Ann Lichter, Director, Resource Rural and Rebecca Huenink, Strategic Advisor, Resource Rural
The recent influx of federal funding for infrastructure, climate, and economic and workforce development provides an unprecedented opportunity for rural communities to undertake bold and transformational projects. But as many have pointed out, it will take significant effort to make sure this funding lands in rural communities where it is most needed and can have the biggest impact.
Resource Rural is a new project aimed at ensuring rural communities are well-positioned to access federal funding. In 2023, with support from the Rural Climate Partnership, Resource Rural assisted the Appalachian Climate Technologies Now (ACT Now) Coalition with the launch of its historic EDA Build Back Better Regional Challenge projects (funded by nearly $63M from the American Rescue Plan Act, matched by $26M in philanthropic dollars from Bloomberg Philanthropies, the Just Transition Fund, the Claude Worthington Benedum Foundation, and others).
ACT Now aims to spur growth in 21 economically distressed and coal-impacted counties in Southern West Virginia by creating a hub of clean energy and green economy jobs. Grounded in a core group of community-based organizations—Coalfield Development, The WV Community Development Hub, and Generation WV—the Coalition includes universities, municipal leaders, and public and private groups focused on economic, community, and workforce development. The majority of the Coalition’s counties-of-focus are rural, and persistent poverty affects a third of them. Given this context, we believe the Coalition’s experience launching a massive economic development effort with the support of both federal and philanthropic funders is an important opportunity for learning about how best to support rural communities in the current funding environment.
Our learnings from the Coalition’s launch year are condensed below, including examples of how rural community and economic development practitioners, philanthropic organizations, and federal funders can put these learnings into practice.
Lean in to rural strengths and assets
While conversations about West Virginia’s southern coalfields often focus on deficits, ACT Now used an asset frame, centering the region’s strengths and designing projects to build on them. This approach energized the Coalition and facilitated strong buy-in from partners and communities. The Coalition was able to move quickly because of a key rural asset: a small community of leaders who knew and trusted each other—and because philanthropic funders were willing to step up and trust them. Earlier work built these relationships and trust—with the support of the Benedum Foundation and the Just Transition Fund, the organizations had successfully applied to several federal grants over the past ten years, including the Appalachian Regional Commission’s POWER grant program. This gave the group federal grant experience and a focus on economic diversification—key ingredients in their readiness for the new opportunity. At the same time, the federal agency was willing to take a chance on a community-driven project that looked different from the types of projects the agency might typically fund.
Putting it into practice:
Practitioners can build on existing relationships to create broad, authentic coalitions ready to work together across community priorities as opportunities emerge. In an environment where opportunities come up quickly, with fast turnaround times, established understanding can position communities for success.
Philanthropy can enable locally driven work by supporting cooperation among community-based organizations to build relationships and develop collaboration experience. With these elements in place, philanthropic organizations can be ready to help communities secure federal funds when the time is right.
Federal and private funders can design grant opportunities and review processes to encourage rural participation and success. For example, careful attention to a community’s starting point and existing assets can be illuminating, given variation with density of people and organizations. Funders should also instruct grant reviewers on rural contexts and issues and wherever possible include reviewers with rural expertise.
Collaborate to grow
Launching ACT Now’s ambitious set of eight workforce, economic development, and construction projects required significant coordination. As they grew to meet the challenges of implementation, Coalition members collaborated to fill gaps that emerged during project launch. For example, because the projects were funded individually, rather than at the Coalition level, budgetary gaps quickly emerged around Coalition coordination, communications, and data management, requiring the group to seek additional philanthropic support—a delicate challenge, given the optics of their historic federal and matching grants.
Putting it into practice:
Practitioners can prioritize key elements of project support like internal coordination and external communications at the design stage. Adequate budget and staffing for project support is especially important in the context of large grant projects, for which a small organization might need to scale up.
Philanthropy can provide flexible funding to fill gaps that emerge in the context of growth, keeping in mind that matching funds for federally funded projects are obligated to specific project elements in grant budgets, and thus are not a substitute for flexible funds or general operating support. While an organization may appear to be “flush with cash” after a major federal grant award, the opposite is more likely the case, given scaling needs.
Federal and private funders can provide targeted funding for project support, including collaboration when projects are expected to coordinate. Funders can also reduce the need for project support by streamlining reporting and data gathering processes to increase learning and reduce burden on grantees.
Build infrastructure for the future
The funding awarded to the ACT Now Coalition through EDA’s Build Back Better Regional Challenge came at a level that challenged participating organizations to scale quickly—in some cases the new grant awards were multiple times the awardee’s previous operating budget. This growth required new levels of organizational infrastructure to effectively manage the funds, staff, and projects—from accounting to human resources. To scale effectively, Coalition members drew on expertise from partner organizations and external consultants to evaluate options, design systems, and build extensible infrastructure that will support the organizations through this and future projects.
Putting it into practice:
Practitioners can approach scaling by intentionally moving from a scarcity mindset to investing in systems to support their work at a new level. This transition can be challenging, especially for underinvested rural organizations used to doing their best with inadequate resources. For example, the process of applying for a Negotiated Indirect Cost Rate Agreement (NICRA) can be intimidating and expensive, but it is essential to the financial health of an organization that receives significant federal funding, given that indirect (administrative) expenses associated with federal grants often exceed the “de minimis” rate afforded to organizations that do not have an established NICRA (currently 10%).
Philanthropy can provide wrap-around support to assist with scaling, including connecting grantees to external experts and technical assistance, as well as supporting peer networks and learning communities. For example, philanthropy can help organizations create strong financial management systems, recruit finance and operations staff, and prepare for and manage federal audits.
Federal and private funders can build funding systems with the challenges of scaling in mind. For instance, sometimes funder representatives may informally encourage applicants to ask for an indirect rate lower than the de minimis or negotiated rate, count indirect costs as in-kind match, or forego indirects altogether in the name of competitiveness. This practice can be extremely damaging to small organizations that need administrative funding to scale.
Much work remains to ensure rural communities, especially historically marginalized communities, can access needed federal funding, and the example of the ACT Now Coalition can inspire and instruct as we undertake this work. While philanthropy plays a key role in providing matching funds to unlock federal grant dollars, it would be a mistake to view philanthropy’s role this narrowly. To realize the full potential of federal funding, philanthropy should intentionally invest in organizational capacity and coalition-building, and bring operational expertise to support non-profit organizations new to managing federal funds.
