January 25, 2015

Rural nonprofits challenged but ‘hardy’


Rural nonprofits

Rural nonprofits

Rural nonprofits in the U.S. get a disproportionately low share of total spending in the nonprofit sector but show better financial health than urban nonprofits, a new study says.

Yet despite the big barriers rural nonprofits face in serving their communities, some have found ways to operate effectively, says Small but Tough: Nonprofits in Rural America, a study by The Bridgespan Group.

In previous research, Bridgespan says, it found a "rural nonprofit landscape that resembles a sparse pygmy forest where 80-year-old trees that normally would grow to be 60-feet tall reach only three feet," although they are "relatively hardy despite their size."

Rural nonprofits, Bridgespan says, "grow small for lack of nutrients," while also facing "significant scarcities related to funding, leadership, and the large distances over which they operate."

The new study, based on a comparative analysis of Form 990 tax returns for all rural and urban nonprofits, and an examination of Bridgespan clients working in rural communities, looks at trends among rural nonprofits, and at ways in which successful rural nonprofits are addressing the challenges they face.

"The overall sturdiness and financial health of rural nonprofits is a testament to their ability to adapt to a challenging climate," Bridgespan says.

Rural areas are home to 18 percent of the U.S. population and 22 percent of the nation's poor, with an average poverty rate of 15 percent, compared to 12 percent in urban counties, yet rural counties receive only 8 percent of total spending in the nonprofit sector, the study says.

Still, it says, rural nonprofits are less likely to run an operating deficit and have relatively more in cash reserves than urban nonprofits.

Rural nonprofits also seem to suffer from a shortage of financial "nutrients," lacking local funding sources, connections to outside funding sources, and the capacity to pursue both, the study says.

They also face a tough time hiring and keeping talented staff and board members, with smaller budgets making it tough to offer attractive salaries or retain talented people.

Smaller budgets also provide less potential for pay raises, and smaller nonprofits may be limited in providing opportunities for training, development and advancement.

Rural America is home to one nonprofit for every 50 square miles, on average, compared to one nonprofit for every half square mile in urban areas, the study says.

So rural nonprofits in general likely serve much bigger regions than urban nonprofits, the study says, and their clients are highly spread out and lack access to transportation.

Based on its review of client nonprofits, the study suggests some strategies to effectively overcome the challenges facing rural nonprofits.

In the area of funding, for example, successful rural nonprofits are strategic about grant opportunities, aggressively pursuing government funding to which they may have greater access to than foundation or corporate funding, and their leaders spent a lot of time networking outside their communities "because, by and large, that is where the money is," Bridgespan says.

In the area of leadership, it says, some rural nonprofits have put together strong leadership teams and boards by seeking candidates with strong connections to the local community, or individuals from the community who live somewhere else but understand the local culture and have ties to the area, and by engaging past employees or alumni.

To address challenges posed by the distance between clients, some rural nonprofits have altered the way they deliver programs to reduce the amount of travel needed, such as offering programs at schools and churches, or using phone, videoconferencing or the Web to deliver services.

And rural nonprofits have looked for ways to collaborate or merge with other nonprofits or affiliate with a state or national nonprofit network.

Still, while rural nonprofits often have been able to use innovate strategies "to survive in a tough environment," the study says, "they will need more support from their private funders and policymakers who shape the environment for government funding."

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