Becoming Certified as a CDC

by Sharon
(Black)

Reviewed: June 12, 2024

Visitor Question: Who can I apply to for my company to become a Community Development Corporation? When is application taken?

Editors Reply: Sharon, a community development corporation (CDC) is indeed a powerful agent of change in a neighborhood or broader community if and when it is carefully built.

To answer your immediate question in your title first, there is no such thing as certification of a CDC in the United States. Other countries might have such a process, but then again, they are likely also to call this kind of entity something different.

The body of your question also refers to "applying" to become a CDC. Here too there is no such thing as applying to become a CDC.

Now what you will need to do is to become a corporation in your headquarters state. But it sounds as though you already have a "company," a term that is most often used to describe a for-profit company or corporation.

CDCs are almost always non-profit corporations, although some may own and control for-profit subsidiaries. If you want to keep your current "company" as part of the CDC, or maybe as an income-producing aspect of the CDC, that will be fine providing you give the CDC ultimate control of and ownership of the company.

If you want to keep your current company, which we are assuming to be profit-making or aspiring to be so, you can do that, but keep it separate from the CDC unless you are willing to have the CDC control the company.

By its very nature, a CDC attempts to involve the community not only in its projects, but also in its governance. So if you turn "your" company into a CDC, you will be giving up control and sharing power with a group. Certainly you can become one member of the board of directors of the CDC corporation, but you will need others as well.

State governments vary considerably in what is required to become a non-profit corporation. Consult your state's Secretary of State office, which could be called something different in your state, to determine what the legal requirements are. Usually you will need a minimum number of directors or incorporators, usually at least three. So shift your thinking from "me" and start thinking about who the "we" is.

Also be thinking of the geographic territory to be addressed by the CDC you want to start. If you have immediate projects in mind for the CDC, start writing those down.

Beyond that, we want to call your attention to two pages on this website that will answer many questions about a CDC. The general page about starting a CDC will answer many of your questions and clear up some of the confusion you are experiencing. Another page about faith-based community development corporations might be applicable too if your CDC is rooted in religious conviction.

We also answered a question similar to yours, but out reply in that article is quite different but still relevant to you. Both are true! Please see the page on CDC recognition. In our Visitor Q&A section of the menu of this website, you will find a few more questions and answers about community development corporations that might be helpful.

One other thought is that if your idea is to convert your current company into a CDC, you can certainly do that, but it will involve one or two extra steps. For instance, states usually don't allow two corporations of the same name, so you would have to talk to your state about dissolving a for-profit corporation before you start a new non-profit corporation of the same name. As another example of how this could become complicated fast, you might receive some tax benefits by creating the CDC with a different name first and then donating assets of your current company to the CDC. But rest assured, all of this can be handled. We really don't recommend setting up a CDC without the help of an attorney who is familiar with non-profit work, so any licensed attorney should be able to help with any such issues that arise.

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