While there is no legal definition of the term "community development corporation" in Maryland, community development corporations or "CDCs" are generally defined by their community-based leadership and community-based goals. CDCs are broadly defined, but are typically locally based tax-exempt non-profit corporations that promote physical and social improvements in communities with a significant low-income population.
CDCs can be set up by community residents, local small business owners, church congregations and leadership, members of civic associations, and others to promote the revitalization of their community. They can perform a wide variety of roles, such as housing, commercial, and retail development, leading community planning, providing social services, health education, career training, and assisting with community improvement programs such as improved lighting and streets. A CDC’s reach may include a small neighborhood or extend to cover an entire city, county, region, or even an entire state.
There are programs, private and governmental, that fund CDCs, and each program has its own eligibility criteria. Some states, including Massachusetts, require an organization to meet certain requirements in order to receive funding from the state and to be considered a CDC. This is not the case in Maryland.
What is a CDC in Maryland?
In Maryland, a CDC is legally the same as any other non-stock corporation. In order to form a CDC, one must follow Maryland’s steps to incorporate as a non-stock corporation.
Some Steps to Forming a CDC in Maryland
The list below includes certain required preliminary steps and some best practices in forming a CDC in Maryland. Consulting with an attorney for all steps is not necessary, but it is a good idea for some of the steps.
- Define the community by attributes such as its geographic boundaries.
Define and assess the needs of such community and consider what the CDC could contribute to these needs.
- Examples include economic development, jobs, housing, education, health, senior citizen assistance, and other social services.
Form an initial steering committee - Find like-minded individuals to form an initial steering committee for the future CDC.
- These individuals can be leaders from the city and county government, community, churches, public charities, or an established group within the organization forming the CDC.
- Provide an open forum - At this point, the organization may want to share ideas and gather information by providing an open forum where members of the community are invited to learn, offer suggestions, and ask questions regarding the steering committee’s vision for the CDC.
Develop a specific mission of the CDC and organize a group of people dedicated to that mission.
- Who you are and what you will do; why is the mission important; and what are your core values?
- Consider and plan finances and funding.
- Develop and draft bylaws that control the board of directors, officers, and members of the CDC.
File with the State Department of Assessments and Taxation (SDAT) to become a non-stock corporation. The form and instructions are located at Maryland’s State Department of Assessment and Taxation’s website:
This form serves as the corporations Articles of Incorporation.
If the CDC decides to use a different name than the one listing on the Articles of Incorporation, it must also register that Trade Name with SDAT. The form and instructions are located at Maryland’s State Department of Assessment and Taxation’s website:
- If the CDC decides to use a different name than the one listing on the Articles of Incorporation, it must also register that Trade Name with SDAT. The form and instructions are located at Maryland’s State Department of Assessment and Taxation’s website:
Obtain a federal Employer Identification Number (EIN) from the Internal Revenue Service.
The form and instructions for obtaining a federal EIN are located at Internal Revenue Service’s website:
- The form and instructions for obtaining a federal EIN are located at Internal Revenue Service’s website:
Apply for federal tax-exempt status - While it is not required, the CDC may also wish to apply for federal tax-exempt status with the Internal Revenue Service. Many applications for grants require proof of tax-exempt status.
Detailed instructions for applying for tax-exempt status are located at Internal Revenue Service’s website:
- The CDC may also consider using the services of a like-minded fiscal sponsor. A fiscal sponsor allows you to use its tax-exempt status for purposes such as applying for grants and soliciting donations. A CDC should consider the fiscal sponsor’s requirements and fees when selecting one to partner with.
- Detailed instructions for applying for tax-exempt status are located at Internal Revenue Service’s website: