down racial barriers, however. It entailed a battle against poverty and an effort to build community leadership throughout the state. To support a statewide antipoverty initiative, the Ford Foundation and several funders based in North Carolina created the North Carolina Fund (NCF) in 1964. Its main purpose was to help redistribute resources and bring about civil rights and economic justice. Fortunately, North Carolina had a progressive governor, Terry Sanford, who supported and recognized the value of NCF's strategy of engaging local leadership in efforts to improve education, employment training, social services, transportation, housing, and health care around the state.

NCF launched its antipoverty initiative by inviting counties throughout North Carolina to develop plans for addressing their most urgent needs. From the pool of applicants, twelve were chosen to receive funding to establish what were called Community Action Agencies. These agencies eventually became the model for the type of programs that were supported by the newly created federal Office of Economic Opportunity (OEO). Through their boards, which were mandated to include a broad spectrum of community representatives, the Community Action Agencies were to foster what was to become one of the basic tenets of President Lyndon B. Johnson's War on Poverty - the "maximum feasible participation of the poor."

Soon after these agencies were formed, however, several of NCF's African-American staff members became concerned that the boards of the Community Action Agencies did not truly empower impoverished residents of the state. For the poor to exercise real power, they asserted, they needed to create their own organizations and have full control over resources. To address this concern, some of the NCF staff members devised a plan for creating a separate entity, the Foundation for Community Development (FCD). This new organization would identify and build leadership in impoverished African-American, Native American, and white Appalachian communities in the state, and would help them to capture and direct resources to solve local problems. Fortunately, the idea received a favorable response and financial backing from the directors of NCF, and the new entity, the Foundation for Community Development, was created in 1967. Its first director was Nathan Taylor Garrett, a member of the African-American community who had served as the comptroller for the North Carolina Fund and had helped develop the concept for the new foundation. One of FCD's most important contributions to the antipoverty effort in North Carolina was the creation of a cadre of leadership with the skills to mobilize people to address their own needs and concerns. As Garrett describes, "People learned how to analyze situations, how to address a crowd, and how to plan a meeting so that you got out of it what you intended."

Creating Economic Alternatives

Initially, FCD helped its grantees to organize around such issues as the need for improved housing, bus transportation, sanitation, health care, and other basic services. Soon after its formation, however, FCD's mission was broadened to respond to community concerns about the lack of economic and employment opportunities in its 12-county impact area. To forge a strategy for nurturing economic enterprises within the black community, FCD worked with several neighborhood councils and local business associations. With his background in accounting and finance, Garrett was able to find an innovative means of selling stock in the community to form a for-profit business corporation, United Durham, Incorporated (UDI), which would be owned and operated by low-income people. In 1968, the organization was capitalized with $40,000 worth of Class A and B stock. The Class A membership was reserved for low-income residents of the neighborhood, and the Class B membership was reserved for people from the business community.

The concept behind UDI's creation was that it would help produce the goods and services that the African-American community was being asked to avoid buying downtown. As R. Edward Stewart, UDI's first executive director, points out, "If we were going to tell our relatives, friends, and neighbors not to shop downtown, the idea was to perhaps provide them with the basic needs of food, shelter, and clothing."

Launching the First Enterprises

UDI's decision to focus on enterprise development was timely. On the federal front, OEO was making a significant amount of funding available for economic development in low-income areas. In 1969, UDI secured a Title VII grant from OEO to start up its first ventures, a modular housing production plant and a supermarket. The plan for the production plant was to build housing units and sell them to another OEO-funded agency, which would use the federal Section 235 homeownership program to turn them over to local residents at a low cost. Unfortunately, this venture encountered a number of problems. At first, the other agency was not pleased with the quality of the housing, and refused to honor its original agreement to buy the first 50 units. Once UDI finally managed to address its initial production and marketing problems, the federal Section 235 program was frozen by the Nixon administration, and it became extremely difficult to sell the homes as originally planned. Eventually, the organization was able to build and sell the homes to residents in five other states, and was even able to use several units to build a day care center in Atlanta. Many of UDI's housing units had to be sold at a loss, however. The supermarket venture, which was also created to address an urgent need in the community, ran into management and financial difficulties as well. Upon reflection, Stewart points out that UDI's first enterprises had a very important function, despite their problems. Like many community-based economic development efforts, they provided the opportunity for low-income workers to gain valuable skills on the job. By serving as hands-on training sites, they enabled their workers to build their self-esteem and improve their long-term employment prospects. "I think that part of our mission is converting non-skilled or low-skilled persons into self-sufficient persons with self-sufficient capabilities," Stewart explains.

The Creation of a Community Development Corporation

During its first few years, UDI was operated as a for-profit subsidiary of FCD, and its grants had to be channeled through the foundation. After its initial difficulties with venture development, however, the organization was advised by its funders to reorganize its structure in order to avoid being encumbered by past debts. In 1974, UDI therefore decided to become a membership-based nonprofit community development corporation, the United Durham Incorporated Community Development Corporation (UDI/CDC). Its membership was comprised of 16 community councils whose representatives would have two-thirds of the seats on the board. Representatives from the business community would occupy the other seats. As Stewart explains, "The philosophy behind this is that low-income community persons mixed in with the corporate people will learn the economics of doing good business." This structure would also enable the business community to become aware of issues that affect local residents.

UDI/CDC's target area was comprised of 14 census tracts within the city and county of Durham, where 80% of the population was black and unemployment was very high. The CDC's mission was to raise the economic, educational, and social level of the area's low-income residents. While it maintained economic development as its program focus, it also began addressing the social needs of its community by serving as a referral center for people seeking human services.

Capitalizing on Real Estate

To advance its economic development agenda, UDI/CDC decided to capitalize on one of its underutilized assets, a 26-acre wooded plot which FCD had helped UDI to acquire in 1968. Because one of the largest research parks in the country, the Research Triangle, was being developed less than two miles from UDI/CDC's property, the organization's directors saw a prime opportunity to develop their own industrial park. Their idea was to create a facility that would accommodate smaller industries that wanted to expand, but did not have the sophistication or desire to locate in the Research Triangle. The project would not only create new enterprise and employment opportunities for the African-American community, but would also improve the organization's revenues and asset portfolio.

After exploring some potential sources of funding for the project, UDI/CDC discovered that the federal Economic Development Administration (EDA) had money available for water and sewer development in low-income areas. By piecing together $1 million for basic infrastructure, UDI/CDC was able to spur development in the area and make improvements that would have been cost prohibitive for a private developer. The beneficiaries of these improvements were the businesses who located in the industrial park, as well as an adjacent residential community which had relied on an aging and deficient septic tank system.

Building an Industrial Park

UDI/CDC's original plan was to use an EDA-financed revolving loan fund to encourage African-American manufacturers from other parts of the country to expand their operations into the Durham area. In part because the CDC had difficulties in identifying minority businesses who were willing to expand into the area, and in part because funds were scarce, UDI/CDC decided to make the park available to a wider range of businesses. The local Chamber of Commerce was, in fact, showing a great deal of interest in the development.

In order to create the industrial park, UDI/CDC had to use some innovative financing strategies. The organization's primary means of covering the cost of upgrading, developing and maintaining the park was to sell part of its land holdings and improvements such as sewer lines and street paving to businesses who were interested in building their own facilities. A total of 52 of the 91 acres that currently comprise the UDI/CDC Industrial Park have been sold to tenants. Now that the CDC has financed a major portion of the park, it does not plan to sell any more of its land holdings, however.

Today, the 91-acre UDI/CDC Industrial Park has an asset base of over $30 million. Stewart is proud of the fact that the federal funds invested in the park have leveraged private dollars many times their worth. In addition to a dozen industrial tenants, the park houses a small business incubator for ventures interested in tapping into the local service industry. For a nominal monthly fee, a private developer provides fully furnished and equipped offices, office support services, and on-site day care facilities to its tenants.

Accruing Benefits to the Community

As part of its mission of serving the community, UDI/CDC has worked with its business tenants to ensure that local residents benefit from economic growth in the industrial park. Although there is no contractual requirement for businesses to hire local residents, many of the industrial park's tenants draw upon the local work force to fill entry level positions. To date, the park has created an estimated 300 jobs. With an anticipated expansion of the park, UDI/CDC expects to see the creation of an additional 300 entry level positions in the near future.

UDI/CDC has also joined with North Carolina Central University's School of Business to build the capacity of existing and aspiring small business entrepreneurs, particularly minorities and women. Launched with a $470,00 grant from the U.S. Department of Health and Human Services in 1992, the Entrepreneur Training Institute provides an array of business management seminars to people who either already own a business or want to form one.

Investing in Housing and Neighborhood Development

To expand the scope of its mission to address the need for housing and neighborhood revitalization in a depressed section of its special impact area, UDI/CDC recently launched the North Five Point Project. This low-income housing and commercial development project is located in a predominantly African-American community in North Durham, about three blocks from downtown. The area had been designated as an Urban Renewal site, and had been sitting idle for about ten years before UDI/CDC intervened. To meet the need for affordable housing, the CDC has been renovating deteriorated structures and constructing new housing for low-income residents interested in purchasing single family detached homes. Because of a lack of basic goods and services within a 4-mile radius of the neighborhood, UDI/CDC has been developing a commercial complex that will house a supermarket, small stores and possibly a gas station. Although UDI/CDC does not expect the project to generate a lot of income, it believes that it has already served as a catalyst for neighborhood improvement. The project has also been beneficial to the CDC because it has allowed the organization to create a presence downtown, and has required it to form a partnership with the city of Durham.

The Long View

As Stewart reflects on the history of UDI/CDC, he is proud of its accomplishments. "A community development corporation comes to the table with nothing but a noble idea and a mission. It's going to take X amount of grants to get it to a stabilized position - five years and about $5 million, as a minimum. To be where we are in view of the mistakes we made when we got started, I feel very good about where we are going." A clear lesson from UDI/CDC's experience is that success has to be measured over the long term. UDI/CDC's future goals are to strengthen and expand its work in housing development and social services, and to expand and maintain its industrial park.

United Durham, Inc. Community Development Corporation (UDI/CDC)
P.O. Box 1349
Durham, NC 27702
(919) 544-4597