Rural Gets Less Foundation Money

A new federal study shows that rural communities get a disproportionately small share of foundation grants. 

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Whichever way you slice it, rural communities aren’t getting a proportionate share of foundation grants compared to the relative size of the rural population, a new report says.

Researchers found that rural communities, which accounted for 19 percent of U.S. population in 2010, received only about 6 to 7 percent of foundation grants awarded from 2005 to 2010.

The federal study also found that over the same time period, grants from large foundations to organizations based in rural areas came to about $88 per capita. Organizations in metropolitan areas received foundation support at twice that per capita rate, the report said.

 “This suggests an urban focus in foundation grants,” writes John L. Pender in a study conducted for the USDA Economic Research Service.

The study expands on previous work by Nonprofit Quarterly’s Rick Cohen that has tracked philanthropic investment in rural development. The new USDA study examines grants in all types of funding – not just development.

Determining how much foundation money is going into rural work is not an easy proposition, Pender writes. The study used three methods:

  • Measuring the size of grants going to organizations located in rural areas.
  • Adding to those rural-based grants money that went to urban organizations that appear to be doing rural work.
  • And taking random samples of grants to study geographic and programmatic distribution of grant funding.

The primary data for the study was grant reports of the nation’s 1,200 to 1,400 largest foundations, which are tracked by the private Foundation Center.

Each method yielded similar results, and in each case the share of grants going to rural work “is much less than the rural share of the U.S. population,” Pender writes.

U.S. foundations gave approximately $2.2 to $2.5 billion for the benefit of rural areas in 2010, the study says.

Though those dollars are small compared to public investment in rural projects, private philanthropy is an important part of the rural funding mix. Private grants can affect the impact of public programs, Pender writes.

Private philanthropy is also important because of equity, Pender writes.

“A number of observers have argued that as tax-exempt, often powerful organizations, foundations should be accountable to the public for their use of funds,” the report says. “Geographic distribution of foundation funds to rural versus urban areas is an important dimension of the debate (in addition to the distribution of grants across demographic groups, socioeconomic classes, and other elements of society).”

The study also breaks new ground in analyzing the purpose of grants given to rural versus urban nonprofit work.

Rural grants are more likely to go to education, environmental protection, and recreation than urban grants. Conversely, rural organizations are less likely than urban ones to receive grants to support arts and cultural activities, philanthropy and volunteerism, and medical research.

USDA Economic Research Service

Part of the difference in both the size and type of grants awarded to rural projects has to do with local capacity, Pender argues. He found that counties that had organizations like universities with higher fundraising ability tended to raise more money from private foundations. And counties with more nonprofit infrastructure tended to receive more philanthropic dollars.

The answer might be to help communities develop greater nonprofit and educational capacity, Pender writes. But that can be tricky.

Since foundation funds (and other sources of funds) are often important to develop these capacities, this illustrates circularity in the process of community development—funds are needed to develop local capacity, which is needed to raise funds. This type of circularity may be at the root of problems of persistent poverty in some rural areas (i.e., poor communities with insufficient initial capacity find it difficult to attract resources and thus may be unable to develop their capacity and therefore remain poor).

Pender writes that public funding might be important for helping overcome any capacity gap. “…Public funds may be needed to help overcome capacity-based poverty traps, especially in rural areas where foundations appear not to have a strong antipoverty focus, though further research is needed concerning this hypothesis.”

USDA Economic Research Service
USDA Economic Research Service

 

 

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