A home equity loan from Hope Credit Union, part of the HOPE Enterprise Corporation in Moorhead, Mississippi, helped Shari Morrow rebuild her life after a devastating fire. (Photo by Ken Gordon of KenGordonPhotography.com via the Hope 2017 Impact Report)

Rural America isn’t going to hell in a handbasket. There’s more strength and possibility in rural areas than today’s popular narrative would have us think. I’ve spent much of my career on and around rural development issues, and I believe we can’t just write off 14 percent of the country’s population and 85 percent of its land mass, throw up our hands, and tell people to buy a bus ticket out or be doomed. There is a power to place. We need people in rural America.

Modern American agriculture leads the world in food, fuel, and fiber innovations—there’s a strength here that as a nation we need to encourage. And for the first time this decade, we’re seeing shifts in the trend of rural exodus toward an increase in population in some rural areas, according to the USDA.

What is also true of rural America is structural poverty in many areas hasn’t had sufficient attention—85 percent of the nation’s 353 persistently poor counties are rural (defined as counties where 20 percent or more of the population has lived in poverty for the previous 30 years). In too many of these communities, homes are old and unsafe, clean drinking water is unreliable, broadband doesn’t reach, and fundamental services, likes banks and hospitals, are hours away from home.

This is the rural America we must focus on in community development. And we find strength stories here as well.

In 2019, some of the most forceful, creative, and capable community development practitioners—community development financial institutions (CDFIs)—are fighting in and for highly distressed rural areas. They are proving the fight can be won.

CDFIs have proven experience and the conviction that decent housing, clean drinking water, and life enriching community facilities and opportunities can happen in even the remotest and poorest areas. We’re not grappling with the mysteries of cancer. We know how to solve problems in rural infrastructure, housing, banking, small business, and healthcare. The solution is capital, resources, and perseverance.

CDFIs: A Mayor’s Best Friend

CDFIs have the talent, strength, and on-the-ground partnerships to ensure rural America isn’t left behind. I like to say we’re a mayor’s best friend.

An example in the Deep South is the presence of Hope Enterprise Corporation (HOPE) in Moorhead, Mississippi, a high poverty area in the Delta. HOPE works closely with Moorhead’s mayor George Holland through the CDFI’s Small Towns Partnership. The program offers community-grounded strategic planning and technical assistance to Moorhead and six other rural and high poverty communities in Mississippi that lack staffing and resources necessary for community and economic development projects.

In Moorhead, HOPE has opened a credit union branch and collaborates with the municipality, residents, and local leaders on projects like the rehabilitation of 44 homes in Eastmoor Estates, an affordable housing development that had fallen into desperate disrepair.

HOPE is one of many CDFIs working deeply, diligently, and creatively in rural America. In 2017 within Opportunity Finance Network (OFN) alone, 154 CDFIs invested $1.44 billion in rural areas—and 53 of them focus more than half of their activity solely on rural development.

This careful and committed attention to rural communities is making a difference. CDFIs are creating jobs—over little more than a decade, CDFIs supported 232,000 existing jobs and created 63,000 new and 30,100 construction jobs, partly through our financing of 29,200 rural small businesses and microenterprises. Our financing and know-how helped build 37.7 million square feet of space in community facilities and commercial real estate. And CDFIs have provided opportunities that are vital to healthy communities by enabling 29,670 childcare and education seats; 1.65 million healthcare visits; and 41,800 housing units, according to data compiled by the federal Community Development Financial Institution Fund from 2007 to 2012.

In the mix of these CDFIs are OFN members like Southern Bancorp, which operates in rural Arkansas and Mississippi. Since 2017, the CDFI has originated more than $1 billion in loans that helped 4,000 individuals attain or sustain affordable housing and supported the creation or retention of more than 20,000 jobs across its two-state service area.

Additionally, Southern Bancorp successfully advocated for statewide legislation to encourage citizens to save more at tax time. All of their activities count toward the bank’s stated “Big Hairy Audacious Goals” of helping 10,000 people attain affordable housing, supporting 100,000 jobs, and empowering 1 million people to build savings between 2016-2026.

In the Mid-Atlantic, there’s The Progress Fund financing tourism-related small businesses in former coal towns along Appalachia’s Greater Allegheny Passage, a 150-mile rail-trail through Pennsylvania and Maryland. Supporting bike shops, cafes, bar-restaurants, bed and breakfasts, and small manufacturing companies, annually the CDFI has created a $50 million benefit along the route.

Out West in South Dakota, Lakota Funds, the first Native CDFI, works to break the cycle of poverty on the Pine Ridge Indian Reservation by supporting Native businesses, like one of the nation’s only Native owned cattle ranches. In its more than 20-year history, the CDFI has deployed more than $13 million in financing, supported the start or expansion of more than 600 businesses, and created more than 1,600 permanent jobs.

Further north, Coastal Enterprises is providing financing and advice to small businesses that make up the backbone of Maine’s rural economy. Coastal Enterprises invests in small farms, fisheries and other environmentally sustainable enterprises. Over its 40 years of operating, the CDFI has financed nearly 3,000 small businesses, helping to create almost 40,000 jobs.

CDFIs like these serve rural communities in all corners of the U.S., putting together complex financing deals for affordable rental and homeownership and finding innovative ways to create jobs, fight predatory lenders, and fill banking and financing gaps.

Groundbreaking ceremony at Mississippi’s Camp Kamassa in May 2018. The project was made possible through Uplift America, a public-private partnership of the U.S. Department of Agriculture (USDA), philanthropy and the financial sector. (Photo via upliftamerica.org)

Leaning into the Fight

What’s so powerful about today’s community development moment for rural America is that we can make huge transformations with a scale of work that is smaller than what we’re used to in urban areas. And it’s within the nation’s ability to pay for such transformations. CDFIs are leaning hard into the fight to increase capital for rural communities.

One of my favorite examples of the types of creative capitalization strategies we’re always pursuing is a public/private partnership program at the USDA called the Community Facilities Re-lending Program.

When I was Under Secretary for Rural Development at the USDA, we tweaked the rules of one of the USDA’s direct lending programs so other institutions could relend its funds. Instead of lending directly to an essential community facility, this program enables the USDA to lend to another entity with the time and expertise to make loans in very high poverty or persistently poor rural areas.

The Community Facilities Re-lending Program invested more than $400 million of 40-year money into 26 organizations, including CDFIs FAHE, Citizen Potawatomi Community Development Corporation, Coastal Enterprises, MoFi, HOPE, and Kentucky Highlands Investment Corporation, among others. Bank of America stepped up to become one of the program’s key partners with $100 million of guarantees. And also supporting the program is the Uplift America Fund, which offers capacity building grants pooled from seven foundations—Mary Reynolds Babcock, Winthrop Rockefeller, Ford, Heron, JP Morgan Chase, Bank of America, and Northwest Area.

What’s great about the program is it’s the same affordable, patient government capital as the direct lending program but made available to organizations that know where to invest the money for the greatest impact and have the time to do it.

While we need more innovative efforts like the Community Facilities Re-lending Program and Uplift America, we also want to see more bank investment in rural America through the Community Reinvestment Act. Longitudinal data from the past dozen years illustrates a painful discrepancy between bank investment in CDFIs serving rural markets and bank investment in CDFIs serving urban markets. For rural CDFIs, capital borrowed from banks in 2017 comprised 29 percent of total borrowed funds. For urban CDFIs, capital borrowed from banks comprised 56 percent of total borrowed funds. OFN is advocating for a Community Reinvestment Act modernization that encourages more rural investment by banks.

Thrive More Than Survive

Our work in and for rural America is not easy, and we must double down on our efforts to address persistent and entrenched poverty in the poorest, hardest to reach rural and Native communities. But we can do it—we have to do it. We know how, and more capital and partnership will make all of us much stronger.

The conclusion of rural America’s story certainly isn’t determined. People in rural communities have passion, skill, and knowledge. With the right resources rural Americans can do more than just survive, they can thrive. That’s the end we’re working toward every day.

Lisa Mensah is president and CEO of Opportunity Finance Network (OFN), a national association of community development financial institutions (CDFIs). She served as under secretary for rural development at the USDA under the Obama administration and is was the founding executive director of the Initiative on Financial Security at The Aspen Institute.

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