The COVID-19 pandemic has disproportionately damaged rural communities.
The share of rural Americans who were displaced from the workforce is above the national average, and many residents of rural areas report that their local economies continue to struggle. Rates of infection have remained high in communities that rely on farming or meatpacking for employment, as the physical realities of these jobs make social distancing a challenge. High rates of chronic illness and disability leave rural Americans vulnerable to severe complications, while dwindling healthcare resources render most rural areas ill-equipped to handle a surge in infections.
COVID-19 has exposed weaknesses in rural infrastructure that had already long been in development. Helping rural areas recover fully from the pandemic will require initiatives that address structural challenges and restore investment in places that have been overlooked for some time. This means impact investors have an opportunity to contribute to rural America’s renewal.
Rural America Faces Challenges Following an Economic Transition
The rise of industries like finance and technology that reward workers for congregating in urban hubs and increasing agricultural productivity that necessitates fewer workers on farms have combined to drive a shift away from rural areas. In 1953, 36% of the US population was located in rural areas; by 2010, that share was down to 19%. Between 2000 and 2016, the populations of more than half of rural counties declined. The rural population is also older—a larger portion of residents are ages 65 and above.
As their working-age population declines or stagnates, rural counties often struggle to attract new employers and maintain their tax base. That puts a strain on local budgets, hinders the upkeep of existing infrastructure, and delays the adoption of technologies like broadband internet. which further undermines rural competitiveness. Rural areas have lost 120 hospitals since 2010, and about a quarter of remaining rural hospitals are at risk of having to shut their doors.
Rural counties in certain geographic regions see high rates of poverty, particularly in the South. Rates of child poverty are also higher in rural counties than in metro areas, and a disproportionate share of rural counties face high levels of food insecurity. Rural homelessness is reportedly on the rise, although efforts to count the rural homeless population have likely fallen short because many people who subsist in remote locations escape notice. The opioid epidemic has been especially devastating to rural areas, yet treatment is less accessible there.
Impact investors have an opportunity to contribute to rural America’s renewal.
Place-Based Investing Aims to Help Rural Communities Thrive
Many rural communities have suffered after a mine shut down or a factory went offline. One tactic investors can use to help boost economic resilience in rural areas is to back the creation of diverse businesses. If one industry declines, growth in other enterprises can help offset it. One organization that has taken this approach is the Telluride Foundation, which promotes place-based investing in Colorado to expand job opportunities beyond the area’s traditional tourism business. It connects local entrepreneurs with early-stage venture capital investors and offers boot camps and mentorships; in turn, entrepreneurs commit to staying in the area for a certain period of time.
Other investors fund projects to build critical infrastructure. The Uplift America Fund brings loans and grants to rural lenders such as community development financial institutions, which use the influx of capital to finance projects that meet local needs for healthcare, education, and other essential services. Initiatives have included preparing a facility in Williamsburg, Kentucky, to serve as a dental clinic; building a fire training station in Miles City, Montana; and remodeling and expanding a medical clinic in Portola, California.
Similarly, Epiphany Community Impact Fund formed in 2020 to help bring broadband to places that lack digital infrastructure such as rural areas. The fund intends to raise capital from institutional investors and also looks for opportunities to close gaps in transportation and education.