Community mobilization and credit: The impact of nonprofits and social capital on Community Reinvestment Act lending

Objective. Recent trends in urban research emphasize the importance of local nonprofits and social capital in the revitalization of poor and minority neighborhoods. This article tests the idea that urban communities able to mobilize themselves by establishing development nonprofits and overcoming collective action problems will be better able to make use of urban-development policies. Methods. Measures operationalizing nonprofit presence and social capital are used in an empirical test to see if they can, through the medium of the Community Reinvestment Act, increase the number of mortgage and business loans in Washington, D.C. Results. <LF>These variables show only weak effects on mortgage lending, but very strong results for small-business lending in all types of communities. Conclusions. The results suggest that nonprofits and social capital may have only limited benefit in the revitalization of urban neighborhoods and researchers and practitioners should be careful when relying on them.