| Building Philanthropic Support for Rural Entrepreneurship
Location and Context
Nebraska is a very rural state, with only 6 of its 93 counties being defined as metropolitan. Further, 90 percent of Nebraska's 532 incorporated municipalities have less than 2,500 population. Sixty percent (320) have 500 or fewer residents.
The 2000 US census shows that 11 of the 15 poorest counties in the nation are in Nebraska. The average rural family income is only two-thirds that of urban Nebraska and well below the national average. This increasing income gap is leading to a continued wave of out-migration (especially for the critical 25-44 age groups). This out-migration, historically, has been the most accurate indicator of bad times on the Great Plains. In deeply rural counties, out-migration is also the predictor of rooted poverty, as local dis-investment in current and future economic and social vitality are leading to greater external dependency. This poverty and dependency manifest themselves in a community sense of hopelessness, which further exacerbates the problem.
On the other hand, there is a great deal of wealth in rural communities held within asset-rich, but cash-poor, farm and ranch families. These families and their communities are at a critical juncture. Over the next few decades, nearly $94 billion in rural Nebraska assets will transfer between generations as part of the largest national transfer of wealth in the history of the nation. With 750,000 persons living in these rural areas, the transfer is estimated at $125,000 per person. With Nebraska's aging population, the peak transfer in rural Nebraska will occur about 2015. By comparison, the national transfer of wealth does not peak in the next 50 years. Further, 24 of Nebraska's most rural counties will experience their peak transfer of wealth in the next 10 years, with several of these already having peaked.
Nebraskans, especially rural Nebraskans, are fiercly independent and proud. This sense of independence and pride creates an opportunity to assist community leaders in developing sustainable strategies for locally-based, locally-driven community and economic development.
Finally, Nebraskans pride themselves as being entrepreneurial. One study referenced by the collaboration concluded that although Nebraska ranked 41st of 50 states in entrepreneurial environment, Nebraska ranked 7th in overall entrepreneurial activity per capita. Additionally, University of Nebraska researchers recently found that small and micro businesses started in small cities and villages (less than 2,500 population) were "as likely, if not more likely, to survive as business starts in the state's major population centers…."
Collaborative Structure and Strategy
The Nebraska Community Foundation (NCF), the Heartland Center for Leadership Development (HCLD) and the Rural Policy Research Institute (RUPRI) recognize the next decade as a unique opportunity and a significant threat. Their efforts to retain community assets at the local level to support economic development and quality of life needs of Nebraska communities for future generations include furthering the tradition of charitable giving in an increasing number of rural Nebraska communities and helping them to move beyond "checkbook giving." This will be achieved by building endowment funds to encourage initial gifts and long-term planned giving, stemming the exportation of assets occurring during peak years of the intergenerational transfer of wealth. A portion of the annual earnings from these endowments will be directed to to support programs local entrepreneurs, which will in turn create new locally-controlled wealth. Throughout this integrated process, community capacity building and leadership development will be emphasized, as social entrepreneurship and community engagement are also key to stemming outmigration and exportation of locally-held wealth.
Leverage and Impact
The proposed impact of this work will build community capacity to retain at least five percent transferred assets in the form of community endowment funds, which will benefit the community through investments in education/training, entrepreneurial activities and quality-of-life enhancements (An estimated $4.7 billion, generating an annual income of $235 million). They then hope to redirect one-tenth of these recaptured rural community assets into entrepreneurial initiatives that will help to build a sustainable economic future. If even this small percentage were reinvested in meaningful economic development, $23.5 million dollars for entrepreneurial enterprise will be available each year to rural communities. And ultimately, community attitude will be changed to create more of a "we can" mentality.
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