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Community Foundations Rewriting the Story of Rural Minnesota by Sylvia Lindman For decades, tales of woe have been told about small Midwestern towns. Populations are shrinking; the agricultural and labor economies are eroding; young people are leaving for better opportunities elsewhere; and non-English-speaking immigrants are putting pressure on cash-starved schools. To be sure, rural Minnesota communities have not escaped these trends, but there's a positive trend at work as well — and one that is told less often. The past several decades have seen a growing movement of community foundations helping people in Greater Minnesota solve the problems in their hometowns and rewrite the story about rural America. Greater Minnesota has a long and strong philanthropic tradition, and a recent growth of new community foundations and funds has given renewed energy and visibility to this tradition. The state's community foundations have developed a philanthropic model for re-invigorating rural communities that is unique in the nation in many respects. These foundations are developing and giving philanthropic dollars through an expanding and increasingly integrated network of community foundations focused on smaller cities and towns; unique "initiative foundations" serving the six regions of the state; and rural community funds established at community foundations both in the metro area and Greater Minnesota — all bolstered by support from private foundations in the state.
All around Minnesota, there are visible signs that this model is helping improve the outlook for cities, towns and counties outside the Twin Cities. Even more important, say those close to the action, is the positive difference that community foundations are making in the outlook of the people living in these communities. "I've seen the impact they can have," says Judi Dutcher, president of the Minnesota Community Foundation, "not just in terms of dollars brought into the community but in terms of the transformative effect on people who get involved in charitable giving. It is a meaningful experience for people, as opposed to writing a check and putting it in the mail. Once people experience the impact of a gift, they become lifelong donors."
Minnesota has seen tremendous growth in the number and size of its community and public foundations over the past two decades — including in Greater Minnesota. There were 74 community/ public grantmaking foundations in the state in 2002 (the latest year for which complete figures are available), according to the Minnesota Council on Foundations, up from just 11 foundations in 1984 (this includes a few foundations serving border regions with North Dakota and Wisconsin). Community/public foundations comprised 13 percent of the state's total private grant dollars in 2001, up from 6 percent in 1984. Much of this growth can be attributed to the rising popularity of donor-advised funds, where donors establish a charitable fund at a community foundation and provide direction on their giving but leave the administrative and management details to the foundation. Thousands of donor-advised funds have been created at community foundations throughout Minnesota over the past few decades. Of the state's total community/public foundations, there are about 30 foundations — including 18 in Greater Minnesota — that fit the traditional definition of a community foundation that focuses on a specific geographic region, offers various fund options for donors, awards grants and maintains an unrestricted endowment to meet pressing community needs. Another dozen or so community foundations in the state — some with a statewide, multi-state or national focus — offer similar donor services but serve communities defined not primarily by geography but by a population group or common affinity — religious, cultural or philosophical. (See PDF map.) Many community foundations in Greater Minnesota are independent foundations serving a specific region surrounding a town or small city, such as those in Duluth-Superior, Mankato, Rochester and Winona. Greater Minnesota is also home to the Minnesota Initiative Foundations (MIFs), a unique group of six regional community/public foundations established in 1986 by The McKnight Foundation in Minneapolis. Each MIF's priorities are decided by people in its own region, and they provide grants and business loans to support economic development, leadership development, community building, and families, youth and seniors (sidebar). The MIFs are perhaps the most prominent example of a private foundation like McKnight supporting the creation and/or development of community/public foundations in Greater Minnesota, but there are many others. The Duluth-Superior Area Community Foundation, for example, just completed a four-year, $2.5 million challenge grant from the Bush Foundation in St. Paul. And last year the Otto Bremer Foundation in St. Paul awarded $650,000 to the Central Minnesota Community Foundation in St. Cloud to support the development of community funds in Brainerd and Willmar. The Brainerd and Willmar funds exemplify another component of the community foundation model at work in rural Minnesota. In addition to the 18 community foundations in Greater Minnesota, there are more than five times that many community funds (sometimes called component funds or affiliate funds) operating under the umbrella of a community foundation to meet the needs of rural communities throughout the state. Community foundations operating the largest number of these community funds are West Central Initiative, a MIF in Fergus Falls, which has funds in 35 rural communities, and Minnesota Community Foundation in St. Paul, with 34 funds. The MIFs began developing community funds at their foundations as part of their mission to extend the tools and benefits of philanthropy to all parts of the state. "We recognized that if our asset base was going to grow, we needed to provide more flexibility to donors," says Sherry Ristau, president of the Southwest Minnesota Foundation in Hutchinson. "At the same time, we had communities coming to us to ask us to consider this. We saw gifts not only leaving southwest Minnesota but also going outside Minnesota that probably would have stayed here if we'd had the vehicle in place." Despite some overlapping service areas and inherent competition for charitable gifts, the community foundations in Greater Minnesota continue to figure out ways to collaborate and cooperate. For example, the MIFs convene their staffs and boards for an annual meeting to share strategies and ideas. And although most of the MIFs manage charitable funds for donors, the MIF covering the state's northeast region — Duluth-based Northland Foundation — leaves the donor services function to neighboring community foundations in Duluth-Superior, Grand Rapids and Virginia, among others. Minnesota Community Foundation's Dutcher came to philanthropy from state government less than two years ago, and says she has been "amazed and delighted" at the high level of cooperation among the community foundations serving Greater Minnesota. "Maybe it's 'Minnesota Nice,' or maybe it's a recognition of a higher purpose we're trying to serve, which is that, at the end of the day, we're about improving people's lives."
Although the growing grant and loan dollars coming from Greater Minnesota community foundations is certainly an important factor in helping revitalize rural areas, representatives of these foundations share near-unanimous agreement that the most important outcome of the state's expanding network of rural foundations and funds is that it is producing a whole new cadre of individual philanthropists — local people who are involved on the boards of community foundations or funds or who have established their own funds at a nearby community foundation. Community foundations and funds get started for a variety of reasons, but their origins often stem from a group of concerned residents coming together around a strong desire to improve the quality of life of their communities. Sometimes, a community fund may get started by people who have a concrete, finite goal within their community, such as building a senior center or cleaning up a lake. But once the original purpose is complete, people don't want to let them go. "In the beginning they are very directed and focused toward that common goal," says Desiree Heller, vice president for philanthropic consulting services at The Minneapolis Foundation. "Once they have done something about that, they start to take a look at how they want to present themselves to the community and the other issues they want to support." Asked about the primary threats to her community, Jane Campion, a former board member and chair of the Rochester Area Foundation, doesn't bring up the usual suspects, such as poverty or an aging population. Those are very real, but, she says, "The primary threat is if [the community foundation] board is not active. The board has to be out asking, What does the community need? And how can we respond to that in the most responsible manner possible?" The board members of new and small community foundations and funds are local volunteers who often have no exposure to philanthropy or grantmaking before they begin. They soon discover how difficult it is to assess needs and respond objectively and fairly — and how tough it is to say no to a friend's pet project. The Minneapolis Foundation is one organization that, on a fee-for-service basis, helps community funds arrive at a mission and grantmaking guidelines, learn about governance and investments, raise money for programs and train volunteers. In different ways, many other organizations also actively promote philanthropy and facilitate the grantmaking process for small foundations. Like most other community foundations, the Central Minnesota Community Foundation in St. Cloud works to educate donors about the needs in their communities, so that their philanthropy becomes more intentional and effective. Foundation president Steve Joul explains the "4 I's" philosophy articulated by one of his board members. "First is getting information to people; from that people develop interest; third, if they are informed and interested they get involved, and the ultimate involvement leads to investment. It has become a deliberate method," Joul says.
As Greater Minnesota's community foundations have grown and matured, they have become a stronger force for rural development, often working side by side with local governments and businesses. In the wake of cuts in state and federal funding over the past few years, Dutcher says, "more and more community funds are changing and addressing needs that are emerging — social and financial needs — outside of what they had traditionally funded, whether it was band uniforms or main street renovations or capital projects. Now there are more demands for social services."
The Minnesota Community Foundation sponsored a study called "What's Your Vision?" to find out what people around the state were thinking. The findings showed great concern for education, safety, health and the economy. Now the foundation is using those findings and the community visioning process to help community funds develop their strategies. In one way or another, all of Greater Minnesota's community foundations are struggling with a central question: How do we maintain livability in our community so we continue to be a healthy, vital hometown? As they respond to this question, community foundations are serving as important catalysts for action in communities and as central connectors to bring together the key community players to tackle the most critical social issues. A few examples help to highlight the numerous diverse ways this is happening across Greater Minnesota: Improving Public Discourse: The communities of Duluth, Minn., and Superior, Wis., are connected geographically, straddling either side of Lake Superior, but they have long been divided economically, says Holly C. Sampson, president of the Duluth-Superior Area Community Foundation. But today's complex societal problems require cooperation. Hoping to strengthen social cohesion, in 2001 the foundation convened 100 emerging local leaders as the Millennium Group to identify the region's most pressing issues. The group's top priority: Improving the public discourse. "We've become very divisive over critical community issues," Sampson says, "and often the solutions are stalemated because the debate becomes so hostile nothing is accomplished. The approach we're taking is what the Millennium Group has identified — bringing people together around critical community issues so we can come to common ground." That prompted the foundation to launch its first public education campaign, "Speak Your Peace," in Aug. 2003. "Speak Your Peace" encourages civility and mutual respect. A local PR firm and other businesses lined up to offer their services, local governing bodies and other groups passed resolutions supporting the campaign, and word has spread throughout the state and beyond. The ads continue to run. To Sampson, that's a positive example of what a community foundation can accomplish. "We can bring together a group of people that represent environmentalists, union members and business owners," she says. "A community foundation plays a unique role in being a neutral convener around critical community issues." Spurring Economic Development: For the scenic cities along the shore of Lake Superior in northeast Minnesota, a big worry is maintaining population as a traditional economic mainstay, taconite mining, has been hit hard by global competition. "Cities and counties are really having a hard time maintaining basic services," says Tom Renier, president of Northland Foundation. "For a lot of communities, that means they don't have the time or resources or even energy to think long term . . . They don't have the luxury of trying things, being innovative, being entrepreneurial." Northland uses grants and loans to foster creative thinking and entrepreneurship in both the for-profit and nonprofit sectors. "We're investing in entrepreneurs and business start-ups and reinvesting in some of the businesses we've previously helped finance that are [now] struggling in a down economy," Renier says. Renier considers business finance a crucial part of strengthening communities. "Economic activity is very apparent in a community, and it changes their attitude about themselves," he says. Increasing Affordable Housing: The lack of affordable starter homes had become a well-documented problem for the community of Rochester in southeast Minnesota in the 1990s. Rochester-area employers listed the region's housing shortage as a top concern, and one that was hampering employee recruitment. Although the cost and scale of housing scare off many potential donors, in 1999, the Rochester Area Foundation decided to take on the issue and created the First Homes initiative, with a goal to build 875 housing units for working families in a 30-mile radius of Rochester in five years. "I'd been at meetings where everybody talked about affordable housing but we seemed immobilized," says former board member Campion. "I remember coming out of one meeting when a lawyer in town, Al DeBoer, asked, 'Do you think the Rochester Area Foundation could do this?' With that, he stepped into action." The Mayo Clinic Foundation in Rochester stepped up with a $7 million leadership gift. The foundation established partnerships with the Rochester Area Housing Council, the Minnesota Housing Finance Agency, the Greater Minnesota Housing Fund, the U.S. Department of Agriculture Rural Development and private developers, among others. By 2003, the foundation had raised $13.1 million and was well on the way to completing its goal. First Homes has recently established a land trust to keep prices down for generations by purchasing the land on which the homes sit and leasing it to homeowners. To Campion, it's easy to sum up the role of a community foundation: "To be the impetus for what the community needs." Promoting Early Childhood Development: The six MIFs share the goal of ensuring that children are ready to learn. Working in partnership with The McKnight Foundation, Ready 4 K and other foundations, last year the MIFs launched a three-year, $5.9 million initiative to identify and promote early childhood care and education opportunities throughout the state and to create local strategies to fill the gaps. The effort is being funded in part by a $3.2 million grant from McKnight, and each MIF will seek additional funding. The effort will engage communities throughout Minnesota in creating local "road maps" to promote early childhood opportunities. "Communities are coming up with plans on how to raise the bar on how we care for children, in partnership with parents and child care providers, businesses, the faith community and health care," says John Ostrem, president of the Northwest Minnesota Foundation in Bemidji. The early childhood effort is the first time the MIFs have collaborated so closely on a statewide project. "We were all going on different tracks and our paths merged," says Ristau of the Southwest Minnesota Foundation. As this project shows, the very existence of a community or regional foundation can extend a philanthropic initiative into the far corners of the state and help ensure that the effort truly is universal. Without the MIFs' on-the-ground connections around the state, Ristau says, the effort might very well have been limited to the Twin Cities. "As a result of our being here, people are working together who wouldn't be working together otherwise."
Despite their successes, community foundations in Greater Minnesota are under the same ongoing pressures to attract new dollars for donor funds and unrestricted endowments as are their peers in the Twin Cities and around the country, competing with mass-market funds, philanthropic advisors and others. These fund development pressures can be heightened in rural areas, due to a relative lack of individual wealth in the region and generally lower wages, fewer and smaller corporations, and donors who are much more spread out geographically than in metropolitan areas. Even so, Greater Minnesota's community foundations say they are holding their own. Raising money is "a collaborative process," says Sampson of the Duluth-Superior Area Community Foundation. Hers is one of more than 50 community foundations around the country that has countered the philanthropic efforts of financial firms' donor-advised funds by working with Merrill Lynch to create a different product for donors. Merrill Lynch facilitates the investment and the donor's local community foundation assists with grantmaking. Small community foundations have a learning curve in fundraising, The Minneapolis Foundation's Heller says, but "once they get going I find there's usually a lot of support and people are eager to support in different ways." Joul of Central Minnesota Community Foundation believes there are substantial resources in Greater Minnesota to sustain worthy organizations, but they are not always visible. "A lot of money is very quiet — it's the millionaire next door," he says. "People are quite humble. Everybody is a potential donor." Given the added fundraising challenges that rural-based community foundations can face, competition for donors would seem to be an obvious concern. For example, the service region for a MIF typically includes at least one other independent community foundation as well as numerous community funds. And community foundations based in the Twin Cities, most notably The Minneapolis Foundation and Minnesota Community Foundation, are reaching out to donors outside the metropolitan region. Many leaders of the state's community foundations downplay any concerns about competition. They stress that providing donors with more options will benefit everyone in the long run, as donors are able to assess their choices and find the right niche for them. "The more all of us are out there touting the benefits of philanthropic giving, the larger the benefits for all of us," Dutcher says. Joul disagrees to some extent. He notes there has been some "great collaboration" among community foundations in Greater Minnsota around programs and grantmaking, but that competition for fundraising does exist just under the surface. "But 'Minnesota Nice' often prevents us from speaking about it or acknowledging it," he says. "Choice is wonderful but it does come at a cost. Greater cooperation in this area could only produce greater efficiencies, allowing more money to be spent on the community." Community foundation leaders in Greater Minnesota agree that their task is different than for community foundations in the metro area — but not necessarily harder. "The difference is that people in those small communities say, if we don't step up to the plate, who will?" Sampson observes. "Maybe in the larger metro areas people can say, well, that should be the CEO of Target. In smaller communities they say we have to make this community a better place because we are the community."
Sidebar In the early 1980s, leaders at The McKnight Foundation in Minneapolis were concerned about the lack of philanthropic capital in the state's rural areas, and in 1986 established six regional community/public foundations, called the Minnesota Initiative Foundations, to help make Greater Minnesota stronger and more prosperous. Each foundation covers one of the state's six geographic regions outside the Twin Cities metropolitan area:
The MIFs provide grants to local nonprofits and loans to local businesses, operate their own special initiatives and provide training and resources to nonprofits and the community. Five of the six MIFs also manage various types of charitable funds and other philanthropic services for donors. To date, McKnight has invested nearly $200 million in these foundations. The MIFs have raised an additional $103 million, leveraged $600 million in loans, made grants totaling $67 million and loans totaling $99 million, and created 26,000 jobs. Collectively, their current endowment assets are $118 million.
Source: Minnesota Council on Foundations |
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