Rural Development Philanthropy Learning Network

Building rural assets to build rural livelihoods

The Aspen Institute: Community Strategies Group

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Endowments with a difference

What difference does it make?

Build engines, not just funds

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Rural Endowment Building

The key question:

How can community foundations raise significant endowment funds from and for rural communities to support rural community economic development?

Don't miss:

Building Engines for Rural Endowments: A Thinking and Action Framework—a step-by-step guide for rural-focused community foundations trying to build rural endowment and rural vitality.

Engines for building rural endowments

Endowments with a difference—intentional, long-term RDP. Rural endowments have long been a staple for community foundations serving rural regions. Many community foundations hold agency endowments for rural libraries or manage scholarship trusts long since abandoned by for-profit financial institutions. Community foundations have the flexibility to work with diverse donors representing the spectrum of private sector giving—from individuals contributing to a pooled fund, to the family establishing a donor-advised fund, to the local business, corporation or private foundation setting up a scholarship. Community foundations also have the capacity to accept gifts of varying sizes and structure—from the $25 check, to gifts of real estate, art, livestock or stock transfers.

When it comes to sustainable economic development, community foundations are unique among rural community-based institutions: They offer a foothold in the present through their grantmaking and convening activities, while making a commitment to the future through their management of endowed capital in perpetuity.

While traditional endowments definitely contribute to community well-being, rural development philanthropy (RDP) asks community foundations to take rural endowment building one step further. RDP is an inclusive and intentional effort to draw the usual and unusual suspects to one table to create a shared, dynamic and capitalized vision of the community?s future.

Normally, community foundations patiently and quietly grow and manage resources in the form of discretionary and restricted endowments that are pooled, invested and granted to the operations and/or community building efforts of nonprofit organizations and as ?seed? funding for innovative community projects. When community foundations engage in RDP and build engines for rural endowments, they are almost always asked to engage in more intentional fundraising, diverse convenings, and more complex management and governance structures.

To be ?intentional,? community foundations engaged in RDP cannot wait for rural donors (or their bequests) to appear before establishing rural endowments. Instead, community foundations must step out from the shadows and ?position? themselves to partner with communities and donors to develop proactive, place-based strategies for raising rural endowments.

What difference does it make? Endowed capital raised and allocated by and for rural communities—as RDP suggests—provides both a tangible financial nest egg and the intangible ?peace of mind? that having a nest egg brings. In advocating a shift in our anti-poverty policy from an income maintenance to an asset development approach, Michael Sherraden has written of the ?change in world view? that occurs when low-income people develop savings focused on building for the future. By contributing to a savings targeted for their own or their family?s development, low-income people alter their orientation to the ?luxury? of planning for their future—in contrast to surviving from day to day. Similarly, when a rural community begins to develop its own ?savings account? in the form of a community endowment, a comparable shift in world view occurs.

No longer is the community wholly dependent upon government, metropolitan seats of power or the whims of an increasingly global economy. Instead, rural communities control their own resources. Over time, these resources offer rural communities an equal seat at the economic development table and allow them to respond quickly to opportunities or to sudden, unexpected crises. Community endowments imbue rural communities with a self-sufficient, expansive worldview that can sustain towns and cities when faced with troubled times. While no one would suggest that community-based philanthropy offers the best or only strategy to achieve stronger rural futures, access to endowed capital is one integral piece of the rural development puzzle—one that is often underdeveloped in rural communities.

Build engines, not just funds. Engines for rural endowments—in contrast to one-time, fundraising campaigns—encompass the structures and strategies that shore up endowed resources by continually generating and renewing RDP over time. Raising funds in rural areas can be challenging even when fundraising goals are physical and visible, for example, a new wing on the public library or new coats for school children. Soliciting contributions for a more abstract ?community fund? or for any endowment aimed at community economic development can prove grueling indeed.

Time is a critical variable in RDP for at least two reasons. First, it will take time to grow a community endowment to the level that it can distribute significant funds for distribution for and by the community. Second, endowments are forever. Once established, endowed funds will ask the community (represented by staff, board or fund advisors) to consider how it will be ?spent? for many, many years to come. The very nature of an endowment suggests that by the time significant funds are available for distribution, the folks who raised or contributed the funds will likely be long gone. Consequently, a long-term vision and inclusive decision-making practices must be engineered and sustained by the community foundation so that the greatest community-building benefits of a community endowment—not just the money, but the group decision-making, shared vision, usual and unusual suspects side-by-side—can be maintained.

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