Community Development Block Grant (CDBG) – Overview
The Community Development Block Grant, or CDBG, offers federal funding for projects aimed at improving people with low or moderate income quality of life. It is also aimed at revitalizing urban activity centers and addressing the urgent health and safety needs of low-income and underserved communities within the US.
The CDBG program has been operating since 1974 under the U.S. Department of Housing and Urban Development (HUD) and is the longest-running community development and housing affordability program in the United States.
How Does the Community Development Block Grant (CDBG) Program Work?
The U.S. HUD allows a portion of its budget annually to fund the CDBG program. The Department of HUD uses a certain formula to allocate funds to its “entitlement grantees,” specifically the designated large cities, including counties with a population of over 200,000 people.
Entitlement grantees receive up to 70% of CDBG funds while the HUD distributes the remaining 30% of CDBG funds to states. Then, the localities within the state can submit applications and compete for CDBG funds. In March 2022, HUD allocated around US$ 3 billion towards CDBG-Disaster Recovery. Since its establishment in 1974, the CDBG has distributed an astonishing US$ 160 billion towards community and block development initiatives across the United States.
What Are the Eligibility Criteria for Receiving CDBG Funds?
Nonprofit organizations, private corporations, and individuals are not eligible to apply for or receive CDBG funds. However, the following are the criteria for eligibility to apply for CDBG funds:
- Principal cities of 384 MSAs (Metropolitan Statistical Areas), which are made of one or more counties and have a high degree of social and economic integration, comprising a core of at least one urbanized area with 50,000 or more people.
- Any metropolitan city with a population of over 50,000.
- Qualified urban counties with a population of over 200,000.
- States and insular areas (except Hawaii)
What Are the Benefits of a Community Development Block Grant (CDBG)?
HUD rules divide qualifying CDBG activities distinctly for low-income to moderate-income populations into several categories, namely:
Area Benefit Activities
These activities are provided to all residents, regardless of income level. The eligibility criteria for this CDBG fund require that at least 51% of individuals fall below that area’s median income limit. Some examples of Area Benefit Activities include service or infrastructure improvement projects, such as installing water and sewer systems, street improvements, or even cosmetic improvements to buildings.
Limited Clientele Activities
Though these may appear self-explanatory, there are certain limit restrictions to apply for this CDBG fund. This fund affects a specific subset of the area’s population instead of benefiting the residents of a certain area. To qualify for this CDBG fund, the recipient of the benefits must have at least 51% of people who meet the general low-income requirement.
To allocate these funds, the HUD assumed that several classes of individuals are mainly low- to moderate-income persons, which may include:
- Abused children
- Older adults
- People experiencing homelessness
- Battered spouses
- Migrant farm-workers
- Illiterate adults
- Persons suffering from AIDS
- People with severe disabilities
Limited clientele activities are specific to their target groups, as opposed to being a part of a more extensive program meant for all the residents of a particular area. For instance, a food pantry that serves low-income individuals in a particular area is not considered a limited clientele program. However, they benefit the homeless, the elderly, and people with special needs.
However, any organization that provides services for the elderly, such as meal programs, senior shelters, job training, and employment services for the severely disabled, qualifies for a limited clientele activities fund. This fund can also cover certain commercial activities, such as assisting micro-enterprises operated by low- or moderate-income persons, especially if they are traditionally members of a minority community.
Low- to Moderate-Income Housing Activities
This CDBG fund is provided once the HUD assesses the eligibility of housing activities on a household basis instead of an individual basis. These funds are allocated to provide housing to low- to moderate-income persons. This lets HUD consider situations where multiple unrelated people inhabit the same housing and can contribute to the cost of buying and maintaining the housing. Additionally, the household must meet the minimum income requirement to receive these funds.
This also includes an occupancy rule dictating the percentage of occupancy by low- to moderate-income households, depending on the type of housing.
Employment or Job Activities
This type of CDBG activity helps to create or retain permanent jobs. These activities can remedy common disparities in career opportunities for conventionally under-represented minority groups. The eligibility criteria to receive this type of CDBG funding requires applicants to belong to low- to moderate-income households and hold at least 51% of associated jobs full-time.
Numerous communities across the United States have effectively used CDBG funds to improve infrastructure and offer better community services, especially to low- to moderate-income households and individuals. You can find out more details, such as eligibility criteria and application process, by visiting the official HUD website.