Grants for Rural Development in Decline

While foundation giving increased more than 40% from 2004-2008, grants to rural development declined. Rick Cohen sees a "metronation" bias in U.S. philanthropy.

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How are foundations doing in their support of rural America?  It is difficult to tell.  The definitions of rural are vague, and the classification of foundation grantmaking no clearer.  A foundation grant that might be classified as “rural” could well be serving urban areas, too. 

Nonetheless, there’s evidence that rural philanthropy has not made the leaps that rural communities sorely need.

The Foundation Center’s online database includes, reportedly, the grants of more than 100,000 grantmakers: more than 2.2 million grants. It shows that “rural development” (domestic, not international) did not fare well in foundation grant portfolios 2004-08.  During that span annual foundation grants for rural development declined from $92.7 million in 2004 to $89.5 million in 2008. That’s a 3.45 percent decrease during a period when total annual foundation grantmaking increased 43.4 percent.

Some grantmakers may not have not fully reported their 2008 grants; the 3.45 percent decline may be erased. But rural development grants definitely will not show increases anywhere close to the level of growth seen in total foundation grantmaking. Moreover, as noted, the grants marked “rural development” are not likely to have been spent entirely on rural projects, so that $89.5 million probably represents a gross overestimation rather than an undercount.  

 

 


What makes foundations’ support or lack of support for rural development a topic worth paying attention to? Rural America needs philanthropic support just like other meritorious causes that are underserved by the operations of the “markets.”  In fact, foundations themselves have made an issue of rural development.

In 2006, Senator Max Baucus, the ranking Democrat on the Senate Finance Committee, surprised a plenary session of the Council on Foundations by calling on institutional philanthropy to double its commitment to rural communities in a five-year period—which would end as of May 2011.  Recognizing that Baucus, from a rural state, was likely to become the Committee chair once the Democrats took the Senate, as they ultimately did, the foundation community fell all over itself to show its willingness to meet the Baucus challenge in several ways, but noticeably NOT with grant dollars.

The Council on Foundations held a rural philanthropy conference in Montana, with Baucus in attendance, followed by another rural philanthropy conference in Little Rock, perhaps because the expected leading presidential candidate was Hillary Clinton. The Council also issued a glossy report of good ideas for rural funders, but regarding money, it encouraged rural areas to find new sources of philanthropy from the wealth in their own communities.

That small and slow process of mining rural communities for latent philanthropic capital would hardly rate a scintilla of attention if existing foundations had also been  upping their commitment to rural causes, but by all indications, that commitment hasn’t been on the upswing.

The focus here on “rural development” makes the analysis a bit sharper, as it makes it possible to look at grantmaking dedicated to the economic growth of rural areas, not just anything with the word “rural” in the grant description. 

Rick Cohen/via the Foundation Center
The leading foundations in rural development grantmaking.

The Ford Foundation and the W.K. Kellogg Foundation stand out as the largest rural development grantmakers for the five-year period 2004-08. And as the listing (at right) shows, there are other noteworthy funders. The Northwest Areas Foundation made a large contribution to rural development as part of a strategic development plan, a contribution unlikely to be replicated, at least at this seven- and sometimes eight-figure size, by the foundation’s current leadership.

Several of the others focus on specific geographic regions: for example, the Mary Reynolds Babcock Foundation (Southeastern U.S.), McKnight (largely Minnesota), and the California Endowment (California). Others have more topical interests, such as the business capital grants of the Libra Foundation and the environmental or conservation grants of the Gordon & Betty Moore Foundation.  Nonetheless, there are smaller foundations with creative and aggressive rural development grantmaking portfolios: the F.B. Heron Foundation and the Jessie Smith Noyes Foundation, both headquartered in New York City, the Walton Family Foundation from Arkansas, and Marguerite Casey in Seattle.

Most of the next 25 largest rural development grantmakers are even more geographically targeted – Benedum, largely in West Virginia; Meyer Memorial in Ohio; Iowa WEST, Rasmuson in Alaska. Others focus on one topic, particularly environmentalism (Goldman and Wyss, for example). 

After all the philanthropic breast-beating in recent years about how much philanthropy was going to do for rural America, the evidence still isn’t there.  Foundations have yet to show that they are ginning up increased support for rural America.

Don’t blame it on the economy.  We specifically chose the years prior to the recession that began largely in the last quarter of 2008; if foundations indeed determine their payouts based on a multi-year rolling average, the 2008 grantmaking numbers should not have tanked as precipitously as the economy, if at all, given the robustness of the market even in the third quarter of 2008.

What’s behind the philanthropic support—or the insufficient levels of it—for rural America?  Elements of several plausible theories probably come into play:

•    Where’s Max?  Remember when Senator Max Baucus challenged foundations to double their rural grantmaking in a five year period? Led by the Council on Foundations, philanthropy responded with a booklet of self-congratulatory essays about good ideas in rural philanthropy. There are some great things happening in rural philanthropy, some real philanthropic leaders as shown in this list, but glossy publications aren’t the same as real money.  Like Waldo, Max has been hard to find in the follow-up with foundations. As the chair of the Senate Finance Committee, he might have learned from his predecessor, Republican Charles Grassley, that foundations don’t respond to one-off Congressional initiatives.  It takes a bit more persistence than that.

•    Pull yourself up by your bootstraps:  The major foundations—and philanthropy as a whole—spliced in an argument for bootstrapping in rural areas.  Rather than turning to the foundations that control well above a half trillion in tax-exempt endowments to put a dollop more toward rural, the Council on Foundations chose to encourage rural areas to look to their local wealth to develop new sources of philanthropy, typically community foundations.  This strategy is slow slow slow and poses other problems.  One is that not all rural areas are well enough endowed with wealth to be tapped for philanthropy; developing new rural philanthropic resources is demonstrably easier and more lucrative in richer rural areas than in poorer ones. The other is that the “transfer of wealth” between generations, which some theorists predicted would bring about a major infusion into philanthropy, has not come to pass, especially since so much transferable wealth simply evaporated during the recession.

•    Metronation strategy:  Not surprisingly, most of philanthropy is located in cities—even if the wealth of foundations came from rural areas and rural industries (mineral extraction, agriculture, etc.).  Most of the staffs of foundations come from urban America and live in cities or suburbs, not ex-urbs or rural areas (except for their second homes). The inexorable urban bias of philanthropy (“where you stand is where you sit”) is underscored by the “metronations” concept of focusing public investment in a number of metropolitan areas that have the highest potential of leverage and growth, assuming that rural areas will benefit somehow by being dragged along.  Foundations are hardly immune from this thinking and are as comfortable with this investment focus as the public policy makers in Washington have been.

Adam Fernandez/Headwaters
Coastal Enterprises, based in Wiscasset, Maine, developed a business plan for Spindleworks, an arts center for mentally disabled citizens.

Perhaps the issue is a lack of rural advocacy. Foundations have often complained that they suspect rural non-profits lack capacity. That argument has always been unpersuasive, an ex post facto justification of inadequate rural grantmaking. Just take a look at the truly impressive array of rural nonprofits in the NeighborWorks and Rural LISC lists to see groups that can match up well against the most sophisticated of their urban counterparts; groups like Coastal Enterprises (Maine), Southern Mutual Help Association (Louisiana), Enterprise Corporation of the Delta (Mississippi), Cabrillo Economic Development (California), Centro Campesino (Florida), Quitman County Development Organization (Mississippi), Chicanos por la Causa (Arizona), and so many more. 

Despite frequent promises to the contrary, foundations haven’t done much to narrow the disproportional gap between urban and rural groups’ access to foundation dollars.  In fact, the failure of foundations to put much grant money into rural nonprofits is historic and persistent. 

The toll is increasingly evident in rural nonprofits struggling to stay afloat, not to mention to respond to burgeoning new problems. 

In Monroe County, Georgia, a health center serving rural communities is closing: “Unfortunately, there is not another rural health center or clinic in the county.” The money to stay open simply isn’t there.

In state of Mississippi is contemplating closing mental health facilities that serve rural areas due to a lack of funding.

Rural Nelson has been struggling to provide community education and information about governmental services in Nelson County, Virginia.  Individual donations have been the key to keeping this civic service alive, but they’re hard to come by. 

The urban foreclosure crisis is hitting rural nonprofits who have few resources to devote to fixing “underwater” mortgages and taking and rehabilitating bank-owned foreclosed homes. 

Rick Cohen
Trends in foundation giving as a whole and in grants to rural development

Are America’s foundations prepared to address the persistent and increasing problems of rural America? There’s always lip service, heartfelt statements about how much foundations care about rural communities, but something is missing year after year—dollars.  There are heroes and heroines in U.S. philanthropy for whom rural America is undoubtedly grateful.  They are the champions for the cause within the halls of this overwhelmingly urban sector.  Their challenge remains as immense as ever. 

Rick Cohen is the national correspondent for Nonprofit Quarterly magazine and NPQ’s online Cohen Report.  He developed this review of rural philanthropy for an MDC webinar on The State of Rural Philanthropy, January 14, 2011, available here.

 

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