Recognizes that private nonprofit corporations fill an important public purpose in providing health, safety, and welfare services to our state's residents. Acting through partnerships with governmental entities, these private sector providers are able to increase the amount and quality of services available to state residents, conferring a valuable benefit on the public.

Finds that existing programs by local governments, federally recognized Indian tribes, and private nonprofit organizations to help distressed communities and underserved, low-income populations could be enhanced by creating the community development fund.

Requires the department to develop accountability and reporting standards for grant recipients.

Directs the department to submit a report each biennium to the appropriate committees of the legislature, including at a minimum: (1) A list of projects funded during the current biennium, including a description of each project, its total cost, the amount of state funding awarded and expended to date, the project milestones completed, and the extent to which the project has met its stated goals;

(2) Recommendations, if any, for policy and programmatic changes to the community development fund to better achieve program objectives; and

(3) The ranked list of prioritized projects and amounts proposed for funding in the subsequent biennium, and the unranked list of the remaining projects for which applications were received, as submitted in the department's biennial capital budget request as required in this act.

Directs the department to submit its initial report by January 1, 2009.