Asset Based Community Development

Asset-Based Community Development (ABCD) is a community-focused approach that shifts the development paradigm from needs to strengths. It involves principles like asset mapping and capacity building, empowering communities to drive their own development. ABCD has found applications in diverse projects and nonprofit organizations, fostering sustainable, community-driven initiatives.

Introduction to Asset-Based Community Development (ABCD)

Asset-Based Community Development (ABCD) is an approach to community development that originated in the 1990s. It was developed by John L. McKnight and John P. Kretzmann, both researchers at Northwestern University, as a response to traditional community development practices that often focused on addressing deficits and problems within communities. ABCD takes a radically different approach by starting with the assumption that every community has valuable assets that can be harnessed to drive positive change.

At its core, ABCD is about empowering communities to become active participants in their own development, rather than passive recipients of external interventions. It encourages community members to identify, connect, and leverage their strengths and resources to improve their quality of life.

Key Principles of Asset-Based Community Development

ABCD is guided by several key principles that underpin its approach:

  1. Asset Mapping: The first step in ABCD is to identify and map the assets within a community. These assets can be tangible, such as physical infrastructure and natural resources, or intangible, like skills, knowledge, and social networks. Asset mapping helps community members recognize the full range of resources available to them.
  2. Community Engagement: ABCD places a strong emphasis on involving community members in all stages of the development process. It encourages active participation, decision-making, and leadership within the community.
  3. Capacity Building: ABCD seeks to build the capacity of individuals and groups within the community. This involves providing training, support, and opportunities for skill development, enabling community members to take on leadership roles and drive initiatives.
  4. Asset Mobilization: Once assets are identified, ABCD aims to mobilize them for community benefit. This may involve creating partnerships, leveraging resources, and connecting people with shared interests and skills.
  5. Sustainability: ABCD prioritizes long-term sustainability by focusing on the assets that are likely to endure over time. This ensures that community development efforts have a lasting impact.

Key Concepts and Practices

1. Asset Mapping

Asset mapping is a central practice in ABCD. It involves creating an inventory of the assets present in a community. Assets can be categorized into several types:

  • Individual Assets: These include the skills, knowledge, talents, and experiences of community members.
  • Associational Assets: These are the formal and informal groups, organizations, and networks within the community.
  • Physical Assets: This category encompasses tangible resources like buildings, parks, libraries, and infrastructure.
  • Economic Assets: Economic assets refer to local businesses, job opportunities, and financial resources.
  • Cultural Assets: Cultural assets involve the traditions, stories, art, music, and cultural practices of the community.

By identifying these assets, community members gain a better understanding of their collective strengths and resources.

2. Community Engagement

ABCD places a strong emphasis on engaging the community in decision-making and action. It encourages residents to participate actively in shaping the development of their neighborhood. This engagement can take various forms, including community meetings, workshops, focus groups, and collaborative projects.

3. Capacity Building

Capacity building is essential for empowering community members to take on leadership roles and drive initiatives. It involves providing training, mentorship, and opportunities for skill development. The goal is to equip individuals and groups with the tools they need to initiate and sustain positive change.

4. Asset Mobilization

Once assets are identified, ABCD seeks to mobilize them effectively. This can involve:

  • Connecting: Bringing together individuals and groups with complementary skills and resources.
  • Leveraging: Using existing assets to attract additional resources from outside the community.
  • Collaborating: Forming partnerships with local organizations, businesses, and institutions to support community initiatives.

5. Sustainability

Sustainability is a fundamental principle of ABCD. The approach focuses on assets that are likely to endure over time, ensuring that community development efforts continue to thrive long after external support has ended.

Benefits of Asset-Based Community Development

ABCD offers several significant benefits:

  1. Empowerment: ABCD empowers community members by giving them a sense of ownership and control over their development process. This empowerment can lead to increased civic engagement and a greater sense of pride and purpose.
  2. Resource Efficiency: By leveraging existing assets, ABCD often makes efficient use of resources, both financial and human. It minimizes duplication of efforts and reduces the need for external interventions.
  3. Sustainability: ABCD’s focus on enduring assets promotes the long-term sustainability of community initiatives. Communities become less reliant on external support as they learn to harness their strengths.
  4. Community Cohesion: Asset mapping and engagement activities foster a sense of community and strengthen social bonds. Collaborative projects can bring people together, enhancing social cohesion.
  5. Tailored Solutions: ABCD recognizes that each community is unique, and solutions should be tailored to the specific assets and needs of that community. This leads to more effective and culturally relevant interventions.

Challenges and Limitations

While ABCD offers many advantages, it also faces certain challenges and limitations:

  1. Resistance to Change: Some community members may be resistant to change or may have a vested interest in maintaining the status quo. Overcoming resistance can be a significant challenge.
  2. Resource Constraints: Communities with limited resources may struggle to initiate and sustain development efforts, even when leveraging existing assets.
  3. External Factors: External factors, such as economic downturns or changes in government policies, can impact a community’s ability to mobilize and sustain assets.
  4. Inequality: ABCD may not fully address underlying structural inequalities, as it primarily focuses on community-level assets. Addressing systemic issues may require broader policy changes.
  5. Skill and Knowledge Gaps: Communities may lack the necessary skills and knowledge to effectively mobilize and manage their assets. Capacity-building efforts can help address this limitation.

Real-World Applications of Asset-Based Community Development

ABCD has been applied in various contexts and settings around the world:

  1. Local Development: Many communities have used ABCD to address local challenges, such as improving education, healthcare, or infrastructure. For example, a neighborhood might mobilize residents’ skills to provide tutoring for students or organize a community garden to address food security.
  2. International Development: NGOs and international development organizations have adopted ABCD principles to empower communities in developing countries. These efforts aim to reduce poverty, enhance livelihoods, and promote sustainable development.
  3. Health and Wellness: ABCD has been applied to public health initiatives. Communities have used their assets to promote healthy behaviors, create support networks for individuals with health conditions, and improve access to healthcare services.
  4. Economic Development: ABCD can also drive economic development. Communities may support local businesses, encourage entrepreneurship, and create job training programs to boost their economies.
  5. Arts and Culture: Cultural and artistic assets play a significant role in community development. ABCD has been used to preserve and promote cultural heritage, support local artists, and enhance cultural events and festivals.

Conclusion

Asset-Based Community Development (ABCD) represents a paradigm shift in how communities approach their own development. By focusing on strengths and assets rather than deficits and problems, ABCD empowers communities to take control of their future. It is a collaborative, participatory, and sustainable approach that recognizes the inherent potential within every community. While it faces challenges, its benefits in terms of empowerment, resource efficiency, sustainability, and community cohesion make it a valuable tool for community development efforts worldwide. Through ABCD, communities can unlock their full potential and work together to create positive and lasting change.

Key highlights of Asset-Based Community Development (ABCD):

  • Asset-Centered Approach: ABCD focuses on identifying and harnessing the existing assets within a community, including skills, talents, relationships, and resources, rather than solely addressing needs and deficits.
  • Community Empowerment: It empowers communities to take ownership and control of their development by actively engaging community members in decision-making and action.
  • Capacity Building: ABCD emphasizes building the capacity of individuals and groups within the community, enabling them to leverage their assets effectively for sustainable development.
  • Sustainability: By relying on local assets and capacities, ABCD promotes sustainable development practices that endure beyond short-term interventions.
  • Social Capital: It fosters the development of social capital by strengthening trust, collaboration, and social connections within the community.
  • Collaborative Networks: ABCD encourages the formation of collaborative networks both within and between communities, connecting local assets with external resources.
  • Applications: ABCD is applied in various community projects, including neighborhood revitalization, education improvement, and healthcare initiatives, to achieve long-lasting positive change.
  • Global Reach: Its principles have been applied in diverse cultural contexts around the world, demonstrating adaptability and effectiveness.
  • Shared Learning: Communities engaged in ABCD often share their experiences and knowledge with others, promoting a culture of shared learning and innovation.
  • Ongoing Evolution: ABCD continues to evolve and adapt, incorporating new ideas and strategies to better serve communities and address emerging challenges.
  • Policy Influence: ABCD principles have influenced policies and practices in community development, emphasizing community-driven approaches.
  • Challenges and Critiques: Some challenges include resource constraints, equity concerns, and the difficulty of measuring the impact of ABCD initiatives due to their diverse nature.

Connected Financial Concepts

Circle of Competence

circle-of-competence
The circle of competence describes a personโ€™s natural competence in an area that matches their skills and abilities. Beyond this imaginary circle are skills and abilities that a person is naturally less competent at. The concept was popularised by Warren Buffett, who argued that investors should only invest in companies they know and understand. However, the circle of competence applies to any topic and indeed any individual.

What is a Moat

moat
Economic or market moats represent the long-term business defensibility. Or how long a business can retain its competitive advantage in the marketplace over the years. Warren Buffet who popularized the term โ€œmoatโ€ referred to it as a share of mind, opposite to market share, as such it is the characteristic that all valuable brands have.

Buffet Indicator

buffet-indicator
The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that countryโ€™s GDP. Itโ€™s a measure and ratio to evaluate whether a market is undervalued or overvalued. Itโ€™s one of Warren Buffetโ€™s favorite measures as a warning that financial markets might be overvalued and riskier.

Venture Capital

venture-capital
Venture capital is a form of investing skewed toward high-risk bets, that are likely to fail. Therefore venture capitalists look for higher returns. Indeed, venture capital is based on the power law, or the law for which a small number of bets will pay off big time for the larger numbers of low-return or investments that will go to zero. That is the whole premise of venture capital.

Foreign Direct Investment

foreign-direct-investment
Foreign direct investment occurs when an individual or business purchases an interest of 10% or more in a company that operates in a different country. According to the International Monetary Fund (IMF), this percentage implies that the investor can influence or participate in the management of an enterprise. When the interest is less than 10%, on the other hand, the IMF simply defines it as a security that is part of a stock portfolio. Foreign direct investment (FDI), therefore, involves the purchase of an interest in a company by an entity that is located in another country. 

Micro-Investing

micro-investing
Micro-investing is the process of investing small amounts of money regularly. The process of micro-investing involves small and sometimes irregular investments where the individual can set up recurring payments or invest a lump sum as cash becomes available.

Meme Investing

meme-investing
Meme stocks are securities that go viral online and attract the attention of the younger generation of retail investors. Meme investing, therefore, is a bottom-up, community-driven approach to investing that positions itself as the antonym to Wall Street investing. Also, meme investing often looks at attractive opportunities with lower liquidity that might be easier to overtake, thus enabling wide speculation, as “meme investors” often look for disproportionate short-term returns.

Retail Investing

retail-investing
Retail investing is the act of non-professional investors buying and selling securities for their own purposes. Retail investing has become popular with the rise of zero commissions digital platforms enabling anyone with small portfolio to trade.

Accredited Investor

accredited-investor
Accredited investors are individuals or entities deemed sophisticated enough to purchase securities that are not bound by the laws that protect normal investors. These may encompass venture capital, angel investments, private equity funds, hedge funds, real estate investment funds, and specialty investment funds such as those related to cryptocurrency. Accredited investors, therefore, are individuals or entities permitted to invest in securities that are complex, opaque, loosely regulated, or otherwise unregistered with a financial authority.

Startup Valuation

startup-valuation
Startup valuation describes a suite of methods used to value companies with little or no revenue. Therefore, startup valuation is the process of determining what a startup is worth. This value clarifies the companyโ€™s capacity to meet customer and investor expectations, achieve stated milestones, and use the new capital to grow.

Profit vs. Cash Flow

profit-vs-cash-flow
Profit is the total income that a company generates from its operations. This includes money from sales, investments, and other income sources. In contrast, cash flow is the money that flows in and out of a company. This distinction is critical to understand as a profitable company might be short of cash and have liquidity crises.

Double-Entry

double-entry-accounting
Double-entry accounting is the foundation of modern financial accounting. It’s based on the accounting equation, where assets equal liabilities plus equity. That is the fundamental unit to build financial statements (balance sheet, income statement, and cash flow statement). The basic concept of double-entry is that a single transaction, to be recorded, will hit two accounts.

Balance Sheet

balance-sheet
The purpose of the balance sheet is to report how the resources to run the operations of the business were acquired. The Balance Sheet helps to assess the financial risk of a business and the simplest way to describe it is given by the accounting equation (assets = liability + equity).

Income Statement

income-statement
The income statement, together with the balance sheet and the cash flow statement is among the key financial statements to understand how companies perform at fundamental level. The income statement shows the revenues and costs for a period and whether the company runs at profit or loss (also called P&L statement).

Cash Flow Statement

cash-flow-statement
The cash flow statement is the third main financial statement, together with income statement and the balance sheet. It helps to assess the liquidity of an organization by showing the cash balances coming from operations, investing and financing. The cash flow statement can be prepared with two separate methods: direct or indirect.

Capital Structure

capital-structure
The capital structure shows how an organization financed its operations. Following the balance sheet structure, usually, assets of an organization can be built either by using equity or liability. Equity usually comprises endowment from shareholders and profit reserves. Where instead, liabilities can comprise either current (short-term debt) or non-current (long-term obligations).

Capital Expenditure

capital-expenditure
Capital expenditure or capital expense represents the money spent toward things that can be classified as fixed asset, with a longer term value. As such they will be recorded under non-current assets, on the balance sheet, and they will be amortized over the years. The reduced value on the balance sheet is expensed through the profit and loss.

Financial Statements

financial-statements
Financial statements help companies assess several aspects of the business, from profitability (income statement) to how assets are sourced (balance sheet), and cash inflows and outflows (cash flow statement). Financial statements are also mandatory to companies for tax purposes. They are also used by managers to assess the performance of the business.

Financial Modeling

financial-modeling
Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.

Business Valuation

valuation
Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.

Financial Ratio

financial-ratio-formulas

WACC

weighted-average-cost-of-capital
The Weighted Average Cost of Capital can also be defined as the cost of capital. That’s a rate – net of the weight of the equity and debt the company holds – that assesses how much it cost to that firm to get capital in the form of equity, debt or both. 

Financial Option

financial-options
A financial option is a contract, defined as a derivative drawing its value on a set of underlying variables (perhaps the volatility of the stock underlying the option). It comprises two parties (option writer and option buyer). This contract offers the right of the option holder to purchase the underlying asset at an agreed price.

Profitability Framework

profitability
A profitability framework helps you assess the profitability of any company within a few minutes. It starts by looking at two simple variables (revenues and costs) and it drills down from there. This helps us identify in which part of the organization there is a profitability issue and strategize from there.

Triple Bottom Line

triple-bottom-line
The Triple Bottom Line (TBL) is a theory that seeks to gauge the level of corporate social responsibility in business. Instead of a single bottom line associated with profit, the TBL theory argues that there should be two more: people, and the planet. By balancing people, planet, and profit, itโ€™s possible to build a more sustainable business model and a circular firm.

Behavioral Finance

behavioral-finance
Behavioral finance or economics focuses on understanding how individuals make decisions and how those decisions are affected by psychological factors, such as biases, and how those can affect the collective. Behavioral finance is an expansion of classic finance and economics that assumed that people always rational choices based on optimizing their outcome, void of context.

Connected Video Lectures

Read Next: BiasesBounded RationalityMandela EffectDunning-Kruger

Read Next: HeuristicsBiases.

Main Free Guides:

About The Author

Scroll to Top
FourWeekMBA