Rural nonprofits get fewer dollars from government and foundations

Rural communities account for 18 percent of the U.S. population and 22 percent of the country’s poor. Yet they receive only eight percent of total nonprofit funding.

A new Bridgespan study says rural nonprofits confront a particular set of barriers to serving their clients and raising funds. According to the study, based on an analysis of Form-990 tax returns, the rural nonprofit sector is one-third the size of its urban counterpart on a per capita basis.

For every dollar per capita spent by a rural nonprofit, urban nonprofits spend six dollars on arts and culture; five dollars on food and agriculture, social action and advocacy, and education; four dollars on youth development and crime; three dollars on health, recreation, and housing; and two dollars on human services, environment, and public safety.

The overall ratio of government and private funding for nonprofits is about the same in rural areas as in urban ones. Despite evidence that rural states have strong Federal legislative influence and access to special Federal funding streams, rural nonprofits receive fewer government dollars per capita than urban ones.

Private philanthropy in rural areas is notoriously limited. Grants to rural America account for less than seven percent of overall foundation giving and slightly more than one percent of corporate giving by large companies.

Several leading nonprofit analysts have pointed to the weak infrastructure for rural community foundations. The Council on Foundations is promoting a Rural Philanthropy Growth Act through which the Department of Agriculture would incentivize and support rural philanthropic capacity building.

By some measures, rural organizations actually exhibit better financial health than urban nonprofits. They’re less likely to run an operating deficit and more likely to have more than three months of cash reserves.

Rural nonprofits struggle with a lack of qualified job applicants due to lower educational attainment in rural areas. Further, many are not able to offer competitive salaries compared to urban nonprofits.

They also struggle to deliver crosscutting services. Many rural nonprofits must provide a broad array of services, which the study’s authors say challenges their ability to develop expertise and capacity in any one service area.

The study highlighted three fundraising strategies that have proved successful for rural nonprofits: seeking long-term rather than short-term funding, aggressively pursuing government funding, and developing relationships and increasing visibility outside of their communities, “because that’s where the money is.”

Read more in the Bridgespan Report, “Small But Tough: Nonprofits in Rural America.”

For an excellent article on the future of rural funding, see Rick Cohen’s “Where is Rural Philanthropy Heading and Where in the World Are Its Partners on the Journey?” in the Nonprofit Quarterly.

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