Foundation Redlining of Rural America Explained to Senate Ag Committee

February 14, 2012; Source: Daily Yonder | Chuck Fluharty of the Rural Policy Research Institute (RUPRI) addressed the Senate Agriculture Committee on Wednesday, addressing what our nation should do to advance rural development.  Among his recommendations, Fluharty called on the committee to “explore why there continues to be a glaring lack of rural investment by our nation’s major foundations.” We don’t know how the senators responded, but it was a gutsy move to put rural philanthropy on the nation’s policy agenda. It’s worth quoting Fluharty’s testimony at some length:

Rural America remains challenged by this long-standing, differential disadvantage in philanthropic investment in its people, organizations, and institutions. And this is now more critical than ever, as federal, state and local government resources continue to decline. Because of the generous tax subsidies granted foundations and their donors, their presidents and trustees enter into a covenant with the American people, in which our government and these institutions jointly assume an obligation to steward this awesome public trust so as to optimize the public good achieved, in exchange for the lost public sector revenues and resources, as a result of tax deductions and exemptions. An awesome challenge, indeed…As with all subsidies, deductions, and exemptions, federal budgetary pressures are again calling these dynamics into question, as both more research and more transparency are sought.

While redlining has been decried by national foundations for years on the part of government, a current de facto foundation redlining of rural America simply must be addressed. Federal funding for community capacity continues to decrease, and rural safety net resources are in dire need. Yet, American philanthropy continues to distribute less than 3 percent of its annual payout to the people and places of rural America, which comprise 20 percent of our population and 80 percent of our natural resource base. In fact, foundations have withdrawn further from rural commitments in the past five years, as need has increased exponentially. These foundations, and the generous tax subsidies provided to donors, create a public partnership in pursuit of the public good. This geographic inequity must be named. It is an institutional and moral failure, and one so long-standing that serious inquiry regarding whether this is an abuse of a solemn public trust should be considered. 

Chairman Baucus explored this question, and sought some rural accommodation, five years ago…[W]e facilitated with then-Chairman Harkin, and a number of national foundation leaders prior to the development of the last Farm Bill, seeking a similar outcome. Regional and community foundations are doing excellent work in seeking to fill this gap. But the gap remains, and it is vast. Current arguments center around whether the total outlay in rural America is one or three percent, and yet we are unable to calculate the exact number, as pathetic as it is, because zip code data is not required. This should be rectified. Such a public trust merits greater transparency.

With payouts to rural America so ridiculously small, shouldn’t the current rural capacity and safety net crisis warrant a percentage payout increase, as a good faith gesture from America’s largest foundations to rural America, in exchange for the revenue losses incurred, without the benefit of proportional foundation giving, over these many years?

Read Fluharty’s critique and challenge closely. By noting foundations’ “awesome public trust,” he is reminding rural nonprofits—in fact, all nonprofits—about their right and obligation to hold institutional philanthropy accountable. By bringing this issue to the assembled senators at the committee, Fluharty is reminding our nation’s legislators that the content of tax-subsidized philanthropy is indeed an issue of public policy. Congratulations, Chuck, for presenting powerful testimony to be heard by the members of the Senate Agriculture Committee and by the nation’s grant making foundations. –Rick Cohen

About

Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He has also worked in government. Cohen pursues investigative and analytical articles, advocates for increased philanthropic giving and access for disenfranchised constituencies, and promotes increased philanthropic and nonprofit accountability.