Who Gets to Decide? CDEs and the Question of Capital Power
Joy D. Johnson
Not every organization should become a Community Development Entity.
And that’s exactly why more of the right organizations must.
CDE certification is not a badge of credibility. It is a strategic choice about power, responsibility, and risk. The real question is not whether your organization can become a CDE—but whether it is ready to lead capital decisions instead of responding to them.
This article cuts through the myths to clarify who CDE status is actually for—and when it’s better to wait.
Myth #1: “We’re Too Small to Be a CDE”
There is no minimum budget size, staff size, or geographic footprint required to become a CDE. What matters is not scale—it’s function.
CDEs are evaluated on whether they can:
Demonstrate accountability to low-income communities
Show a track record or clear intent to facilitate economic development
Operate with governance and financial discipline
Deploy capital in alignment with community benefit
Some of the most effective CDEs are not large institutions. They are deeply rooted ones. Small does not disqualify you. Being unfocused does.
A Neighborhood-Rooted CDE That Shifted Power
A powerful example of neighborhood-scale CDE leadership is Dudley Neighbors Inc. in Boston. Serving a single historically disinvested neighborhood in Roxbury/North Dorchester, Dudley Neighbors Inc. is a resident-controlled community land trust that became a certified CDE to retain control over land, capital, and long-term outcomes. Rather than relying on citywide intermediaries, the organization used CDE status to align tools like New Markets Tax Credits with a community-driven vision focused on permanent affordability, local ownership, and stability.
What makes Dudley Neighbors Inc. instructive is not its size, but its discipline. Operating in one geography, it treated capital as a strategic tool, not an end goal. Each investment reinforced a long-term neighborhood plan, ensuring that successful projects also shifted decision-making power. The result was not just revitalization, but structural change: assets stayed local, wealth was protected from extraction, and the neighborhood itself became the anchor institution.
For Ohio’s neighborhood and rural organizations, CDE certification represents a tangible opportunity to move from implementing externally defined projects to shaping capital strategies rooted in local priorities.
Myth #2: “You Have to Be a Developer or a Lender”
CDEs are not banks or developers. They are strategic capital vehicles.
Many CDEs:
Partner with developers rather than acting as one
Work with lenders while retaining control over project selection
Support operating businesses, nonprofits, and community facilities
Use tools like NMTCs to fill gaps others cannot
The defining question is not what you build.
It’s who decides.
If your organization already understands how capital should support a long-term community vision, you may already be thinking like a CDE—without the certification.
Who Should Seriously Consider Becoming a CDE
Organizations best positioned for CDE status tend to share a few core traits:
They are place-based or deeply accountable to a defined community
They think in systems, not just programs
They want influence over capital—not just access to it
They are willing to strengthen governance and financial systems
They are tired of starting over every funding cycle
CDEs are not about doing more projects. They are about doing connected ones.
Who Should Probably Wait
An organization may want to pause if it lacks basic financial controls, has unstable leadership or governance, or is pursuing CDE status primarily for prestige rather than strategy. Certification does not fix internal challenges—it magnifies them.
For some organizations, partnering with a CDE while intentionally building internal capacity is the smarter first step.
Choosing to Lead Differently
Becoming a CDE is not about checking a federal box. It is about deciding whether your organization is ready to move from the margins of capital decisions to the center of them.
Some organizations are ready now.
Some need time.
Some will choose a different path—and that’s okay.
But communities cannot afford for all leadership to sit elsewhere.
In the next article, I’ll walk through what the CDE application process actually looks like—what reviewers really look for, common mistakes, and how neighborhood organizations can prepare without losing momentum.
Because understanding the rules of capital is only the first step.
Learning how to use them—on your own terms—is the next.