The Nebraska Community Foundation serves 214 community, organizational and donor-advised affiliated funds in 230 communities located in 77 Nebraska counties. NCF and its affiliated funds have reinvested $138.6 million in Nebraska since 1993.
11/07/2008, Jeff Yost
To give, you must first believe. Belief must drive the mission, the cause, the community. Therefore, to grow philanthropy in rural America, we must first believe in the future of rural America.
For several decades belief in the future of rural America and our hometowns has been in short supply. The continuing out-migration of our young people is the single greatest threat to the economic viability of many of our rural communities. Today, however, information technology is making it increasingly possible to live and work wherever we want to live and work. This new-found freedom has the potential to make rural America more economically relevant than it has been in some time. And it makes “place,” and the quality-of-life in that place, paramount.
With a deep understanding of the opportunities and challenges in Nebraska’s rural communities, the Nebraska Community Foundation (NCF) has built a decentralized system that embraces the most essential element of community development: asset-based community building–a system born and sustained through local assets. We describe NCF as a community development institution that uses philanthropy as a tool; not a charity. NCF does not itself make grants; it empowers local leaders to raise and grant their own funds. One of our primary strategies is to push as much power as possible to the community level while remaining an effective fiduciary agent. NCF focuses a great deal of attention on changing the mindset and the economic prospects for rural Nebraskans.
The NCF system is designed to help local leaders involve everyone in contributing to the quality of life and economic vitality of their own community. It is an inclusive system for building community endowments where every gift, no matter how small, is celebrated. By building permanent community assets, our system reaches out to help everyone to deepen or rekindle their belief in the future of their hometown.
Nebraskans have a strong ethic of giving back, especially to church and higher education. NCF encourages community leaders to build on this ethic, but to also develop goals based on community and economic development outcomes. We educate and empower leaders to be more intentional with their grant making, stronger advocates of their agenda, and less afraid of asking prospective donors to give. By these means, NCF is helping to develop an ethic of giving to support a spectrum of needs and opportunities that make rural communities better places to live and work.
Capital, under typical market conditions, flows to certainty. For the past several decades, there has been a lack of economic certainty in most of our rural communities and a consequent flight of financial capital, human capital and, most importantly, hope. But even under these dire circumstances, NCF has identified and studied a community-based asset, which, if managed effectively, could help to stem the flight of capital and reinvigorate hope.
In 2001 NCF completed analyses1 of both the magnitude and the peak of the transfer of wealth for Nebraska and each of its 93 counties. Based on those findings, NCF estimates that $94 billion will be transferred in the next 50 years in rural Nebraska (750,000 citizens). More important still is the timing, with 86 of 93 counties experiencing their peak transfer on or before 2039; 26 very rural counties will peak on or before 2014. By comparison, the peak transfer for the U.S. as a whole will not occur until sometime after 2050, if ever, as each year the country continues to become larger and wealthier. In rural Nebraska, commonly referred to as land-rich and cash-poor, engaging the middle class in estate planning is essential in order to capitalize on the transfer of wealth opportunity, and to ensure that gifts to the community are included as intergenerational wealth transfer occurs. If only a small portion of the transfer of wealth is given back to support the communities where it was made, the resulting endowments, granted strategically, could be transformational.
We use the transfer of wealth analysis to help local leaders develop goals for endowment building in their community or county. For example, Valley County, Nebraska (population 4,647) lost nearly 10 percent of its population in the 1990s. As a result of this population loss and the resulting percentage increase in the number of older citizens, the peak transfer of wealth in Valley County is likely to occur during this decade. But even with this bleak outlook, we estimate that $597 million will be transferred during the next 50 years.
For simplicity, we encourage affiliated fund leaders to set an initial endowment development goal of five percent of the projected 10-year transfer of wealth for their community or county. Therefore in Valley County, the initial goal was set at $5.97 million ($11.94 million/year x 10 years x 5%). We then encourage affiliated fund leaders to include both current endowment and confirmed expectancies in their calculation. By breaking down this macroeconomic analysis into smaller, more understandable terms, community leaders, donors and their financial planners can all better conceptualize, and therefore embrace, the transfer of wealth opportunity.
Six NCF community-based affiliated funds have now met their initial goal of endowing five percent of their projected transfer of wealth. Another seven have achieved at least 50 percent of their goal. Five years ago, only one affiliated fund had met this initial goal. NCF’s process of building community capacity is not linear, but rather employs a group of reinforcing strategies and tactics to help leaders succeed in their community development efforts.
NCF employs other catalysts beyond its transfer of wealth analyses to help community leaders build and make their affiliated funds more sophisticated.
A founders club is one such catalyst. These clubs can take many forms. NCF encourages its affiliates to use a model whereby a gift of at least $1,000 that can be paid over a period of years by dividing it into monthly payments. An additional benefit of founders clubs is that a habit of giving is formed, which will increase the likelihood of receiving an estate gift from that donor.
Another catalyst NCF employs is estate planning and raising awareness of its value among leaders and prospective donors. This is critical because a large percentage of the transfer of wealth will occur upon the deaths of individuals. In 2002, NCF participated in a survey of 6,500 rural Nebraskans. We found that 87 percent of respondents said they gave donations annually to local charities, but only four percent said they had included their community as a beneficiary in their estate plans. With this information in hand, NCF increased substantially its education and technical assistance to donors and their financial advisors through workshops and seminars.
NCF also convenes peer-learning events as an effective way to share best practices among affiliated funds and to motivate leaders to push their efforts to the next level. Due to the growth of community-based affiliated funds and the requests for assistance from others throughout the nation, NCF convened its inaugural Rural Philanthropy Conference in Nebraska City, Nebraska in February 2007. With over 90 attendees from 13 states and nearly 20 Nebraska communities, the conference provided affiliated fund leaders an opportunity to learn about the importance of the transfer of wealth, strategies for working with boards, donors and their financial advisors and how to tie these endowment building efforts into community development activities. Many of the sessions were led and facilitated by NCF affiliated fund leaders themselves. The next Rural Philanthropy Conference is scheduled for September 10-12, 2008 in Nebraska City. Reviews and registration information can be found on the NCF website.
Today NCF’s grassroots, community-led system has 199 affiliated funds (community, organizational and donor-advised funds) located in 73 Nebraska counties. These funds are led by over 2,000 community leaders. Using our transfer of wealth analysis as a call to action, NCF and its affiliated funds have received nearly 30,000 donations in the past five years. NCF has sustained at least a 20 percent annual growth rate for each of the past five years, with endowed assets increasing by 47 percent last year. Since NCF was formed in 1993, $65 million has been reinvested by NCF and its affiliated funds.
Forty-five community-based affiliates now have combined endowments and expectancies of at least $100,000. Five years ago, there were only 16. And combined assets and expectancies for 88 community-based endowments now total $36 million, nearly four times the total recorded five years ago. Bottoms-up endowment building efforts in communities of all sizes are flourishing within the NCF system. The Nebraska towns of Pender and Thurston (combined population 1,273) offer just one example among many of successfully building a community endowment. The Pender-Thurston Community Fund is using a founders club to engage everyone. Thirty-nine of 41 public school teachers have committed to giving $100 annually in perpetuity. This has led to a total of 232 commitments from current and former residents to give $100 per year.
To fulfill our mission of building community capacity, NCF co-founded the HomeTown Competitiveness (HTC) collaborative, which uses the transfer of wealth opportunity as an asset-based community development strategy, to create new economic opportunity to stem the tide of out-migration in rural Nebraska. HTC is a holistic, community-driven economic development strategy based on homegrown capacities, including entrepreneurship, leadership development, youth engagement and building charitable assets and endowments. HTC is a “come-back/give-back” strategy intended to rekindle residents’ belief in the future of their hometown, thereby transforming community conversations, attitudes and ultimately, our willingness to give.
Through our HTC work in communities across Nebraska, we are confronting an ironic pattern of generational belief systems. Many adults assume the best thing they can do for young people is to encourage them to leave home for college and pursue career opportunities in an urban center. The irony is that, when asked, significant numbers of young people say that they would love to return home to raise their children near their parents. Of the more than 700 students surveyed in 2007, about 50 percent said they could see themselves living in their hometown in the future. This is especially true in communities with HTC efforts underway.
In Ord and Valley County (population 4,647), the pilot site for HTC, personal income increased 21 percent from 2000 to 2004, compared to a statewide average of 11 percent. Endowments and expectancies now total over $7 million. Over 70 donors have become founders (gifts of at least $1,000) of a Valley County HTC endowment fund. And most importantly, population has increased by 3 percent since 2000, the first increase since the 1930s. Many other communities, in Nebraska and in other states, are experiencing similar results by implementing the HTC framework. Outcomes range from local business coaches helping to start and expand local businesses, to more citizens running for elected office, to efforts to recruit alumni home, to increased regional collaboration.
In all of these HTC sites, endowments are being built to catalyze and sustain community economic development efforts. Most importantly, HTC is proving to be a better case statement for prospective donors because it has rekindled or renewed their hope for the future prosperity in their hometown.
The Nebraska Community Foundation is achieving mission fulfillment by believing in the future of rural America. By providing local leaders with education, assistance and tools to form and implement their own agendas, we are building a grassroots system of giving and engagement. With more compelling reasons to give, new habits of giving are being nurtured among thousands of Nebraskans in dozens of communities. People are rediscovering their sense of place and reinvesting in its quality of life.
The phenomenal opportunity of capturing a portion of the transfer of wealth is entirely relevant to the rural economy. And it will have a major impact on where our children choose to live and work in the future. As a result, NCF does not adhere to a traditional community foundation business plan. A traditional model of charging an annual fee on endowed assets would take NCF many decades to build enough assets under management to underwrite even a small portion of our community empowerment work. Given the peak transfer of wealth that is looming in many rural places, this work must occur now, not in 20 or 30 years.
Jeff Yost is President and CEO of the Nebraska Community Foundation. To learn more about NCF or HTC, see www.nebcommfound.org.
Philanthropy & Rural America
2008 Council on Foundations Inc.
Council on Foundations
2121 Crystal Drive, Suite 700
Arlington, VA 22202
703-879-0600
Fax 703-879-0800
www.cof.org
1 Based on the groundbreaking work by J. J. Havens and P. G. Schervish, Millionaires and the Millennium: New estimates of the forthcoming wealth transfer and the prospects for a golden age of philanthropy, Boston College Social Welfare Research Institute, 1999.
