Urban-centric federal programs make it hard for rural nonprofits to compete. A president with a rural point of view could help.">
What might a President Obama or President McCain do to bolster rural nonprofits? Based on recent presidential trends, not much. But maybe, just maybe, the next president will have an epiphany and rediscover that rural America’s progress is integrally tied to the vitality of its nonprofit and foundation infrastructure.
At the National Rural Assembly this past summer, two spokespersons for the candidates presented sharply divergent views of what John McCain and Barack Obama would do for rural nonprofits.
Speaking on behalf of Obama, former South Dakota senator Tom Daschle confidently ticked off a list of statements — “Barack believes”¦” — specifying policies of importance to rural nonprofits. Standing in for John McCain, Senator Sam Brownback of Kansas attested to his colleague’s character and political bona fides but offered little about what the Republican nominee’s platform had to say to rural nonprofits. Brownback even urged his audience to help persuade his candidate to pay attention to and support policies that benefit rural communities and nonprofit groups.
Barack Obama and John McCain do offer rural voters two presidential candidates with loads of direct nonprofit experience under their belts. As highlighted by Sarah Palin, Obama brings on-the-ground experience as a community organizer who has worked on environmental justice issues and then served on foundation boards. McCain has plenty of nonprofit experience himself, as a board member or advisor to a dozen or so groups.
How can Obama and McCain help rural nonprofits?
First, they need to acknowledge what’s happened: this nation has subjected the charitable infrastructure in rural regions to systemic disinvestment, leaving many nonprofits bereft of capital and capacity. Second, they have to understand the importance of rural charities and rural philanthropy. The new president must realize that rural nonprofits drive economic and social development.
Response to Hurricanes Katrina and Rita is a case in point. Where there was an existing network of nonprofits—community development corporations, human service providers, advocacy organizations, and legal assistance groups— communities were able to mobilize to attract and deploy resources much more effectively than were those places that could rely only on FEMA, state government agencies, and the American Red Cross. In reaction to Hurricane Gustav, both candidates impulsively called on voters to contribute to the Red Cross, without a thought to the existing infrastructure of rural nonprofits along the Gulf Coast. This oversight is troubling; it indicates that neither candidate may understand how rural communities function.
Moreover, for rural areas addressing isolation and poverty, (many of them dominated by racial/ethnic minorities, contrary to the all-white rural image) or regions dependent on a sole industry that’s threatened by economic change and globalization, nonprofits bridge social and economic divides. They mobilize communities for policy advocacy and generate entrepreneurial innovations.
Volunteers with Southern Mutual Help Association, a non-profit based in New Iberia, Louisiana, tour Katrina-destroyed Grand Bayou.
Photo: Shawn Poynter
Obama’s platform does contain several program initiatives with clear rural nonprofit potentials. For example, Obama has said he would establish a social innovation fund, one that rural nonprofits might hope to tap. His platform also identifies specific nonprofit targets with strong rural track records. For example, he calls for a major increase in federal support for the YouthBuild community development job training program; sixty out of the 230 current YouthBuild programs are operating in rural communities. It’s hard to find anything comparable from the McCain camp.
Both candidates support expansions in AmeriCorps and other national service programs. And Obama offers specific targets — an increase from the current roughly 75,000 participants to 250,000. McCain has not specified the extent of changes he intends for these programs. But for rural non-profits, there’s an issue beyond scale.
Rural organizations need to be able to compete on a level playing field for inclusion in federal programs.
Historically, federal rural assistance programs often were not structured to work well for rural nonprofits. Rural nonprofits have to make heroic efforts to use the New Markets Tax Credit (NMTC), perhaps the most significant federal economic development initiative in the past two decades, and the Community Development Financial Institutions program (CDFI), a crucial capital-access mechanism for nonprofits. NMTC frequently doesn’t work for rural groups because of necessary scale and transaction costs. In head-count competitions, rural nonprofits simply lose out to urban and suburban CDFIs. Even for national service, the nation’s predilection for impact-by-numbers means that rural areas with smaller, less dense populations are frequently out of the running unless there are specific set-asides.
For the sake of fairness, the new president should try to insert minimum rural nonprofit set-asides in the somewhat “urban-centric” NMTC and CDFI programs—and any others where rural groups might automatically find themselves at a competitive disadvantage—and then restructure these programs to improve their utility in rural areas.
Even more directly, the next president might infuse federal capital into rural nonprofit operations and programs. To increase funding for USDA, HUD, and other agencies that develop the capacities of Community Action Agencies, Community Development Corporations, rural community colleges, and other nonprofit or quasi-public entities would be steps toward reversing the rural nonprofit disinvestment.
This is obviously not the time to drift into laissez-faire economics, with the financial markets so dubious. Instead the next president should strengthen the Community Reinvestment Act (CRA) to compel lenders to maintain credit to rural areas. Adding investment banks and insurance companies into CRA coverage would effect a major leap toward expanding credit access for rural nonprofits and rural people.
Ultimately, the most potent and accessible tool available to the incoming president is the bully pulpit. Voters often overestimate what the tenant in the White House can do through policy initiatives to change economic conditions on the ground, but they also underestimate the president’s leadership potential — to cajole public and private institutions to do better and more. It will take that pressure from the top to move a larger proportion of U.S. private foundations’ roughly $700 billion in tax-exempt assets into the coffers of rural nonprofits.
Rural nonprofits consistently characterize foundation support as “under-investment” in rural programs. Notwithstanding a Congressional feint to promote rural philanthropy these past few years, the response of foundations has been a conference in Montana and the production of a book on rural philanthropy, available at thirty bucks a pop, thank you very much. Until the recent financial meltdown, foundation assets were booming, yet there is no evidence that an increasing slice of grants or investments went to rural development. Most observers sense the opposite.
The foundation community is pitching the idea that rural areas should pull themselves up by their philanthropic bootstraps and generate new indigenous, homegrown foundations rather than looking to national foundation wealth. Truth be told, building new homegrown foundations is tough sledding. Within rural America, the better off communities are generating, as logic might suggest, new philanthropic assets faster than the rural counties that are poorer (and usually, demographically, more minority). Unless the president carries a big stick and tells existing foundations to stop sitting on their assets, rural America is going to be waiting a long time for more than a pittance of philanthropic largesse.
The foundation lobby has been angling for permission to expand grant and loan (program-related investment) activities to reach for-profit businesses with public benefit, the so-called L3Cs (Low-Profit Limited Liability Companies). But what about the nonprofits already on the ground, the groups like Rural Opportunities Inc. (ROI) in Upstate New York, Coastal Enterprises in Maine, Enterprise Corporation of the Delta in Mississippi, among the nation’s most entrepreneurial and innovative groups out there? Investing in a new infrastructure of socially-oriented for-profits while disinvesting in the rural nonprofit infrastructure makes no sense.
President Obama or President McCain should establish a tough-as-nails rural report card with targets for rural progress; the crucial role of a nonprofit rural infrastructure would be obvious. The next president should provide benchmarks and hold federal agencies and philanthropic foundations to a schedule for action. Such pressure in combination with specific goals could generate the federal support for rural nonprofits that has not been forthcoming from Obama’s and McCain’s presidential predecessors.