New Partnership Leverages More than $400 Million for Rural Facilities
The partnership links USDA Community Facilities loans for schools, clinics, and other facilities with private funds to support community development organizations that will invest the federal loans locally.
A new private-public partnership with USDA, private foundations, and banks will help rural community development organizations take advantage of more than $400 million in federal loans to build community facilities like health clinics, schools, and child-care centers.
The Uplift America fund, which was announced today, will provide private grants to help community development financial institutions manage and invest USDA Community Facilities loans. The organizations receiving the loans via USDA will, in turn, re-lend the money locally to facilities projects.
The 26 community development organizations that will receive the support have “track records of helping reduce poverty in some of the nation’s most isolated rural communities,” according to a press release from the Mary Reynolds Babcock Foundation, one of the private foundations involved in the project, and the organization that will manage the private portion of the fund.
The community development groups receiving the re-investment loans are spread across 18 states and serve Appalachia, the Texas-Mexico border region, the South, and Indian Country. They include organizations such as the Federation for Appalachian Housing Enterprises, which serves mountain portions of six states; Hope Credit Union, which serves parts of four states in the Mississippi Delta; Citizen Potawatomi Community Development Corp., which serves tribal communities across the U.S.; and Rural Community Assistance Corporation, which serves 13 Western states. Complete list of participating community development organizations.
Bank of America and others will back the USDA facilities loans with guarantees for five years, allowing the groups re-lending the money locally to provide lower interest rates.
These re-lenders will also be supported by a total of $22 million from seven philanthropies: Bank of America, Ford, Heron, JP Morgan, Mary Reynolds Babcock, Northwest Area, and Winthrop Rockefeller.
The private funds are designed to “provide additional financial ingredients that allow community lenders to access [USDA] funds and increase the chance they will make a difference,” according to the Uplift American website. The private grants may be used to help the financial institutions with staffing, technical assistance, planning, and building their assets.
USDA Secretary Tom Vilsack said the Community Facilities loan program will invest a “game-changing level of investment capital to reduce poverty in targeted rural areas where capacity for growth has not been realized,” according to the press release.
Justin Maxson, executive director of the Mary Reynolds Babcock Foundation, said the partnership with USDA will help get funds to local groups who know what their communities need. “Grants from the Uplift America Fund enable these lenders to attract more federal dollars in the short term, while building their capacity to address rural economic challenges for the long term,” he said.
The community facilities loans may be used to build, acquire, maintain, or renovate “essential” community facilities. They also can be used for capacity building and to finance community services, such as education, health care and infrastructure, the press release said.
One of the recipients, the South Carolina Community Loan Fund, will lend the funds in rural counties, many of which have poverty rates of 20 to 30 percent.
“The unique partnership that has been established through the Uplift America Fund and Community Facilities Relending Program will help us provide essential services and improve quality of life in low-income, rural communities by providing much-needed, long-term capital,” said Chief Executive Officer Michelle Mapp.