Why Philanthropy Continues to Underfund Rural America—and What Grantmakers Can Do

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Note: This article was originally published on January 5, 2022.

Long before the pandemic hit, Americans living in rural areas have faced a daunting list of problems—a diminishing number of hospitals, limited transportation options, population decline, lack of broadband access, high levels of poverty, and more. 

According to the U.S. Department of Agriculture’s “Rural America at a Glance 2021” report, about 46 million people—or 14% of the total U.S. population—live in rural areas. The report found that people who live in these areas “often face greater difficulties accessing provisions and services or commuting to work, among other economic challenges.” These challenges have made it all the more difficult for rural Americans to cope with and recover from shocks and stresses, including but not limited to the pandemic.

Indeed, a separate report from the USDA found that rural residents are more vulnerable to death or severe illnesses from COVID-19 than urban residents are, largely due to factors like old age, underlying medical conditions, a lack of insurance and difficulty accessing medical care. Over the past decade, more than 130 rural hospitals have closed and an additional 900 rural hospitals are at risk of closing in the near future. That’s a full 40% of all rural hospitals in the country, a major cause for concern, regardless of COVID-19. 

While the initial wave of cases was centered on urban areas, by late August 2020, the COVID death rate in rural areas surpassed that of urban areas. Over a year later, rural Americans are dying from the virus at more than twice the rate of urban residents. 

Both the public and private sectors have stepped up to provide resources to cope with the myriad issues brought on and exacerbated by the pandemic. Rural America, however, has not received the same amount of assistance, particularly when it comes to private philanthropy. This isn’t a new issue. By and large, funders tend to concentrate their efforts on urban centers while ignoring much of the struggle in rural America. Only about 7% of all grantmaking in the U.S. goes to rural areas. 

For years, advocates and experts have tried to close the huge funding gap between rural and urban places. Last year, New Profit hosted a virtual action summit focused entirely on the issue. But while many have tried to find solutions, the problem persists. According to several people close to the problem that IP spoke with—leaders at rural foundations and philanthropy-serving organizations—the problem boils down to deep-seated sector dynamics, but also to the underlying relationship between rural and urban areas in America. Fortunately, these same experts and advocates presented a path forward—and challenged philanthropy to lead the way.

The mythical rural-urban split

When considering disparities between rural and urban philanthropy, one thing advocates insist upon is that the issue shouldn’t be looked at as a competition between two distinct categories.

“If funders think about the two as distinct, you’re kind of missing the picture… It just doesn’t reflect the way people live,” said Allen Smart, a long-time rural foundation leader and national spokesman and advisor for improving rural philanthropic practice through his group, PhilanthropywoRx. In an interview with Inside Philanthropy, Allen said that many funders tend to look at rural and urban areas as two separate, clearly divided regions. In reality, they are intertwined and interdependent. 

For example, many of the workers who live in rural areas commute into cities, providing neighboring urban areas with much of their workforce. Conversely, rural areas depend on urban centers for access to things like markets and industrial capacity.

As New Profit notes in a report on its recent summit, “rural communities aren’t separate from the rest of the country.” All community types, be they rural, small town, urban or suburban, are in a symbiotic relationship with one another. 

Even in official government designations, the concepts of rural and urban are intertwined. The U.S. Census Bureau defines rural as “any population, housing or territory not in an urban area.” In other words, the only way to understand what “rural” means is through its relationship with urban areas, which are defined as having a population of 50,000 or more; or “urban clusters” that have a population between 2,500 and 50,000.

For Smart, philanthropists shouldn’t approach grantmaking as funding either rural or urban areas. “Rural is not getting its fair share of philanthropy… but it shouldn’t be an either-or,” he said. Instead of operating under this strict binary, experts suggest funding more and engaging in cross-sector partnerships.

We fund what we know

One of the major reasons a significant funding gap exists between rural and urban areas is that most big funders are located in, and are therefore often focused on, large cities like Los Angeles and New York. 

As Eric Nee recently outlined in the Stanford Social Innovation Review, despite the fact that the poverty rate is significantly higher in rural America than in urban regions, philanthropists give far more money to urban areas, largely because that’s where the money is based.

Nee noted that the majority of the 10 foundations with the highest endowments are headquartered in big urban areas. Only two, the W.K. Kellogg Foundation and the Robert Wood Johnson Foundation, are located outside of these areas. 

“For the most part, private foundations and corporate philanthropy exist in an urban bubble, largely isolated from the rest of the country,” the article states.

Dr. Richard Frost, president and co-founder of the Chapel Hill Foundation in Plattsburg, New York, has seen how this dynamic plays out. “When you look at capital development and where fortunes are made, it tends to be in cities, and I think philanthropy tends to be given to places with which you’re familiar.” Many funders, for example, will give to the universities and colleges they attended. Others will support their own neighborhoods. 

“I think people develop a loyalty to where they work, where they’ve made their money,” Frost said.

In addition to the issue of urban wealth concentration, another factor is a lack of staff members with rural backgrounds.

“If you look at the staffing of larger funders, whether it be state-based or regional or national, there are very, very, very few people from rural backgrounds in any of the programmatic roles or leadership roles,” said Allen Smart of PhilanthropywoRx.

“The notion that somehow, those people [without rural backgrounds] will immediately gravitate toward rural America or rural philanthropic work is just a little bit misguided,” he said. This also holds true on the intermediary side, where the people who often lead the work also lack rural backgrounds. 

Smart suggests that those interested in engaging in rural philanthropy should bring on people who actually have that background. Just as it would make little sense to “staff a whole initiative around disability rights without anyone who’s disabled,” so, too, would it be counterproductive to exclude those with rural backgrounds from programmatic roles in large foundations.

The need for regional funding—and collaboration

While experts do recommend bringing on staff from rural areas at national foundations, they also acknowledge that most rural philanthropic work is not going to happen at the large, national foundation level. The future of rural philanthropy, Smart argues, lies at the local or regional level.

“That’s how the university systems work,” Smart said. “It’s how the health systems work. That’s often how the economic development systems work. Funders… haven’t come around to this idea of regionalism.”

Andy Carroll, a senior advisor at Exponent Philanthropy, shares some of that perspective. Exponent Philanthropy is a community of grantmakers that represents more than 1,700 “lean” foundations in the U.S., many of which are located in rural areas and small towns.

“Most of our members are place-based foundations in that, unlike the large national foundations, they give and work mostly in their immediate community or the state,” Carroll said. Because these are local foundations, they have a greater understanding of their communities and can better serve their needs.

According to Carroll, these organizations make a big impact in ways beyond providing funding. They serve as conveners. They often provide technical assistance and capacity-building to nonprofits. They commission research and data from local universities to gain a better understanding of the problems and issues their communities face. They even engage in policy advocacy, bringing together organizations and residents to push for policy change. 

“That’s a powerful role that they play, and it ends up being highly invisible work, because they’re not out in front,” Carroll said. “They’re doing the quieter but really important connective work that really builds communities and builds capacity.”

In addition to addressing the pressing needs of communities—COVID relief, transportation and access to medical care, for example—these small foundations also work to provide community enrichment opportunities.

“It’s not just physical needs that need to be met, but some of those mental and social types of needs that need to be met,” said Kimberly K. Orth, executive director and sole staff member of the William Stretesky Foundation.

In addition to funding college scholarships and awarding grants for school supplies, including iPads and Chromebooks for every student in the county, the William Stretesky Foundation also supports a children’s theater, county fairgrounds, a movie theater, and modern restroom facilities for a park, among other projects. 

For urban residents, things like clinics, grocery stores and recreational resources may be a given. But for many rural residents, they remain out of reach. 

“Even though we have fewer people, doesn’t mean that we have fewer needs,” Orth said. “It’s harder for people to get their needs met at home because they have to travel so far to get what they need. In urban areas, you can go around the corner, and you’ve got three restaurants or you’ve got businesses or you’ve got medical facilities. Those kinds of things just aren’t available to the people here.”

To help fill those gaps, the Chapel Hill Foundation, which is devoted to “bettering the lives of children and to meeting the challenges of an aging society,” has funded the development of community gardens in older adult and child care facilities. It also funds educational opportunities for older adults in the area.

The Pascale-Sykes Foundation, serving rural southern New Jersey, funds a family enrichment network that provides forms of family entertainment, including pool parties, dance contests and parades, among others. The foundation also looks to help families transition from simply getting by to being able to form long-term plans. 

In an example of public-private collaboration, the foundation helped create four transportation initiatives, working with local government agencies and nonprofit organizations to connect rural counties with New Jersey Transit and the South Jersey Transit Authority via shuttle.

“We firmly believe that just as one person can’t do it alone—they need a community, a family, a support system—so with one agency, it’s the same thing,” said Fran Sykes, the foundation’s president and CEO. “Many agencies working together can do far more than one agency can do.”

That’s not to say that national funding isn’t important. Recently, Sanford Health announced an additional $350 million philanthropic commitment to support healthcare in rural and underserved areas in the Midwest. 

Large foundations, which have significant financial and personnel resources, might consider partnering with small rural foundations, thus combining their strengths to both close the funding gap and better serve rural communities.

“I think the real rural work is going to start with those funders who have their feet in both urban and rural,” Carroll said. “They are understanding some of this regionalism. They understand how to do stuff to scale in rural [areas], but that’s not a national funder issue. That is going to be led by place-based funders who have both urban and rural footprints.”

Dan Smith, president and CEO of the Vermont Community Foundation, agreed that regional giving has unique potential to build necessary bridges.

“The divide between urban and rural philanthropy is also one of the reasons why place-based philanthropy matters. Community foundations are the best examples. Philanthropy that can take into account the alchemy of what drives well-being in a particular place is a really important lens into how to drive difference-making in those places.”

Poor understanding of rural areas and issues

Another likely reason that the funding gap between rural and urban areas persists is a scarcity of good data. “We all need better data,” Smart said. “And funders need better data to make decisions about rural giving… We haven’t taken a hard look at that for probably 20 or 30 years.”

There’s a great deal of misunderstanding about rural America. For one, demographics in rural areas are changing. Too many people, including politicians, erroneously believe rural America is composed solely of white residents. This is far from true. According to a Brookings Institute analysis of the 2020 U.S. Census, about 24% of rural Americans are people of color—that’s nearly one-fourth of the rural population. In the past decade, the median rural county saw an increase in its population of color by about 3.5 percentage points. 

“Narratives that erase the 24% of rural Americans who are people of color—as well as the many rural counties that are majority people of color—devalue the needs of rural people of color who face systemic barriers to opportunity, especially in light of the COVID-19 pandemic, while giving rhetorical priority to the concerns of an imagined white rural monolith,” Brookings’ report stated. 

If funders had a better understanding of the needs of under-recognized demographics within rural populations—people of color, immigrants, lower-income families—they would likely find that serving such regions falls squarely in their wheelhouse. 

“Funders should be interested in that,” Smart said. “They’re interested in those issues in cities, but they still kind of hold this mythology of what rural America looks like—which is white—which has never been true, but is completely, absolutely not true in 2021.”

In the wake of 2020’s racial reckoning, philanthropy made numerous commitments to fund racial equity programs. The grantmaking, however, focused primarily on urban regions while largely ignoring rural ones. 

“There’s a lot of focus on what’s happening in cities, particularly in urban cores, and the genuine need for philanthropic investment there,” said Diane L. Brown, executive director of the Community Foundation for South Central New York. “Rural communities often don’t have a voice. They don’t have the critical mass, whether it’s voters or individuals or donors, to have their voices be heard as much.”

Still, funders should bear in mind that there’s no one-size-fits-all solution when it comes to addressing rural needs. Funders need to recognize that because there’s such tremendous regional variation, what works in one community may not work in others. 

“The amount of money that’s been dumped in the Mississippi Delta or other places that are rural without much strategy or without much local ownership is astounding,” Smart said, adding that such programs are not the future of this work. “It’s not a one-model best practice.”

Rather than simply showering an area with money and using practices that have been tried and tested in urban areas alone, both better data and partnerships with rural funders are needed—in other words, actual understanding of and interaction with the people and places involved.

Recognizing rural philanthropy’s achievements

For Smart, one of the biggest challenges when it comes to increasing funding for rural America is that the topic of rural philanthropy, like rural America itself, only receives sporadic attention.

“It’s unfortunate that this discussion has been going on forever,” Smart said. “National funders… get undue attention for what they’re doing or not doing. If the possibilities of rural philanthropy are to pick up steam or pick up traction, there’s got to be some sustained attention paid to it.”

Every so often, someone asks what’s happening with rural philanthropy and why there isn’t enough of it—as this article is doing. But that discourse is rarely sustained.

“It’s because it gets forgotten 10 and a half months out of 12,” Smart said. “There’s literally thousands of funders doing real work. Some of them are the most creative, smartest, most impactful people I’ve ever met.”

To his point, I came across many examples. 

The Community Foundation for South Central New York, which serves five counties in the area, has about $34 million in assets and currently holds about 130 funds. In addition to supporting arts organizations, municipalities and school districts, and sports, recreation and community, the foundation also helps fund the Rural Health Network of South Central New York Transportation Program, known as Getthere.

In addition to making grants and hosting donor-advised funds, the foundation rallies the community around areas of mutual interest. For example, the foundation convened a group of local government officials and people from nonprofits to create a “social purpose grocery” in Binghamton, New York. One of the most economically challenged parts of the town had lacked a grocery store for more than 20 years. Thanks to the foundation’s efforts, it now has one.

In Vermont, meanwhile, one of the biggest long-term issues is a stagnant population. On top of that fact that it’s one of states in the country with the oldest average population, many residents end up leaving. The Vermont Community Foundation is working to improve the quality of life for Vermonters by closing opportunity gaps.

“We’ve oriented our work around the opportunity gap as it exists in Vermont, which really [consists of] the systems and structures that create disparate lived experiences across Vermont by virtue of where you live, who your family is, what your racial and ethnic background is, [and] what your family’s economic circumstances are,” the foundation’s president and CEO Dan Smith said.

According to its 2020 annual report, the foundation distributed $12.4 million to more than 1,000 organizations to address COVID response and recovery alone. Some of its priority issues include food insecurity, shelter for Vermonters without homes, online learning access for students, and support networks for historically marginalized and vulnerable populations. In total, the foundation moved $52.2 million that year. 

“We see the role of philanthropy as both to foster communities that are inviting in terms of who might live in Vermont… but also in terms of ensuring the Vermonters who, for whatever reason, don’t leave… aren’t left behind by the economy as it evolves, and aren’t left behind socially or economically.”

Partnerships are the way forward

Numerous experts have noted that collaboration is crucial to meeting the needs of rural America. For large foundations unclear about where and how to help, experts suggest partnering with small foundations. 

“As conveners and matchmakers, small, place-based foundations build networks and capacity in rural areas to address issues collaboratively,” Exponent Philanthropy’s Andy Carroll said. “Some small foundations engage residents in assessing local needs and making grants decisions. In these ways, small foundations… can be valuable partners with local and state government. Exponent Philanthropy members in rural areas can also partner with foundations in urban areas that want to make an impact in rural areas but don’t have the knowledge and relationships.”

In addition to collaboration between small and large foundations, partnerships between the public and private sectors are also a way forward. The recently signed infrastructure bill will allocate $65 billion to increase broadband access in rural areas, $55 billion to improve water and wastewater infrastructure, and $110 billion to repair the nation’s bridges, highways and roads. While philanthropy cannot address all of rural America’s needs, it can play a crucial role in filling the gaps left by public resources and helping to guide incoming funds.

Through cross-sector collaboration, partnerships between large and small funders, and sustained attention, it may be possible for rural America not just to endure and survive the pandemic, but to thrive in its aftermath.