Foundations Make No Pledge to Increase Rural Giving

About one dollar, maybe a buck-fifty out of every hundred dollars given that U.S. foundations give away reaches rural America. That's a pretty small slice of the $40 billion handed out [1] each year by 80,000 foundations.

In early August, some 180 representatives from foundations and nonprofits met in Missoula, Montana [2], under the auspices of the Council on Foundations, the national trade association of grant makers, to examine how to get more money flowing toward rural people and communities.

Why Missoula? Because in May of 2006, Montana's U.S. Senator Max Baucus spoke to the annual conference of the Council and challenged foundations to double their grant making to rural America in the next five years — and, while they were at it, they might add some rural people to the boards of the nation's largest and most powerful philanthropies.

With Baucus chairing the powerful Senate Finance Committee — and to that extent controlling the tax laws under which philanthropies operate — foundations snapped to attention and called for a conference in the Senator's home state to think about how to ratchet up foundation giving to rural communities. The results? So far, they are mixed.

The Council on Foundations just this week issued a brief summary report of the Missoula results [3], promising more talk about what might be useful and future targets for funders interested in rural America. The report hinted at a second rural philanthropy conference in 2008.

All well and good, but mechanisms for doubling foundation grant-making to rural America were nowhere to be found. The conference called for studying the "transfer of wealth" in rural areas, the rural portion of some $40 to $50 trillion dollars that retiring Baby Boomers will pass on to their heirs between now and the year 2050. Presumably, a chunk of that wealth is lodged in rural America in land and other assets, and some portion of that transfer could end up as philanthropic resources in private foundations and in "donor-advised funds" at community foundations.

The Nebraska Community Foundation [4] has already conducted research on the amount of wealth likely to be transferred [5] and how it might be tapped to create new philanthropic endowments. The Council called for transfer-of-wealth studies in all 50 states. The implication of this suggestion was clear: To respond to rural needs, the Council was telling rural areas to build and control their own new philanthropic funds rather than rely on outside funders in the nation's big cities for grant support.

The leadership of the foundation sector came out against what was termed "redistributive" philanthropy, the notion that funders that weren't already giving in rural areas ought to be. Their reasoning was that this approach would simply be taking funds away from hard-pressed urban areas to meet the philanthropic needs of rural areas.

The answer really ought to be "both and." Endowment-building is great, but it's slow, and the rural areas with the least wealth generally face the toughest and slowest sledding in amassing assets for responding to community needs. The Nebraska Community Foundation model is a great example of the "both and"; its transfer-of-wealth endowment-building strategies were first capitalized by several million dollars worth of grants from multi-billion dollar foundations, notably Ford and Kellogg.

Many of the nation's wealthiest foundations now headquartered in major cities derived their wealth from the resources and labor of rural America. Their assets and grants are hardly so tautly focused on critical social needs that doubling their grant making to rural communities would deprive disadvantaged and disenfranchised city folk. Besides, most foundations don't help the poor, don't put their money toward community economic development, and don't funnel resources for workforce development.

Why was there such reluctance for foundations to alter their giving to include rural communities [6]? Observers who attended the conference offered a number of possible answers. Missoula was the first truly rural philanthropy conference sponsored by the Council on Foundations. It was pulled together rather rapidly, so the fact that the conference did not get to the hard structural issues of a "philanthropic divide" is understandable.

Another perspective blamed persistent rural self-reliance — that rural America did not want to be subject to the mercurial whims of outside foundations "parachuting" into rural communities and then leaving just as fast. Locally controlled philanthropic resources wouldn't be subject to the short attention spans of non-local foundations.

But some observers also pointed to a foundation sector that resists being told where and how to spend its resources. Much discussion focused on identifying rural investment opportunities for foundations in areas, such as health care, economic development, and natural resources. Tours of Montana nonprofits during the conference underscored the message that rural nonprofits had to develop relationships with the foundation community and tell their stories, explaining the philanthropic potential they could deliver.

The head of the Council on Foundations [7], Steve Gunderson, was once a Congressman representing a largely rural district in western Wisconsin. Given Gunderson's background, it is difficult to imagine that rural philanthropy will not be a continuing priority of the foundation's Washington-based trade association.

But if the issue of "redistribution" and increased spending in rural areas is to get on the table — along with the conference's focus on "growing rural philanthropy" — more than one observer suggested that the impetus will have to come not from foundations, but from rural nonprofits. One longtime organizer in the audience suggested, "Unless you hold things over their (the foundations') heads, they wouldn't keep going. They'd say they'd do things and then not."

"The real test," said one observer, "is going to be how (rural) people pick it up and work on it." He meant that it would require consistent work by rural nonprofits to convince national foundations to expand their rural grant making.

Not that many nonprofits were to be found at the meeting in Montana. There was strong foundation leadership in the room — statewide community foundations from Nebraska and Montana, and private foundations committed to rural grant making such as Anschutz, Lumina, Kellogg, Ford, the Duke Endowment, Annie E. Casey, and others. But the nonprofits, other than a few workshop panelists and the event's organizers, were not present. Some nonprofit leaders who did get in reported frustrations with being limited to attending Senator Baucus's reception rather than going nose to nose with the foundations during substantive meetings.

The Council's interim summary report [3] is only a first step. At an upcoming national conference of community foundations, there will be discussion of how to follow up the Missoula meeting. This is a logical turn since the centerpiece of recommendations coming out of the August meeting was the building of endowments for community foundations in rural counties. Variously called a "journal" or a "book" on rural philanthropy may also be produced later in the year. But Senator Baucus's expectation of doubling rural grant making — even if the purported burgeoning rural transfer of wealth could be realized — won't happen without major foundations anteing up.

And the issue will not be resolved if it's simply left to the intramural conversations of foundations. Leadership in rural philanthropy has to come from rural nonprofits.

Rick Cohen is National Correspondent for Nonprofit Quarterly magazine. In June of this year he wrote "Rural Philanthropy For What?�? [8]