Halting Steps Toward Increased Rural Philanthropy

Print Share on LinkedIn More

If he has achieved anything, Senator Max Baucus has galvanized the attention of the foundation community to talk about rural philanthropy. In 2006, Baucus challenged foundations to double their grantmaking to rural America over the next 5 years. By the end of the year, he was the chair of the Senate Finance Committee, the Congressional body in charge of nonprofit and foundation oversight, and the foundations snapped to attention.

Something around 180 foundation and nonprofit leaders, (the latter by invitation since the conference was for foundations), showed up in Missoula, MT in August to think about how to meet the Baucus challenge. Included in the list were rural foundation mainstays such as the Ford Foundation, the W.K. Kellogg Foundation, the Duke Endowment, the Annie E. Casey Foundation, and the Northwest Area Foundation (though the nearby Bill and Melinda Gates Foundation, with an annual grantmaking commitment to the Pacific Northwest, was not in the room). Would they simply try to ply a few grants to the Senator’s favorite Montana nonprofits, maybe give the Senator a platform to wax philanthropic, or would they take up the rural philanthropy challenge in earnest and try to move the needle of rural philanthropy above the one percent mark?

According to some top rural experts who were in the mix, something unusual and somewhat positive might have happened in the conference, but the jury is out on the long-term follow-up. By most accounts, this was a first: a gathering devoted to specifically discussing rural philanthropy, not a side piece in a generic Council on Foundations program. However, the summary report of the Missoula conference issued by the Council, much like the information issued by the Council leading up to the event, offered no major specific breakthroughs and inadvertently pointed to a couple of unfortunate omissions.

Community foundations came out a big winner in the show. As expected, the Nebraska Community Foundation had a star turn in the agenda, garnering recognition for its strategy of generating new philanthropy in rural America, tapping the much-discussed upcoming transfer of wealth. For many, the concept combined rural self-reliance with an idea that this new approach to foundation endowment-building would spur a democratization of philanthropy, permitting rural people and communities to direct the deployment of their wealth.

The purported democratization of philanthropy through funds affiliated with community foundations may be a bit of a reach. Many community foundations around the nation hardly reflect the community philanthropy of their turn-of-the-century forebears such as the Cleveland Foundation in the 1910s and 1920s, conducting community assessments to determine how to deploy their assets. Now, many community foundations operate like local and regional versions of their for-profit competitors such as Fidelity, Vanguard, and Schwab, highly dependent on donor-advised funds that seem to many nonprofits to function more like restrictive donor-directed funds. Their discretionary grantmaking pools are frequently small and getting smaller as a proportion of their total grantmaking, leaving relatively little to democratic decision-making. Maybe the rural community foundations force-feed a healthy dose of democracy into the philanthropic sector, but rural America will have a long time to wait, given the tortuously slow process of building rural endowments capable of generating more than minuscule grants.

New foundation assets are fine, but the discussion didn’t get to the question of how to mobilize the assets of the nation’s existing 80,000 or so grantmakers controlling north of $550 trillion of assets—and doling out $40 billion in grants annually. The foundation trade association drumbeat leading up to the conference militated against what it called a redistribution of foundation grants from urban to rural communities.

The image is of foundation resources tautly deployed to address critical social needs in urban and rural areas, without a scintilla of fluff, waste, and folly, not a cent open to redeployment. No one, certainly not Senator Baucus, had called for foundations to deprive poor people in New York and Los Angeles to help their counterparts in Montana and West Virginia.

The Anschutz Foundation, among others, offered a strong model of redistribution, its active leadership in Colorado’s annual Rural Philanthropy Days convening. The program has generated new grant commitments from existing foundations, with no sense that the foundations are grabbing philanthropic morsels from poor people in Denver to reallocate to rural communities. Anschutz’s demonstrated Rural Philanthropy Days results got attention in the Missoula gathering, notable not only on its own merits, but as reflective of the active involvement of relatively conservative foundations promoting rural philanthropy such as the Lumina Foundation (chaired by a former Republican Lt. Governor of Indiana), the Samuel Roberts Noble Foundation based in Oklahoma (simultaneously a funder of agriculture and biotechnology and national conservative think tanks such as the Heritage Foundation and the Acton Institute for the Study of Religion and Liberty), and Anschutz itself (funded by the family of conservative billionaire Philip Anschutz).

But that wasn’t the theme much less the conclusion of the gathering. With the Council declaring redistributive strategies largely off the table and out of the summary report, major foundations got a free pass. Maybe people forget how much of U.S. philanthropic wealth actually came from the resources, land, and labor of rural America, even if the foundations themselves have set up their operations in big cities. And why did the Missoula conversation somehow sidestep the billions in corporate philanthropic giving, half of it not publicly disclosed direct corporate charitable giving, that might touch on rural communities?

It’s fine to tell rural areas to tap their indigenous assets lurking to be deployed through community foundations, but that is going to be a slow, slow process, generating resources whose match to critical community needs depends on the interests and priorities of the donors. And the data shows that rural counties with the high levels of economic deprivation (and lowest indigenous wealth) obviously lag behind in rural endowment building. This is consistent with Rob Reich’s recent research findings, that charitable giving and philanthropic grantmaking tends to drift disproportionately toward better off communities and not to communities of the greatest need.

The Council’s summary report on Missoula called for a 50-state analysis of the transfer of wealth. They clearly mean the wealth to be transferred, not transferring the existing wealth of endowed foundations. Maybe it would be worthwhile to remember that the work of the Nebraska Community Foundation and others in tapping that lurking rural philanthropy got lots of necessary support from major foundations not located in Nebraska. The Foundation Center indicates that the Kellogg Foundation gave the Nebraska Community Foundation more than $2 million in grants between 2004 and 2007, while Guidestar lists $4.2 million in Kellogg grants just in 2005 alone.

Whichever Kellogg number is correct, it demonstrates that existing foundations have a vital role to play in putting money toward building rural philanthropy. Kellogg is already well ensconced in the rural agenda, but the vast majority of its institutional and family foundation peers, not to mention corporate grantmakers, can’t seem to find their way to grants for 80% of the map of the U.S.

Due to Senator Baucus’s intervention, rural philanthropy is a primary agenda item. But will it stay there? The Council’s summary report made Congressional action to approve foundation program related investments (PRIs) to Limited Liability Corporations the second item in its recommendations, but the L3C idea, pitched here as a tool to “bring needed new capital to rural America” has been on the Council’s legislative agenda for some time, a core item pitched by the Council and the Forum of RAGs in their “Foundations on the Hill” day lobbying effort this past spring, not necessarily at all with a rural emphasis. Rumor has it that Iowa Senator Tom Harkin is crafting an amendment to the Farm Bill that would provide incentive funds, essentially a long term very low interest loan, to help existing and new community foundations in rural areas, to be matched at a ratio of something like 2.5:1, but that doesn’t appear in the Council’s initial summary report on Missoula.

The Council summary does call for a follow-up rural philanthropy conference next year, but there’s a hurdle to overcome, applicable to the Council as much as to rural America: money. In place of its usual annual membership conference, the Council is banking on a mammoth mega-conference in 2008, titled “Philanthropy’s Vision: A Leadership Summit”, melding all of its regular annual conferences (corporate, family, community, annual) into one huge gathering near Washington, DC. 2008 just happens to be a national election year, and the Council’s lobbying agenda (rollbacks on the donor-advised funds and supporting organization restrictions from 2005) will be a big focus. Will there be the will, energy, and money to mount a separate rural philanthropy conference on top of the spring 2008 mega-conference?

The Council’s summary report on Missoula ended up where the Council’s rural philanthropy thinking started—rural areas should focus on raising new money, not tapping existing foundation coffers, and continue the good conversations from Missoula of what might make for powerful rural philanthropic (beyond charitable) investment opportunities.

All well and good, some good things might be forthcoming, but don’t expect the needle of foundation grantmaking to rural America to move above its current puny percentage. Nonprofits know that foundations like other power centers in this nation make changes not simply of their own volition, but when their constituents advocate for change.

As the delivery system for the value that foundations have to deliver, rural nonprofits are the constituents who have to organization to push foundations to continue the Missoula dynamic and do more. If the interpretation of Senator Baucus’s challenge gives a free pass to existing family, institutional, and corporate grantmakers, it will be a long slow road to a doubling of not much money at all.