As a native of Appalachian Kentucky, I know that when I start to talk about my homeplace to a national audience I’m not working from a blank slate. Poverty is the first thing that many people from outside my region think of when the word “Appalachia” comes up. However, while it’s true that I work in one of the most economically distressed areas of the country, the innovation and philanthropic opportunities for systems-level impact are immense - if funders are willing to build long-term relationships with local people and places.

For those of us that live and work in small towns, we know that when we start to tug on our most pressing national policy and social issues like income inequity and poverty, we find their roots buried deep in rural soil. We also know that while our places are critical for moving national solutions forward, they remain some of the poorest in the nation and receive the least amount of philanthropic investment. With nearly 20% of all people in the United States living in a rural area and 78% of all high-poverty counties in the U.S. existing in rural, why is it that only 7% of U.S. foundation funding goes to rural communities? That figure includes grants made to rural hospitals and universities. I believe this inequity is largely due to misconceptions about what rural systems change work looks like and a lack of national philanthropic networks with proximity to and relationships built in rural communities.

Over the last year, my colleagues from the Foundation for Appalachian Kentucky and I have participated in a Rural and Small Towns Cohort organized and hosted by New Profit to examine how philanthropy can better invest in rural regions, bridging the philanthropic gap and building those needed relationships. What we’ve learned with fellow cohort partners is that our places are distinct in history and culture, but not unique in the challenges we face. We also all share strong rural development hubs and proximate leaders that are ready - right now - to absorb and aggregate large investments that would be transformative to not only rural places, but the nation. We just need new models that prioritize trust and commitment for how that capital flows.

Best Practices for Investing in Rural

Invest in People Over Projects: Finding and trusting proximate leaders, the people who live in and are impacted by the issues you care about, is paramount to making smart investments in rural places to move systems change work. Whether you’re interested in alleviating poverty, accelerating improved health outcomes, or shifting educational attainment, I can assure you that finding, building trusting relationships with, and investing in people on the ground doing the work, not programs staffed and administered by large organizations outside rural areas with solutions patterned off of urban needs and markets, will help you achieve your mission faster.

Find Your Local Rural Development Hub:  Those proximate leaders often reside in an existing strong anchor organization. Chances are good that no matter what your interest area, a rural development hub in your chosen geography is already working on it or has the right relationships in place to bring together partners and create a place-based strategy. “Rural development hub” is a term developed by the Aspen Institute to describe strong intermediaries in rural regions that are taking an asset-based, wealth building approach to rural community and economic development. Their work increases assets fundamental to creating current and future prosperity; increases local ownership over those assets; and always engages low-income people to help design strategy and define outcomes. Hubs can look like a non-traditional community foundation, a strong local community development nonprofit, or a Community Development Financial Institute (CDFI). Making multi-year, general operating support grants or social impact investments to support a region’s existing rural development hub is critical to achieving long-term results that stick.

Prioritize Equity-driven Strategies:  Rural places are not monolithic. On the contrary, small towns are often more diverse than outsiders think and offer nuanced perspective and analysis to national equity work. In Appalachia, we’ve found that a commitment to racial equity and priority for funding Black, Indigenous, People of Color, queer, women and youth-led organizations and initiatives has helped us achieve better outcomes for all Appalachians.

If philanthropy wants to be part of the movement to transform rural America, we must deeply listen to and invest in rural leadership. We must also design place-based strategies that are appropriate for the scale of rural places and honors the long-term work already underway in those places. By moving together as partners and building local capacity to ignite work through rural development hubs, we can create a shift in rural places that will chart a more prosperous and equitable course for our country for generations to come.


Original contribution by Lora Smith, Executive Director of the Appalachian Impact Fund, a social impact investment fund advancing economic opportunity in Eastern Kentucky, anchored at the Foundation for Appalachian Kentucky.  She serves as Co-Chair of the Appalachia Funders Network.