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Presented by Maxine Moul to the Iowa Philanthropy Academy

February 4, 2008

www.nebcommfound.org

Using Philanthropy to Build Rural Communities by Supporting

EntrepreneurshipAn Example from Nebraska

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Outline for Today’s Presentation

1. About Nebraska

2. Transfer of Wealth Opportunity

3. About the Nebraska Community Foundation

4. Community-Based Endowment Building

5. Endowment for What?

6. HomeTown Competitiveness (HTC)

7. Public Policy to Help Community Building

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About NebraskaNebraska’s strengths

– Civic capacity and pride– Educational system – Work ethic

Nebraska’s struggles– Out-migration of middle-class youth– Lack of diversity in rural economy– Large geography/many frontier counties

(418 of 532 (80%) of communities < 1,000 pop.)

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Special Challenge

Engaging rural leaders in defining new opportunities for their

communities to build a positive future and stem the tide of out-

migration

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Intergenerational Transfer of WealthAn Unprecedented Opportunity

for Nebraska

“Millionaires in the Millennium”Havens & Schervish, 1999, Boston College

“Wealth in Nebraska”Don Macke, 2002, Nebraska Community Foundation

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America's Wealth Transfer:A Likely Scenario

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1999 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

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United States Nebraska Rural Nebraska

Rural NebraskaEstimated WealthTransfer = $94 billion

Nebraska Estimated Wealth Transfer = $258 billion

United States Estimated WealthTransfer = $41 trillion

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Peak of TransferGroup 1 – 2000 to 2014

Group 2 – 2015 to 2039

Group 3 – 2040 and after

County-Based Transfer of Wealth

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Transfer of Wealth: A Unique Opportunity

• To build philanthropy and endowments

• To prove that capital is not the limiting resource to community development

• To build sustained community development strategies (by using Asset Based Community Development, or ABCD)

• To break out of a cycle of dependency

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Transfer of Wealth Studies

The Nebraska Community Foundation:Incorporated in 1993Statewide Board of 18/Staff of 11199 Affiliated Funds (98 Community, 58 Organizations, 29 Donor-Advised, 14 Gift Annuities)

MissionThe Nebraska Community Foundation exists to help concerned individuals mobilize charitable giving in support of the betterment of Nebraska communities and organizations.

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NCF Philosophy• Locally-controlled/decentralized• Do not replace local capacity; all services from

“mothership” must add-value• Reciprocity• Build community capacity through

empowering local leadership• Convene & build partnerships• Build endowments to support core mission• Belief in power of Hometown

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Affiliated Fund Responsibilities Governed by Local Fund Advisory Cmte. (FAC)

FAC Responsible for:– Setting Local Priorities & Agenda– Endowment Building– Engaging the Community– Building/Expanding Relationships with Donors and

Financial Planners– Donor Targeting & Visitation – Grant Making

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Community Affiliates Model

Community Affiliated Fund

Unrestricted Community Endowment

Public Schools

Economic Development

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NCF Provides• Corporate Umbrella• All Accounting, Legal & Investment• Comprehensive Insurance Coverage• Website (including on-line giving)• Community-Based Education/Training • Peer-Learning Network• Customized Endowment Building

Assistance with Strategy, Fundraising & Gift Planning

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Community & Nonprofit Fundraising

What’s been successful?EventsAnnual Operating CampaignsCapital Campaigns

What’s been lacking?Endowments Endowments for community economic development

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NCF Partners with Communities and Nonprofits to Build Endowments

• Board Engagement

• Goal Setting & Campaign Development

• Build Skills & Confidence to Engage Donors

• Communications & Marketing

• Gift Planning

• Financial & Investment Management

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2007 Rural Philanthropy Conference• Goal: To teach rural community foundations about the

transfer of wealth and how they can adopt strategies to move their own rural community development initiatives forward using the transfer of wealth as a case statement.

– Speakers from Nebraska, South Dakota and Wisconsin

– Keynote address by Dr. Rick Foster of the W.K. Kellogg Foundation – Attended by 93 individuals from 13 states and the District of

Columbia. (Idaho, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, New York, Ohio, Pennsylvania, South Dakota, Texas and Wisconsin)

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Impact of Decentralized NCF System• Empowers Community/Builds Capacity• 2,000+ Fund Advisory Committee Members• $34 Million in Assets (35% year-over-year growth)

• $23 Million Endowed (39% year-over-year growth)

• $28 Million in Expectancies (124 confirmed gifts)• 29,608 Donors in Past 5 Years• $65 Million in Total Reinvestment

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Community EndowmentsAffiliated Fund Population 30-Jun-07 Total*Ord/Valley County 4,647 $6.9 millionBassett/Rock County 1,756 $2.6 millionMcCook 7,994 $2.3 millionShickley 376 $1.8 millionNebraska City 7,228 $1.6 millionBrown County 3,525 $1.3 millionSpencer 541 $1.2 million

45 community-based affiliated funds now have over $100,000 in combined endowment, expectancies and pledges

*total includes endowed assets, expectancies and pledges

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Community-Based Endowment Building EffortsEndowed assets plus expectancies(in millions)

Endowment for What? Strategic Grant Making

Now that you have an endowment, what difference is that going to make in the future of your hometown?

These new assets must be invested in ways to build a better future for your hometown!

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HomeTown HomeTown CompetitivenessCompetitiveness

Framework for Effective

and Sustainable RuralCommunity and

EconomicDevelopment

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Four Pillars to Build Community

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HomeTown Competitiveness

HTC Strategic Partnership

Heartland Center for Leadership Development

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Nucleus of HTC Communities

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HTC as a Case Statement

HTC helps Communities to:Start and Grow Small BusinessesProvide Better Local Economic OpportunitiesExpand Leadership CapacityAttract More Young People to Live and Work

in their Hometown

HTC is a Better Case to Prospective Donors

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HTC has become a National Model:2004 Innovative Program Award from the

International Community Development Society2005 HTC Awarded $2 Million Entrepreneurship

Development Systems Grant from the W.K. Kellogg Foundation (one of six selected from 180+ proposals)

17 HTC Academies completed in 8 states (787 participants)

HTC training/technical assistance now being provided in 12 other states (HTC developing affiliation model)

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Entrepreneurship

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EntrepreneurshipExpected Outcomes

• Strategy in place for increasing local entrepreneurial business development

• Increased entrepreneurial activity within the community in private and public sectors

• New jobs and wealth being created within the community

• More current businesses retained and growing

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Entrepreneurship How does it support the HTC strategy?

• Business development creates jobs and new wealth in the community

• Assists in retaining existing businesses• Sustains population with manageable growth• Creates career opportunities for young people• Entrepreneurs can provide leadership and new

ideas for the community’s development

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Entrepreneurship in Valley County

• Focusing on building business plans for both start-up and existing growth-oriented businesses

• Business coach hired to provide one-on-one assistance

• 73 new businesses, 10 expansions and 21 business transitions since 2000

• These 104 businesses have created 332 new full time jobs and nearly $90 million new investment

• Linked people recruitment; redesigning Web site • Youth Entrepreneurship Fair

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Charitable Assets

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Charitable AssetsExpected Outcomes

• Community-based endowed assets• Greater knowledge about charitable giving tools

and resources • Grants awarded to specific activities that will

improve economic prospects for individuals and/or technical assistance and business coaching to entrepreneurs and small businesses

• Grants awarded to specific activities that will improve the likelihood that young people stay or return to their hometown

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Charitable AssetsHow does it support the HTC strategy?

• Community endowments provide a new revenue stream to underwrite HTC efforts

• Pool of local assets needed to leverage external private or government funding

• Break out of cycle of dependency• Endowments create a margin of

excellence for communities to build their competitive advantage

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Andy and Geri Anderson Endowed Gift of $346,341 to the McCook Community Foundation

“To us it is important to give while we are still alive. We want to see

the benefits our gift makes to the

community.”

- Andy Anderson

First year grant of $13,500 for:

• McCook HTC Youth Task Force• Entrepreneurship training for

teachers• 4-H ESI Entrepreneurship curriculum• Youth-led community project

First year grant of $13,500 for:

• McCook HTC Youth Task Force• Entrepreneurship training for

teachers• 4-H ESI Entrepreneurship curriculum• Youth-led community project

Examples of Strategic Grants

• Non-Traditional Scholarships • High-quality affordable child care• Microenterprise business

development• Build Leadership with a Purpose• Capitalize Youth Foundation• Retaining and recruiting volunteers • Value-added curriculum for K-12

school

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Young People

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Young AdultsExpected outcomes from HTC

• Champions group recruited and involved

• Linkages: Leadership and Entrepreneurship

• Stronger, sustained connections with alumni

• Increased number of young adults returning

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Sampling of Youth Survey Results

  

Plan toAttend College

Desire to Return Home

Want toOwn Business

OwnBusiness Now

         

Atkinson Pop. 1380

96% 66% 57% 14%

O'Neill Pop. 3,852

98% 55% 64% 12%

Stuart Pop. 650

100% 66% 60% 14%

Survey of all high school (9-12) students, 2005-06

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Youth Attraction Formula

• Based on actual U.S. Census population data• Factors in rural county marriage rate• Calculated using average children per family• Adjusts for current number of youth in county• Formula helps determine annual youth goal• Goal used to open dialog and engage youth

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Garden CountyYouth Attraction Goal

1990 Population 2,4602000 Population 2,292Percent change -6.8%Loss Per Year in 1990s 17 PersonsTotal Youth (18 and under) 529 PersonsYouth as a Percent of Total 23%Average Graduating Class 29 PersonsAnnual Youth Attraction Goal 6 Persons

19% Youth Attraction Goal

EntrepreneurShip Investigation (ESI)• Partnership Venture with UNL

Extension• Focus upon Middle-School Age Youth• Builds on Local 4-H Infrastructure• Links with Local ED Resources • Flexible Delivery Methods

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Leadership

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LeadershipExpected Outcomes

• Increased diversity in community leadership

• Enhanced leadership knowledge and skills

• More volunteer engagement in community projects and activities

• More people willing to run for public office

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Leadership How does it support the HTC strategy?• Expands the pool of volunteers and

emerging leaders to work on community priorities

• Assists current and new leaders in developing their leadership skills

• Encourages community members to participate in community planning and development projects

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Leadership Development in Butler County

• Partnership between UNL Extension & HTC

• Completed 3 years of Leadership Plenty; 53 graduates

• Intergenerational and interdisciplinary• HTC expanded county-wide in 2006• Butler County inter-local agreement to

support community economic development (two full-time staff)

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HTC Helps Communities Spiral Up • Philanthropy for ongoing funds

for leadership, youth, and entrepreneurship

• Cultural capital increases with pride and hope as young people return

• Youth engagement, leadership and entrepreneurship development and capturing wealth transfer creates new social, cultural and financial capital.

• Social, political and financial capital to support HTC and early assessment

• Cultural capital begins to change—We can do it!

• Bridging social capital brings outside expertise together with internal wisdom

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Sustainability

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HTC builds Community OwnershipIn three years, Valley County (population 4,647) has graduated 70 from a leadership class; set up an endowment with $1.2 million willed by a local couple; and hired a business development coordinator….

A wealthy alum living in Arizona flies in to teach a class on growing entrepreneurs. A graduate came home from Lincoln to a start an irrigation-well firm. Another plans a local dental practice. The county must attract 27% of its high school’s average graduating class of 67 to stabilize its population by 2010.

USA Today, February 9, 2005

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HTC Success in Valley County Economic development staff of three Ongoing business training & visitationYouth entrepreneurship fair102 graduates of county-wide leadership class67 $1,000+ founders of HTC endowment$7 million+ combined endowment and expectancies Retail sales +20% (statewide +16%)

Per capita income +22% (statewide 9%)

Population gain of 3% (first increase in 50 years)

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HTC Success in Holt County

HTC initiated in Stuart & Atkinson in 2003

O’Neill joined in 2004Inter-local agreement in 2006 to

expand countywide (9 communities)Full-time county-wide HTC coordinatorStarting 4th HTC leadership institute;

65 graduates$2.5+ million combined endowments

& expectancies

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HTC Success in Butler CountyDavid City initiated HTC in 2004

Strategic grants for youth entrepreneurship, leadership development, related HTC efforts

David City Aquinas entrepreneurship classESI camp completed summer 2007Starting 4th year of Leadership Plenty;

50 graduatesDavid City Area Foundation changed to

Butler County Community Foundation in 2007

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EndowNebraska: Nebraska’s Charitable Tax Credit for

Gifts to Endowments

• Tax incentive to mobilize the transfer of wealth

• 15% credit for individuals (10% for corporations)

• Maximum credit of $5,000 per year

• Individuals: Irrevocable planned gifts

• Corporations: Outright gifts

• Effective January 2006; Sunsets December 2010

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Building Entrepreneurial Communities Act (BECA)

Matching grants to two or more partnering local governments to provide education, training and technical assistance for:Small business development and entrepreneurshipLeadership developmentAttract and retain young people and familiesCommunity philanthropy and endowment buildingAttract new residents

Enacted 2005; revised 2007 ($500,000/year)

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What Others Are Saying About NCFSusan Berresford, President of the Ford Foundation, calls NCF a ‘strong, unique and national model’ because it: is built and sustained from the grassroots; values and nurtures entrepreneurial leadership; emphasizes effectiveness, especially in grant

making, to support economic opportunity; embraces and seeks to strengthen Nebraska

values.

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NCF System Helps Communities To Build a New and Better Set of Habits

• More and more frequent community reinvestment (private and charitable)

• Education/Training/Technical Assistance to Empower Community Leaders

• More Donor Engagement by Friends and Family

• Build Endowments for Margin of Excellence

• Renewed Hope in the Future of Our Hometowns

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For more information on the Nebraska Community Foundation or

HomeTown Competitiveness:

www.nebcommfound.org