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The Two Maines. This time-worn expression captures the state’s regional distinctions and diversity of economy, geography, and politics. The same is often said about the nation – there are two Americas, urban and rural.
Powerful stereotypes influence perceptions of, interactions with and, as a consequence, investments in rural America. In developing economic solutions for our country, it’s important to move beyond these stereotypes and recognize on-the-ground realities.
It is true that there are fewer people and there is less “built” infrastructure in rural America. Rural areas cover 97 percent of the nation’s land area but contain less than one in five people (about 60 million). Rural America is where natural resources are harvested and processed, where most of our clean water originates, and where we go for recreation. Rural residents are more likely to own their homes, live in their state of birth, and serve in the military than their urban counterparts.
In the face of the COVID-19 pandemic, we are witnessing the kind of resilience that rural places are known for. Take the nearly 1,000 small businesses we’ve provided financing support and business advice to over the last month that have been hit hard and are fighting to find a path forward. Right now, loan modifications and clear and accurate advice can make the difference between a business closing its doors and laying off its workers or hanging on through the crisis to recovery.
An important lesson from the Great Recession is that those who are most vulnerable can fall further behind. The assumption that the benefits of stimulus and recovery efforts will automatically “trickle down” to people with low incomes does not hold true. Without investment, we risk more protracted job loss, deepened poverty and ultimately, a less equitable country.
After the last recession, it took the nation almost five years to grow its employment base back to its pre-recession peak. It took Maine three more years to achieve that goal and most of those jobs were concentrated in greater Portland, the state’s most populous region. Moreover, it took a painfully long time for wages of front-line workers to begin to creep up and when they did, gains came as a result of the higher demand for labor buttressed by Maine’s increased minimum wage.
To date, 92 percent of small employers in the U.S. have been negatively impacted by the coronavirus outbreak; nearly 56 percent of Maine people work for small businesses. As a Community Development Financial Institution (CDFI), CEI works with business owners who typically borrow less than $250,000 and pay themselves less than $50,000 a year. Their companies are more likely to employ workers who lack resources beyond weekly paychecks to cover housing, business, or education loans.
They are child care enterprises, sustainable textile manufacturers, food producers, organic farms, local groceries, technology firms, occupational therapy services, kelp and shellfish operations, and community scale solar construction developers. They are pioneering direct market sales channels, incorporating renewable energy and integrating hunger relief efforts into their business models. They have a deep commitment to their communities and the working landscapes that have defined Maine’s heritage industries for generations.
Helping small businesses succeed is vitally important everywhere right now. Yet, the vast majority of investment and philanthropic resources are directed at large, metro areas. Rural communities receive a disproportionately small share of foundation grants, only five to six percent. This lack of capital and associated business development capacity outside of urban areas contributes to widening income inequality.
Here are some ways that philanthropy can make a difference:
- Focus on impact. Invest assets in mission-aligned intermediaries focused on high-impact strategies targeting small business and community development, affordable housing, sustainable food systems, and/or renewable energy.
- Reconsider funding criteria. Donors can unwittingly eliminate rural geographies from receiving funds based on population size or ecosystem impact, favoring urban over rural.
- Maximize flexibility. Consider offering general support funds that can be used nimbly.
- Deploy your Donor-advised Fund. Now is the time to unlock funds to provide additional help.
- Support CDFIs. Community investors like CEI work with the most vulnerable people and need capacity to provide patient, flexible, low-cost capital to new borrowers, debt relief to existing borrowers, and fast and expert advice to small businesses. Zero interest loans and guarantees can de-risk high impact investments. A grant to a CDFI could provide debt relief to borrowers in a strategic or hard-hit industry, such as child care or farms.
- Connect with rural places and businesses that you love. Consider making contributions to food pantries or downtown associations and purchasing gift cards, food products, or gifts from your favorite store.
- Rural America Doesn’t Fit into Philanthropy’s Guidelines. Here’s How to Change That.
- Speak Your Piece: Rural Strength and Possibility
- Rural CDFIs Give Voice to a Brighter Future in Rural Regions
By Betsy Biemann, CEO, Coastal Enterprises, Inc (CEI).