Community Development Block Grants have dwindled, but still help small businesses

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Alisha Wescott of Burlington, Vermont, is trying to get her online nail business off the ground.

She makes long, elaborate acrylic nails, often decked out with glittery illustrations of cartoon characters. She’s built a following over the past few years, showing off her nail creations in Instagram and TikTok videos.

“The type of nails I do are more like, wow factor,” she said.

In August, she started selling her own custom kits of acrylics and glitters so her followers can make similar nails. Which is why she’s spent a lot of time this year in John Gergely’s office. He’s an advisor at the microbusiness development program at the non-profit Champlain Valley Office of Economic Opportunity.

Gergely advises hopeful entrepreneurs like Wescott thanks, in part, to a federal Community Development Block Grant. About $70,000 a year supports the program. But if the Trump administration gets its way, that funding could dry up in the next fiscal year.

The administration has proposed cutting CDBGs completely, arguing they’re “poorly targeted.” But House and Senate committees have both included funding for the program in their budget proposals. As they try to find a path forward on the overall federal budget, lawmakers will decide whether to continue funding this 50-year-old program that’s aimed at helping lower and middle income people and the communities they live in.

For now, CDBGs help make it possible for John Gergely to help Alisha Wescott with her small business. At their most recent meeting, they hunched over a computer to wade through a state tax form. Then, Gergely helped Wescott figure out the per-unit cost of the tiny amounts of glitter she sells in her nail kits.

“So you paid, in this case, what, $134 for three kilograms, right?” Gergely asked. He pulled out a calculator to figure out the cost of each 10-gram jar of glitter Wescott plans to sell.

“So that's 50 cents, roughly, of cost,” he explained.

The federal lawmakers who created the Community Development Block Grant program in 1974 probably couldn’t have imagined it being used to help get a nail influencer’s business off the ground, but that was by design.

“This is a program where cities, counties, or for the smaller places, states, are in control of what gets done,” said Brett Theodos, who leads the community and economic development practice at the Urban Institute.

CDBGs were created, he said, to revamp federal “war on poverty” programs of the 1960s. Lawmakers at the time wanted to shift spending decisions from the federal government to the local level. So ever since, communities around the country have used the funds for all kinds of projects and services, as long as they mostly benefit low and moderate income residents.

“It could be used to fund sidewalks or infrastructure,” Theodos said. “It could be used to support small business advising. It could be used to support business facade upgrades.”

Despite that variety, the program has also dwindled over time, said George Galster, a professor emeritus of urban affairs at Wayne State University.

“We've seen across multiple administrations, over multiple decades, essentially a flat line budget,” Galster said.

Since its inception more than 50 years ago, the program’s funding has stayed between $2 and $4.5 billion a year. With inflation, those dollars don’t go nearly as far as they used to.

While the program might well survive into the next budget year, few politicians in either party have ever taken up the mantle of expanding or modernizing it, Galster said.

“It's one of these almost vestigial programs,” he said. “Nobody wants to abolish it, but they're essentially letting inflation abolish it for them.”

Still, the $3.3 billion of CDBGs appropriated in the past fiscal year do have an effect — on nail influencer Alisha Wescott, for instance.

“He opened the doors for me in terms of knowledge,” she said of John Gergely, the business advisor whose work is partly funded by a CDBG. Their meetings, Wescott said, have been essential to getting her small business going.

“I feel confident now,” she said. “I'm forever thankful for him, for sure.”

She plans to release her next collection — a Halloween-themed package of nail acrylics — later this month.