Issue #152, Winter 2007
Beyond the Farm
New trends in rural community development make the work of rural CDCs appear more in line with their big-city counterparts.
By David Dangler
On the surface, the practice of community development
looks roughly the same in any community or neighborhood, but practitioners
of community development in rural areas can attest to profound differences
between their work and that of their urban counterparts. Its not that the core
functions of organizing, planning, and implementation are dissimilar,
but seen through the rural lens they become markedly different experiences.
For example, distance is a huge factor in rural
communitiesthe distance across a rural service area, the distance
between projects, the distance between communities. Organizing presents
distinct challenges when the focus is not six city blocks, but three
Another aspect of rural community development is
the role that CDCs often have to play to augment and support thinly
staffed, small-town governments. Its not unusual for a rural CDC
to conduct local or regional community needs assessments, prepare Community Development Block Grant
applications on behalf of rural municipalities (often as a consortium
of communities), and then contract with the consortium should the region
be fortunate enough to get the grant.
Affordable housing development is likely to involve
similar construction and management techniques everywhere, but rural
CDCs cannot count on infrastructure basics such as water and sewer hook-ups,
electricity, or even roads to access the sites.
Take the St. Lawrence County Housing Council (SLCHC),
a NeighborWorks America organization serving the largest of New Yorks
counties along the Canadian border. SLCHC has earned high marks for
providing quality affordable housing in rural communities with older
housing stock and a growing gap between housing costs and prevailing wages.
Like most CDCs in rural areas, SLCHC doesnt concentrate on development
alone. In order to get to the affordable-housing and other community-development
projects that the region needs, SLCHC has found that it must invest
more in the front end of its development efforts and provide community-planning
and grant-writing services to the thinly staffed rural municipalities
that may not be able to produce them. There is very little capacity
in St. Lawrence, so by partnering with the regional planning commission, SLCHC provides services on a loss-leader basis to generate
work for their core housing business.
Developing a sustainable business model for sparsely
populated rural communities can be especially challenging. Smaller projects
scaled to meet local market demand (fewer people = smaller projects)
must carry fixed development costs over fewer units. This requires either
deeper layers of subsidy, decreased affordability, or smaller fees for
the nonprofit developer. All too often in rural projects, its
the nonprofit developer fees that shrink first and most. The pressure
on rural-serving CDCs to adopt a more business-like model has led them
to work in mixed urban/rural service areas. The assumption is that high-density urban and mixed-urban
markets provide a healthier business environment when the CDCs
services are priced right.
Rural community-development practitioners invariably
point out that no two rural markets are alike. From land-title and sovereignty
issues in Indian Country to the lack of core infrastructure in the colonias
(unincorporated communities along the U.S.-Mexico border), to rural landscapes transformed
by natural forces (wind, water, fire), to areas of perennial rural poverty
with subsistence economies too thin to drive the slenderest of mortgages,
the diversity is staggering and contributes mightily to the complexity
of rural community development.
Despite the aspects of rural development that add
degrees of difficulty to an already challenging field, rural CDCs continue
to adapt and change. While the pressures have never been greater on
local community-based organizations, the opportunities have never been more plentiful. As
the field has matured, funders expectations have become much higher.
Instead of offering traditional grants in support of altruistic mission
statements, both public and private funders today want to see detailed
business plans and measurable outcomes. Lacking corporate headquarters
and other options for private-sector partnerships that urban and suburban
CDCs can tap, rural CDCs have always relied on the public sector for
grants and other subsidies. Today there is far more competition for
limited public resources.
As individual rural CDCs diversify their funding
sources to mitigate the risk of losing a core funder, they feel pressure
to grow both their programs and their service areas. On the other hand,
for the rural organizations that outperform their peers, there are opportunities
to merge with or take over other organizations, to expand successful
lines of business, and in general, to be broadly viewed as an indispensable
asset-building institution within their service area.
The NeighborWorks organizations, with 234 charters
that serve more than 4,000 communities in widely varied markets across
America, is a good example of how rural-serving organizations have evolved.
NeighborWorks relationship with each of its chartered organizations
involves multiple interactions over time, including periodic organizational
assessments. This insight gives NeighborWorks a unique perspective on
a slice of the field as a whole. The trends among the 90 organizations
within the NeighborWorks network that serve rural communities not only
show how far this segment of the field has come over the past 30 years
but also help us anticipate future directions for rural community-development
The Trend Toward Larger Organizations
Rural community development corporations have long
grappled with the issues of organizational and programmatic growth.
Twenty years ago, less than a dozen NeighborWorks organizations (NWOs)
served rural markets. The average rural NWO had three to five staffers and concentrated its
revitalization efforts on no more than three communities. Rare was the
NWO that served more than one county and had more than five people on
staff. Today, the smallest NWOs have around 10 staffers and serve anywhere from three to five counties. The largest, such as Rural Opportunities
Inc. (ROI) based in Rochester, N.Y., serve multiple states and keep
hundreds of employees engaged in a full range of community- and economic-development services.
Throughout the 1980s, the more seasoned urban NeighborWorks
organizations such as the Neighborhood Housing Services of New York,
Chicago, and Los Angeles had the largest staffs and produced the greatest
number of units of affordable housing and homeowners in the network.
The rural groups in small towns in states such as Vermont, Wisconsin, and
Texas ranked near the bottom in size and production. Today, the larger
rural-serving NWOs dwarf the largest of their urban counterparts in
organizational and staff size, service area, and production.
The Trend Toward Mixed-Market Service Areas
The search for sustainable scale and regional planning
has contributed to the emergence of NWOs serving a mix of markets. The trend goes in both directionsNWOs that traditionally only served rural communities moving into urban and mixed-urban communities, as well as
small, urban-based NWOs expanding into surrounding rural and mixed-rural areas. In many cases, formerly isolated rural communities
join with larger, newly defined economic regions and explore economic
strategies most likely to yield a competitive edge in the global economy.
For example, Rural Opportunities Inc. has served
rural communities in a multi-state region for decades. In 2006, ROI
merged with Housing Opportunities Program Inc. (HOP), an organization
with strong urban roots. CEO Stuart Mitchell says the merger allowed
us to strengthen our rural and urban real-estate development. For over
30 years weve thought of ourselves as rural and only rural. Our growing experience
in mixed markets has made us think about the interplay of urban and
surrounding rural communities. In a way, were now thinking that
we cant really be successful in a long-term community strengthening
endeavor without working in non-rural communities as well.
Community Ventures Corporation (CVC) in Kentucky,
which provides technical assistance to entrepreneurs for small business
development, is another example. CVCs success and explosive growth,
which CEO Kevin Smith refers to as a 10-year sprint, included
the organization adding a housing division to their economic development
base and expanding to surrounding rural counties in a series of phased
expansions. Started in urban Lexington, Ky., CVC now has five satellite
offices, four of which are rural, operating Kentucky Enterprise Communities
(KEC). KEC encourages satellites to be responsive to their own market conditions
in both the range of programs and services offered as well as the resources
secured in support of local operations. At the same time, the KEC model
offers a range of efficiencies for the satellites based upon being able
to tap into centralized operational support in Lexington.
Smiths detailed cost analyses over time led
him to conclude that a sustainable business model for exclusively rural
areas would be heavily dependent upon deep subsidies which were increasingly
hard to obtain. CVCs success in Lexington, combined with the need
for the economic stimulus of housing and economic development in Kentuckys
rural communities, forced Smith to find a way to blend the higher cost
efficiency of urbanized areas with the lower cost efficiency of rural
The Trend Toward Diverse Programs
Although a hallmark of the broader community-development
movement is a commitment to strengthen communities, the dominant focus
has been affordable housing. In rural America, where homeownership rates
are traditionally as much as 20 percent higher than in non-rural areas,
affordable-housing programs alone are often not enough to strengthen
communities where seasonal labor is high and wages are low. Whereas
the urban focus on increasing the rate of homeownership and improving the quality and affordability of rental housing, rural-serving
NWOs focus on programs to sustain homeownership (which puts a premium
on rehab, energy efficiency, green technologies, and financial counseling)
as well as support entrepreneurial development to stimulate economic growth.
Economic stimulation is the primary community-building
focus in the vast majority of the United States we still refer to as
rural. Within the NeighborWorks Rural Initiative, affordable-housing
programs are valued as much for their effect on the economy as for their
impact on local inventories of affordable units.
Rural NWOs that begin as local and regional housing
service providers are often pulled into complementary lines of business
such as community facilities and economic development because they may
be the only organization in the region. Its not just the houses
that are far apart in rural areas; the build-out of nonprofit infrastructure
is commensurately thinner in rural America, particularly in the areas
that are perennially underserved, such as the Delta, the colonias, Appalachia,
and Indian Country.
In Carrizo Springs, a small South Texas community
tucked in among hundreds of square miles of mesquite and sage, the local
leaders of Neighborhood Housing Services of Dimmit County, one of the
first rural NWOs in the nation, realized that housing services alone
could not lift the economy of this middle Rio Grande region. We
got into economic development over 10 years ago because if you have
a home, any home, without a job, its not affordable. We needed
jobs, says Manuel Estrada, who has served as executive director
for more than 25 years.
Neighborhood Housing Services of Dimmit County
continues to offer housing services, but it also maintains a commercial
loan portfolio of more than $1.6 million. Between 1995 and 2005 the
organization generated $17.6 million in capital investments through
economic development within a nine-county service area. In addition, it partners with a far
larger NeighborWorks organization, Business and Community Leaders (BCL)
of Texas, which serves the cities of Austin and Dallas, in a regional
collaborative called TREE, or Texans for Rural Entrepreneurship and
Education. TREE is designed to foster rural entrepreneurship throughout
rural Texas through education, policy, access to capital, and service
Dimmits partnership with BCL allows the Carrizo
Springs program to remain small but to extend both its programmatic
reach and access to capital. By collaborating within TREE, NHS of Dimmit
County can access a broad range of added-value services without increasing
Trend Toward Statewide Networks and Collaborations
Whether CDCs grow their own shops to statewide scale or choose to participate in some form of network structure, there is a marked trend toward statewide organizational structures. For state and federal funders, theres an enormous difference between having to contract with a patchwork quilt of nonprofits who in aggregate only serve a portion of a state, and having a single organizational point of contact that can deliver services across an entire state. For individual CDCs there are tremendous advantages as well. Statewide contracts and partnerships typically open up larger resources for individual CDCs than they could ever access on their own. In addition, statewide networks offer ongoing opportunities for peer-to-peer learning and exchange of information. Perhaps most important, these new networks can become strong platforms with political clout and the ability to shape community development policy.
NeighborWorks Montana uses a highly innovative
and productive partnership model that brings together major housing
players from public and private sectors to promote sustainable homeownership.
Partners range from the Rural Development arm of the United States Department of Agriculture
to local public-housing authorities, from Fannie Mae to local community
banks, from the Montana Housing Finance Agency to local Realtors. The
organization provides outreach to some of the most remote areas in rural
America, including the seven Native American reservations within the
During successive national campaigns to boost homeownership
rates starting in the 1990s, NeighborWorks Montana has regularly been
among the top five producers of first-time homebuyers in any market.
For those who have puzzled over Montanas ability to deliver exceptionally
high production with exceptionally low overhead costs, what surfaces
again and again is the statewide partnership model, a highly efficient
and effective use of individual partners skills and resources to reach rugged
and remote areas of a state that, by anyones definition, is the
epitome of rural.
In Vermont, five NWOs formed a highly interactive
statewide network to offer a full range of standardized homeownership
services. The organizations meet regularly to set common goals, explore
new partnership opportunities, and evaluate their progress. And as in
Montana, the NeighborWorks Alliance of Vermont has parlayed its statewide
coverage into a successful and ongoing resource-development strategy
that has yielded progressive agreements with the Vermont Housing Finance
Agency and USDA Rural Development, along with operating funds from private
fundraising campaigns in support of the five customer service hubs known
collectively as the NeighborWorks HomeOwnership Center of Vermont.
The Winds of Change
As much as the rural-serving CDCs have evolved,
these newly focused organizations are still exposed to literal and symbolic
winds of change. Only time will tell if the Gulf hurricanes and super-tornados
are part of a long-term weather pattern, but the political winds shaping
rural policy can be as devastating. An issue that may seem pure semantics
to manythe definition of ruralis absolutely
critical in determining how public resources flow into ex-urban America.
Rural CDCs have also seen profound changes in the
way in which these local organizations receive funding. The initial
transition from 100-percent grants to subsidized loans has further morphed
into increasingly complex subsidy-recapture formulas and required matches. There are more restrictions
placed on who receives public funds, and subsidies for rural community-development
have decreased. The USDA Rural Developments (RD) historically
dominant presence in rural America continues to fade, after a decade-long pattern of closing and consolidating
county offices and reducing field staff. Rural CDCs depend on RD not
just for housing but for community facilities and economic development
as well. The reduction in RDs field staff has created a shift in
a host of customer-related services, including the elimination of or
drastic cutbacks in pre- and post-purchase homebuyer education and financial
counseling, loan packaging, and construction management.
These changes have served to pressure rural CDCs
to refine their business models, balancing missions of service to economically
disadvantaged clients with cost-based fee schedules for service rendered.
Theyve also had to develop political clout through state, regional,
and national coalitions and to exercise that clout by becoming far more
engaged in the process of designing community-development policy at
federal, state, and local levels.
Organizations such as Stand Up for Rural America,
the National Rural Funders Collaborative, and the W.K. Kellogg Foundations
Rural People Rural Policy program have gained traction as the rural
side of the community-development field becomes engaged in rural policy
Over the 30 years that NeighborWorks America has
been in existence, rural communities have experienced tremendous growth.
But they are no longer simply proving grounds for a largely urban-based
community-development field. Innovative, entrepreneurial CDCs serving
diverse markets within newly defined economic regions are rapidly gaining
Formidable challenges remain. Much of rural America
has substandard housing and lacks educational and employment opportunities.
It will take a concerted effort of public will, policy, and community-based
infrastructure to fundamentally change underserved rural regions.
Before rural CDCs can take on bigger challenges,
organizational sustainability must be addressed. Increasingly, nonprofits are turning
to the private sector for best business practices that dont rely
on public subsidies. In the orchestration of healthy, sustainable business
models, cost-analysis and cost-recovery are crucial areas to emphasize.
However, as rural CDCs cover larger service areas, it will be increasingly
difficult to maintain a clear sense of community. (See Balancing
Two frontiers may have to be explored simultaneously
and with equal vigor. First, rural-serving CDCs are well-advised to
continue developing and refining sustainable business models. Second,
practitioners must be linked to the process of generating public policy at all levels of government.
It may be time for a newly articulated vision of a healthy rural America,
a vision with clear goals that the nation can work toward, together.
David Dangler is the director of NeighborWorks Americas Rural Initiative program.
Definitions of rural, especially as devised to determine eligibility benefits for federal programs, can make anyone dizzy. Rural advocates take issue with the Office of Management and Budgets (OMB) latest way of defining Metro Statistical Areas (MSAs), because so much of what had traditionally been considered rural is absorbed into higher population-density regions. By default, rural becomes defined as non-metro.
The NeighborWorks Rural Initiative uses a very different typology developed by Dr. Andrew Isserman, University of Illinois, Champaign-Urbana. Isserman defines rural based on population per square miles and urban-center population within a county. Using information from the U.S. Census reports, Isserman has identified four county typesrural, mixed-rural, urban, and mixed-urban. If a NeighborWorks organization serves a population in either a rural or mixed-rural county, they are welcome to join the Rural Initiative.
NeighborWorks America www.nhi.org/go/nw
The W.K. Kellogg Foundations Rural People Rural Policy program www.nhi.org/go/wkkf