You Can't Just Throw Money at Community Development

Living Cities set out to lend money to community development financial institutions in five distressed cities but were met with a mountain of challenges. Here are the lessons learned from addressing the lack of "capital absorption capacity."

1 minute read

May 14, 2014, 10:00 AM PDT

By [email protected] @shelterforce


You can't just throw money at a problem, right?

Living Cities knows that, says Robin Hacke, and so set out to lend money to community development financial institutions but soon ran into problems that prevented their dollar from making a big impact.

Says Hacke, "We defined capital absorption capacity as the ability to make effective use of different forms of capital to provide needed goods and services to underserved communities, and then asked: How can you create capital absorption capacity? What makes places effective at deploying community investment?"

So, Living Cities developed a tool that would help organizations go from getting the money to help distressed communities to implementing the money to help distressed communities.

"We are still at an early stage of exploration. We are curious about how places vary in the ways they approach the capital absorption functions and about what interventions will prove to make the biggest different in strengthening capital absorption capacity. We have begun to learn about challenges and opportunities to improve the system as a whole. For example, we have been surprised by the lack of available data about the subsidies used in community investment deals or about the volume and characteristics of such deals," Hacke says.

Tuesday, May 13, 2014 in Shelterforce Magazine

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Wastewater pouring out from a pipe.

Alabama: Trump Terminates Settlements for Black Communities Harmed By Raw Sewage

Trump deemed the landmark civil rights agreement “illegal DEI and environmental justice policy.”

April 13, 2025 - Inside Climate News

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 16, 2025 - Diana Ionescu

Black and white photos of camp made up of small 'earthquake shacks' in Dolores Park in 1906 after the San Francisco earthquake.

The 120 Year Old Tiny Home Villages That Sheltered San Francisco’s Earthquake Refugees

More than a century ago, San Francisco mobilized to house thousands of residents displaced by the 1906 earthquake. Could their strategy offer a model for the present?

April 15, 2025 - Charles F. Bloszies

Ken Jennings stands in front of Snohomish County Community Transit bus.

Ken Jennings Launches Transit Web Series

The Jeopardy champ wants you to ride public transit.

April 20 - Streetsblog USA

Close-up on BLM sign on Continental Divide Trail in Rawlins, Wyoming.

BLM To Rescind Public Lands Rule

The change will downgrade conservation, once again putting federal land at risk for mining and other extractive uses.

April 20 - Public Domain

Calvary Street bridge over freeway in Indianapolis, Indiana.

Indy Neighborhood Group Builds Temporary Multi-Use Path

Community members, aided in part by funding from the city, repurposed a vehicle lane to create a protected bike and pedestrian path for the summer season.

April 20 - Smart Cities Dive