Shortchanging small towns: It's time to shore up philanthropic support for our rural areas

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Despite the good works provided by a robust network of community foundations, rural areas in Iowa, as elsewhere, struggle to compete for grants and support from most national philanthropic groups.

Significant, planned investments in rural communities can provide the infrastructure needed to better entice industries and businesses, and address ongoing and persistent problems, such as poverty.

Such investments also can fund projects that address broader collective issues, spurring innovative solutions to problems that know no geographic distinction.

As Doug O’Brien, a Cascade High School graduate and member of the White House Rural Council, told us: “Investing in rural is important, people coming together to talk about rural issues is important, because rural itself is important to not only the whole of our nation, but to the clean energy and food future of the planet.”

Still, despite concentrated efforts to turn private not-for-profits’ attention to investments in rural places, the results of such labors have been disappointing, as U.S. Agriculture Secretary Tom Vilsack told advocates gathered in Washington, D.C. earlier this month for the 2015 National Rural Assembly. In fact, there has been a decrease in rural investment — even as philanthropic groups have increased giving, overall.

On one hand, we can see the reason for targeting cities, which are home 80 percent of America’s population. But there’s a compelling case to be made, as Vilsack and others have publicly asserted, that answers to some of our biggest collective issues — climate change, clean energy and global food security — will be found not in a city center, but farther afield.

Windmills aren’t going to be constructed in New York City. Significant reductions in methane gasses aren’t going to happen in Atlanta.

And, as Vilsack cautioned: “If you think the world is a scary place now, just wait until people can’t access food.”

FUNDING GAP

A recent study by USDA’s Economic Research Service indicated that grants to rural-based organizations in the U.S. accounted for 5.5 percent of grants by larger foundations during 2005 to 2010, with the overall trend declining. The average value of grants to organizations in non-metro counties during that time was about $88 per capita, which is less than half the average given to organizations in metro counties.

In 2010, for instance, the USDA estimates rural non-profits received about $5.45 billion from national foundations. The urban total in that same year was $93.4 billion.

“Even the USDA has said that their figures are extremely conservative,” said Charles W. Fluharty, President and CEO of the Iowa City-based Rural Policy Research Institute. “In fact, most people in the foundation community believe the percentage of rural giving is between 1 to 3 percent of the total outlays for all national foundations.”

The statistics become more disparaging, he said, when federal economic development dollars are included. Federal per capita investment is between $300 to $500 less for rural citizens than it is for their urban counterparts.

“This is an incredibly important number because philanthropy — the other sector that supports this dynamic — is so heavily, heavily invested in urban areas,” he said.

“You would assume that if community economic development per capita from the feds in rural is significantly less — and that’s around a $25 to $26 billion a year differential — you would hope foundations were (addressing the gap). They’re not.”

Take the 2011 memorandum of understanding signed by USDA and the Council on Foundations “to provide new sources of capital, new job opportunities, workforce investment strategies, and identification of additional resources that can be used to spur economic growth in rural America.”

The agreement was part of the third and final national philanthropic conference to specifically target rural America. Despite a great deal of optimism following the agreement, foundations haven’t followed through.

And despite Iowa’s robust community foundation network, lackluster giving by national groups to rural non-profits negatively impacts citizens and communities in the Hawkeye State. Private independent foundations are the dominant source of grants for both rural- and urban-based organizations. Other types of foundations — community, corporate and operating foundations — comprise only 20 to 30 percent of the value of large-foundation grants, according to USDA’s research.

COMMUNITY FOUNDATIONS

In Iowa, where two state-legislated programs focus on increasing philanthropic activity, the picture is a little brighter than in other rural states.

First, there is the County Endowment Fund which distributes 0.8 percent of the state’s commercial gaming tax revenue equally to all counties that are not home to a state-licensed casino.

Estimated payout to the County Endowment Fund for fiscal year 2015 is $11.1 million, or about $131,000 for each of Iowa’s 85 non-casino counties.

Second is the Endow Iowa Tax Credit which offers donors a 25 percent credit for donations, up to a set amount, made to permanently endowed funds within a qualified foundation or affiliate.

The programs are unique — or nearly so — to Iowa. Iowa is the only state that requires casinos to contribute a portion of revenues to local charities and community projects. According to the Legislative Services Agency, only three other states award tax credits for contributions made to qualified endowment funds.

Community Foundations are public grantmaking organizations that accept donations from individuals and businesses, including real estate and grains, and also help individuals develop and implement planned giving arrangements. They can have a significant impact.

Take the case of Dubuque, which Fluharty holds up as a model of the impact Iowa’s community foundations can have. Nancy Van Millgen, President and CEO of the Community Foundation of Greater Dubuque, has helped shift the group’s focus from merely building and sustaining an endowment to elevating the entire region so all the communities can compete globally. They’ve also concentrated efforts on building the next generation of young leaders, a program that’s earned national awards.

And because the foundation has pitched the region globally, programs that address needs in individual schools and towns can be better leveraged. For instance, a regional effort to identify and nurture the next generation of young leaders was nationally recognized. Affiliates under the Dubuque umbrella have targeted illiteracy, unsafe and energy inefficient housing, unemployment and other local concerns.

OPPORTUNITIES AND NEEDS

Strategic support of rural initiatives and infrastructure are needed primarily to address persistent poverty, especially among children. While many urban areas have bounced back from the latest recession, rural areas continue to struggle.

Investments must be as creative and varied as the root causes of the problem. Education, including workforce training, is a piece of the puzzle. Another is transportation, both in terms of individual needs and larger, regional and industrial concerns.

Economic development has, of course, long been a focus of rural advocates.

New investments undertaken by the USDA and Obama administration, such as the recently announced $10 billion offered by CoBank, part of the U.S. Farm Credit System, to launch a private investment fund targeting rural infrastructure needs, are a start.

State lawmakers also should consider increasing the paltry disbursement of casino tax revenues to the County Endowment Fund, which puts money directly into the hands of local foundations that best understand local opportunities and needs. They might also search for a more equitable distribution of those dollars that would better support counties that have greater opportunities or needs.

And more must be done to educate national grantmaking organizations that rural areas not only matter, but also can be unique and critical partners in solving today’s most urgent issues.

The Indian Creek Watershed Management Authority, which has leveraged state and federal money to develop a comprehensive management plan, is a local example. The cooperative agreement includes jurisdictions throughout a 93 square-mile area, all working to address a larger problem to their mutual advantage. Flooding, water quality and more will be addressed as part of the urban-rural cooperation. The solutions they develop will not only benefit the thousands of Iowans in the area, but may have a positive impact national environmental concerns too, like the dead zone in the Gulf of Mexico.

Iowa’s wind farms provide another compelling example of rural projects that can help achieve national goals — in this case, the reduction of carbon emissions by 16 percent by 2030. Since 2004, Iowa has seen about $10 billion invested in wind energy, a mix of private and public dollars. And, once the state has met its federal goal, Iowa wind power can be exported, increasing the chances that the entire nation will meet federal requirements.

The federal goals target air quality, important to us all. Using Iowa’s wind power can also help consumers keep power bills affordable.

There are more such examples and, with greater philanthropic investment in rural areas, many more possible solutions to be explored.

The message local non-profits need to spread, and national philanthropic groups must hear, is that our rural areas are keepers of opportunities with widespread positive potential. Let’s get to work.

• Comments: (319) 398-8469; editorial@thegazette.com

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