Organizational Development

The page focuses on establishing foundational policies and systems for CLT success.

Governance, leadership, and decision making policies and practices can be designed to support the multiple aims of a CLT- from a right to housing to cultural planning to building civic power.

What You'll Find on this Page:

Governance

Policies and Procedures

Legal

Financing and fundraising for a CLT

Partnerships

Explore the Resource Library database

Governance

What’s the structure?

Most CLTs are nonprofit organizations (a “charitable organization” with IRS tax code 501(c)(3) status)
Some are subsidiary corporations of a parent organization
Some are a program within the existing governance of an organization

Jump down to Legal to learn more about the tax implications of nonprofits and other organizational structures.

Becoming a nonprofit

Most CLTs are incorporated as 501(c)(3) charitable organizations, which can provide a variety of key benefits to your organization. These include exemptions from federal corporate income tax, limited liability for your organization’s officers and directors, and the ability to apply for grants and accept donations. The process to incorporate as a nonprofit can vary for different organizations, but often follows this process:

Naming your organization (choosing a distinguishable business name)
Recruiting and appointing a board of directors
Filing “Articles of Organization” with the Secretary of the Commonwealth of Massachusetts (SOC)
Preparing bylaws for your nonprofit (see below for more information on establishing your organization’s bylaws)
Applying for an Employer Identification Number (EIN) from the IRS
Obtaining necessary business licenses
Filing for tax-exempt status

For more information about incorporating your CLT as a nonprofit organization in Massachusetts, check out these resources:

Massachusetts: Boston College’s Law Library Nonprofit Resources
mass.gov: Non-Profit Organizations/Public Charities Forms
Starting a nonprofit in MA from Harbor Compliance and Nolo.com
Starting a Land Trust in MA — Massachusetts Land Trust Coalition
The Suffolk Questionnaire — Suffolk Law School

Top Resources about organizational structure:

Chapter 3: Incorporation and Basic Structural Considerations from Grounded Solutions 2011 CLT Technical Manual
"Sponsorship" from Starting a CLT, pg 14-24 — different foundational models and types of organizations that might start a CLT, including pros and cons
Variances in Governance Structures from Starting a CLT: Organizational and Operational Choices

The Board and Members

A CLT is democratically controlled by a board of directors. In line with the overarching goal of community control, most boards are made up of a representative mix of community members and other stakeholders. Here are some common ways CLT boards can be structured:

The tripartite board: This is the “classic” CLT board structure, where the board is made up of equal parts residents of the CLTs, non-resident community members, and public stakeholders. Many CLTs do not have a tripartite board.
- Residents of the CLT — Owners and renters of housing, commercial space leasees, farmers on the land.
- Community members — Neighbors or people who reside within the CLT’s community but do not live on the CLT’s land (Davis, 2007)
- Public — a broad category that could include a combination of:
  - people with skill sets/expertise that may particularly benefit the organization
  - tenant and housing justice organizations
  - public officials
  - local funders
  - nonprofit providers of housing or social services
  - community development organizations
  - other individuals presumed to speak for the public interest
Parent organization determined: In this case, the parent organization that hosts or supports the CLT nominates, elects, and appoints board members.
Representative community board: With this board type, seats are filled by a representative mix of community members. This can include: representatives from different ethnic/racial demographics; youth from the community; stakeholders from religious or cultural groups, other nonprofits, or community development organizations; and local elected officials.
Property-representative board: Since CLTs often host different uses on their land, some boards are made up of representatives for each land use type. This means there are board seats for representatives of agricultural land use, commercial spaces, fee-owned homes, rental properties, etc.

Image source: The Parkdale People's Economy Project

Some CLTs require that segments of the board be from specific demographic groups in order to share power within a diverse community.

CLTs that have different types of properties besides homeownership may consider having representatives from different property types on the board.

Some examples of CLT board structures can be found here:

Parkdale Community Economies
Dudley Neighbors Inc. Board
Berkshire Community Land Trust Board (see their bylaws for board details)

Bylaws: Establishing your organization's policies

Bylaws are the governing documents for a nonprofit, serving as the organization's operating manual. Bylaws reflect the mission and purpose, outline membership policies, board and officer responsibilities, and include processes around conducting meetings and elections. Bylaws can include information regarding decision-making procedures, adopting new or altering existing policies, record-keeping standards, and who holds the authority to sign financial and legal documents for the CLT.

Signing the board pledge, 2023. Image source: DSNI

Model Bylaws:

Chapter 5A: Model Classic Bylaws — The CLT Technical Manual
Chapter 5B: Model Classic CLT Bylaws with Commentary — The CLT Technical Manual
Dudley Neighbors, Inc. Bylaws

Business Planning

Going through a business planning process and having the plan as a guide can help set up a CLT for success. Business plans consider and communicate things like target markets, community needs, current housing landscapes, governance structures, potential partnerships, and visions/goals for a CLT's immediate and long-term future.

Top resources for business planning:

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Policies and Procedures

Values-aligned policies and procedures can help an organization accomplish its goals of maintaining/creating power, affordability and community control, serve community’s needs, and treat all stakeholders equitably across the lifetime of your organization.

These policies might start with who is eligible to buy or lease CLT properties. In order to maintain affordability and serve their communities, most CLTs implement some kind of income limit or other restrictions for the sale of their properties.

For more about what to consider when choosing these restrictions, see Chapter 8 of the CLT Technical Manual, as well as the Getting Started section to revisit some of your initial guiding questions and the mission of your CLT.

Some common documents that further support these policies and procedures are ground leases, deed restrictions, and resale/equity formulas.

Hear from Western Massachusetts organizers about their experiences in the CLT space.

Ground Lease

A ground leases is the agreement between the CLT (land owner) and the tenant/leasee (homeowner or other leasee). Ground leases spell out the rights and responsibilities of the two parties, ensuring that together, the CLT and tenant are stewarding the land in accordance with the mission of the CLT. For homeownership, ground leases are long-term agreements that last up to 99 years. Commercial and other uses may have shorter lease terms. Some things a ground lease may cover are:

Board and staff members dig in on ground lease design. Image source: BNCLT

Length of the lease
Occupancy requirements/limitations
Lease fees that the tenant pays to the CLT
Schedules of payment
Agreements about the goals to maintain affordability of the property
Allowed uses of the land, buildings
Whether improvements or changes can be made to the land/building
What kinds of changes are allowed and approval processes
Resale formula specifics
Homeowner responsibilities for property maintenance and taxes
Financing requirements
Insurance requirements and liability information
Transfer of the home to relatives
A CLT's right of first refusal upon resale of the home
Contingencies like: a homeowner falling into foreclosure, land taken by eminent domain

Top resources for getting started with ground leases:

CLT Model Ground Lease — Ch. 11A of the CLT Technical Manual
- Ch. 11B — Model Ground Lease with Commentary
Non-residential Ground Leases — Ch. 16 of the CLT Technical Manual
Model Ground Leases —Grounded Solutions Network
CLT Toolkit — Schumacher Center for a New Economics

Equity formulas

Equity formulas, also called resale formulas, are a crucial tool for CLTs. The equity formula determines the maximum value of a CLT home upon resale. The resale formula is carried through all of the CLTs documents and agreements, and requires board approval to be changed.

Equity formulas ensure that homeowners earn equity while maintaining affordability for the next buyer. An equity formula will balance wealth building today with affordability tomorrow. The ultimate goals of the formula are to ensure fair access and maintain affordability for future homebuyers, and fairly compensate the current homeowner for their investment and stewardship of the property.

Each CLT determines how to balance these goals, and design the resale/equity formula accordingly.

Some common resale formulas:

Itemized Formulas — changes the original purchase prices based on itemized improvements, depreciation, damage, and homeowner equity.
Appraisal-based Formulas — the original home price is adjusted based on a certain percentage of the increase in the home’s appraised market value.
Indexed Formulas — the home’s price is adjusted based on a change in a certain index, determined by the CLT. This index can be something like a change in median income or a change in overall housing costs in the CLT’s service area.
Mortgage-based Formulas — adjusts the resale price of home based on the amount of mortgage financing that the CLT’s target community would be able to afford given current interest rates.

Source: The City-CLT Partnership, John E. Davis & Rick Jacobus

Top resources for developing equity/resale formulas:

Resale Formula Design — Ch. 12 of the CLT Technical Manual
Affordable Pricing and Resale Formulas — Grounded Solutions Network
Comparison of Resale Formula Types — Burlington Associates
Interactive Resale Formula Tool — Street Level Advisors
Video Series on Resale Formulas — Grounded Solutions Network
Resale Formula Table — Chinatown CLT

Legal

Taxes

There is no special legal classification for CLTs in Massachusetts. Most community land trusts are formed as nonprofit 501(c)(3) organizations.

CLT-owned land, like any land, must meet a standard of use as a ‘charitable purpose’ to qualify for tax relief or exemptions. CLT land is taxed based on its use--whether it's leased for agricultural uses, parks or community gardens, housing, commercial, etc. Each city, town, county and state has its own tax laws. In Boston, CLT land that is leased to homeowners is subject to the normal residential tax rate. This tax is paid by the homeowners, not the CLT, and is based on home value + land value.

While the tax rate is not lower for CLT homeowners in Boston, the tax burden/tax paid by CLT homeowners is often reduced, because the home is valued at a below-market rate.

Resources for learning more about the legalities of CLTs:

Municipal Taxation of CLT Homes, from the Lincoln Institute of Land Policy
Legal & Tax Issues Around CLTs, from the National Agricultural Law Center
Considerations of Community Land Trusts, from the Georgetown Law Center
Legal Issues Regarding CLT Ownership, Ch. 10 of the CLT Technical Manual
Community Land Trust Technical Manual

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Financing and fundraising for a CLT

CLTs need operational money to run the organization, and funds to undergo capital projects like building a home or renovating a park.

Public sources include grants and forgivable loans from local and state governments as well as tax credit programs that your CLT may be eligible for (see CITC Program in MA). Semi-public housing financing agencies may finance real estate projects at below market rates.

Private sources include philanthropy and donations (both monetary and property) as well as investments (loans, program-related investments) from organizations, institutions, or individuals. Additionally, there are traditional/typical bank loans or mortgages that community land trusts rely on for projects.

Main sources of funding:

Government/city
Philanthropy or donor
Traditional bank loans/mortgages
Other institutions (hospitals, community development financial institutions CDFI's)

Sources of funding for land acquisition projects can include Community Development Block Grants, HOME Capacity Grants, local housing trust funds, and money from community investment tax credits (CITC). Some funding can even come from individual donations, institutional giving, and foundational grants.

Specific funding sources will vary depending on the type of project and where the CLT is, as well as the structure of the CLT and whether it is affiliated with a municipality or another community development organization.

Some examples of funds that may be available for land acquisition projects

Federal

Local sources

- - - - Partnerships with local credit unions for financing
        Check out this paper to learn more about how local credit unions may be able to work with your CLT
        Local housing trust funds
        Massachusetts’ Community Investment Tax Credit Program

Loans and mortgages

Traditional banks and lenders
- - CLTs, like their homeowners, often need to seek traditional loans and mortgages to purchase or develop properties. This usually happens before land and its use has been separated, and lenders will want to make sure that any future ground leases will not affect the repayment of the mortgage. Luckily, many major lenders are becoming more familiar with CLTs! See the Land & Real Estate section for more information on CLT mortgages.
Land banks
- - A land bank is an institution (public or community-owned) whose purpose is to acquire and manage property that are deemed blighted or neglected and repurpose them for community use. These institutions can help CLTs purchase or acquire land, as was the case for the Island Housing Trust on Martha's Vineyard when they partnered with a local land bank to develop affordable housing.

Individual donations, institutional giving, and foundational grants

Funds can come from grassroots donations, individual gifts, or money from larger institutions or community foundation grants!

For more on funding sources, check out these resources:

Funding — Starting a Community Land Trust by John. E Davis
CLT Financing Options — Greater Boston Community Land Trust Network
Solidarity Economy Funding Library — New Economy Coalition

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Partnerships

Coalitions and organizational cross-pollination

Our CLTs rely on partnerships with organizations and community groups over years of shared campaign work and organizing. CLTs work with other housing, land and environmental and economic justice groups to support policy and program changes at the City and State level, and to educate and normalize practices of collective ownership and community leadership.

City/town government

There are many ways that cities can help CLTs, including providing administrative support, providing direct funding via grants or loans, or even donating or repurposing city-owned land for CLT use. City governments enabling power when it comes to partnering with CLTs. These government institutions have access to land, money, and state actors in ways that nonprofit entities may not, but CLTs have direct community connections and the focus of perpetual affordability. Some CLTs have formed out of working groups within city governments.