Successful Rural Nonprofits

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Nonprofits in rural areas might learn from successful youth-serving agencies whose practices are described in a new report by the Bridgespan Group, which provides strategic advice to foundations and other charitable leaders. The report, "Nonprofits in Rural America: Overcoming the Resource Gap" - funded with a grant from Atlantic Philanthropies - grew out of a business planning partnership among Atlantic, Bridgespan and the National Indian Youth Leadership Project (NIYLP). Lessons learned from that effort led to a broader examination of data on rural youth-serving nonprofit funding in two sample states, New Mexico and California.

          The report first outlines what it calls the "stark" data that show a "rural funding gap." Between 1994 and 2001, rural areas received between $401 and $648 less per capita in federal funding than urban areas for providing community and human resources and national functions, the report states. Private foundations, too, distribute far fewer grants to rural America - 6.8 percent of overall annual giving - even though these areas have 17 percent of the nation's population and high poverty rates, the authors say.

          To compare urban and rural nonprofits, the researchers took a sample set of youth-serving nonprofits in the two states and reviewed nonprofit data on IRS 990 forms, asked nonprofits for details on funding sources and conducted interviews with selected organizations that had grown to having $2 million in annual revenue.

          "The results of our analysis attest to the significant gap between urban and rural nonprofit funding," the authors write. "When we looked at nonprofits by revenue level, our analysis revealed that few rural youth-serving nonprofits were able to attain higher levels of funding." Nine percent of urban youth-development organizations, for instance, were able to attain budgets of more than $3 million, compared with 1 percent of youth-development groups in rural areas.

          The researchers focused on a small number of rural nonprofits that managed to "reach minimum levels of capacity" - with budgets of at least $1 million to pay for a specialist, hire a professional staff and invest in further growth - to find out what might have helped these organizations to grow. National network affiliation seemed to be a key factor in helping rural nonprofits succeed. This could indicate that in a budget-challenged environment, national networks help rural nonprofits gain attention and legitimacy in the community and among funders, and gain access to professional development support. Urban nonprofits might not need this type of support, which could account for why the authors didn't find a similar effect among nationally affiliated city-based organizations.

          Among strong rural nonprofits without national affiliation, the authors uncovered three keys to success: strategic relationships and networks, considered grantsmanship and tailored programming. Rural organizations that creatively alter programs can save money while still serving youth, the authors say. They single out NIYLP and the National Dance Institute of New Mexico as particularly effective in coming up with ways to deliver services that conserved resources and opened up new avenues of funding.

          But the authors admit that more study is needed: "We encourage further dialogue, particularly among nonprofits, foundations and public funders, on how to close the funding gap and strengthen rural nonprofit capacity."