Related Links

• The Philanthropy Gap in Rural America
• The Flow of Capital Into Rural Communities
• Coaching Rural Communities For Economic Opportunity
• Financing Rural Development

Transcript

Tim Sablik: My guests today are Victor Farmer and Mary Donnan. Victor is the director of the Boone Memorial Health Community Foundation in Madison, W.Va., and Mary is the executive director of the Alleghany Foundation in Covington, Va. Victor and Mary, welcome to the show.

Victor Farmer: Good afternoon. Thank you for having us.

Mary Donnan: Yeah, great to be here, Tim.

Sablik: I'm excited to talk with both of you about the role that philanthropy plays in achieving rural development projects. As we have discussed on previous episodes and in some of our publications, rural economic development faces unique challenges with funding as well as leadership and expertise. Philanthropic organizations often help meet both of those needs.

We've also discussed on past episodes the Richmond Fed's interest in understanding and addressing the supply- and demand-side barriers to rural development, which led to the creation of the Rural Investment Collaborative. One of the signature pieces of the Rural Investment Collaborative is the Community Investment Training program, which provides training for community leaders to develop their investment-ready projects.

You both benefited from the Community Investment Training program in connection with your Main Street revitalization projects. Victor, I'll start with you. Could you tell us about your project?

Farmer: My project is the Boone Innovation Hub, which will include a commercial kitchen on Main Street in Madison, W.Va. For those who don't know where Madison is, it's in the southwestern part of West Virginia. Madison is known as the gateway to the coal fields.

For a long time, coal was king in southern West Virginia. But with the decline of the coal industry, we've lost a lot of population. A lot of folks have had to relocate. That's led to a decline in businesses, downtown in particular.

The hospital that I work for, which is Boone Memorial Health, needed to step in to do something about the declining situation in southern West Virginia, and Madison in particular. Our board of directors decided that we needed to focus on some of the fundamentals of the social determinants of health, one of those being economic development. They decided that they wanted to put in a farmer's market in downtown Madison.

We found five lots in downtown Madison. What we thought was going to be a $1.2 million project turned into a $5 million project. It will be opening on September the 19th of this year. We're going to have the opportunity to bring a lot of fresh fruits, vegetables, things that we hope will make a real difference in overall population health.

About 80 feet from the farmers market is the Boone Innovation Hub and commercial kitchen, and that's my project. When we open the commercial kitchen, it'll be a multi-use facility. We'll have opportunities for people who want to make value-added product to rent the space. Also, there is an educational component that we're contemplating. We want to partner with some of our local educational institutions that have culinary programs to bring their students in to give them some real-world experience in making value-added product and putting together a business plan, that type of thing.

Also, this is a two-story building. On the second floor, there are traditionally six apartment units that need to be updated. We're going to update those and use those for housing some of our traveling students, doctors, nurses and so forth.

Sablik: Thanks very much for the overview. Mary, can you tell us about your project?

Donnan: I'm glad Victor brought up the social determinants of health. The Alleghany Foundation's board also takes the lens that looks at what makes a healthy community. As Victor just referenced with that project, so many different components come together.

The piece that I want to talk about today has to do with downtown revitalization. Some of that is the aging but very historic buildings that make up our Main Streets that create a conundrum for moving forward with revitalization. A lot of rural communities share a common challenge in that the market doesn't have enough demand to make the business case for private owners to take care of buildings and make improvements.

The project that we're focusing on with the Community Investment Training is in Clifton Forge, Va. We wouldn't be doing anything on this project if we didn't have these community partners. Clifton Forge has been the lead in this project, handling the fiscal oversight. They worked closely with a community member who works for another nonprofit who was interested in doing the Community Investment Training.

I represent the philanthropic funding arm. The Alleghany Foundation made a grant for the town of Clifton Forge to initially purchase a corner lot with an old gas station, one building at the beginning of the block, and a parking lot that's between them. We did a second grant for some additional [land] acquisition as it could be secured, with the idea that doing one building in one part of a block if the other buildings weren't addressed would be a challenge.

When it comes to what the project actually is, it's a bit like the dog that catches the car. You get the building, then what do you do with it? So, this has been a really great project to try to understand how does revitalization happen. For the participant in the Community Investment Training, it was a great deep dive into doing the structural analysis, looking at potential uses, trying to identify a potential purchaser after the project was complete, and learning different ways to access some grant monies to do some of those structural assessments.

So, that's what our project is about: trying to turn that blighted corner that faces our town hall into something that would be productive for economic development going forward.

Farmer: Mary, thank you for bringing up the partnerships. That's been such a fundamental driver as far as moving on my project forward. The city of Madison has partnered with Boone Memorial Health, along with the Boone County Commission, our local economic development folk, and several private organizations in helping to move forward not only the farmers market, but the Boone Innovation Hub.

So, partners are very important. They play such a critical role in helping you determine what you need in going forward. When we started looking at this particular project, we realized that we need a lot of voices to come to the table and offer their perspectives on what's needed to be done in downtown. And so we're always looking for opportunities to engage the community. I think public engagement is another critical component to all this.

The great benefit of the Rural Investment Collaborative has been the opportunity for people like Mary and myself to talk, along with other people who have great project ideas but are stuck as to where and how to move them forward. When I decided that I would like to participate in the program, I didn't know a lot about commercial development, so I was at a loss as to where to even begin. I realized that a lot of folks who are contemplating coming into the program are in the same boat. So, that gives you some comfort level knowing that you're all in the same boat, you're looking for the same answers.

Sablik: I wanted to pick up on that point about partnerships. As you both mentioned, both of these projects involve a lot of different partners, a lot of different people. I was curious, how did your organizations first get involved in these projects, and how did you determine the role that you were going to play in these efforts?

Donnan: Revitalization takes place one building at a time. But until there's enough critical mass to create a sense of synergy and progress, those one-off events can sometimes feel as much discouraging as they are inspiring. In towns that are really working to try to get a sense of success, there is so much stamina that I want to appreciate in the small merchants who try to get those buildings going and try to keep the businesses going.

It really starts for me with that vision that downtown revitalization makes a difference. Some of it's going to be done by the private sector. Some of it's going to be done in the nonprofit sector. In rural places, there's typically a lagging market demand, so where to get the catalytic work going forward is something that might be different from an urban place. In urban places, you often have robust private sector developers, In rural places these are learning opportunities and it takes a lot of different partners coming together.

How we got involved was we had a great group of volunteers, and I think that's one of my big lessons. When you see energy and volunteers, follow that energy because that will be a driver for what actually gets done.

One of those volunteers did a huge project with our Masonic Theater, a multi-story building that utilized New Market Tax Credits [and] historic tax credits, and it's fairly close to the 600 block that we're talking about. So, we were led into this by the energy of the town and other partners doing previous projects, and then this one surfaced with a willing seller and the right time for acquiring the first block of properties took place. That led us to, okay, we've learned we need some critical mass. What can we do for the whole block?

Sablik: Did you have anything you wanted to add, Victor?

Farmer: Yes. Our CEO had a vision, and that is to obviously make a difference in all the aspects of the social determinants of health. Hence, our CEO and board came up with the farmers market and then started talking, well, we'll have this farmer's market. What else can we do to, as Mary said, bring together some critical mass to make things happen and move forward? The idea of this Boone Innovation Hub came up.

Sablik: Mary, you talked about this a little bit already, about the different challenges in rural settings versus urban settings. But I'm curious about hearing from both of you what unique challenges you each faced when trying to move your projects forward in a small town.

Farmer: First of all, when somebody's in a hurry to sell a building, ask why. We purchased what we call locally the Mitchell Jewelers building from an individual, and then decided to have it inspected and found out that there is just under half a million dollars worth of asbestos in the building. Fortunately, we were able to work out an arrangement with the city of Madison to purchase the building because the city had been in a position to apply for an EPA grant for remediation. The city has since been awarded that grant. Hopefully, by April of 2026, we will have a blank slate to work from. That was a huge initial obstacle.

The next hurdle that we have run into is with regard to getting some architectural drawings so that we can show our preliminary concepts to potential investors, and lining up that investment. As I think most people realize, at this point a lot of federal funding has dried up or is drying up. But we are very hopeful that we will be able to secure some of the grants to proceed with the renovation.

Donnan: For many years, our community said we'll attract a developer to come in and fix the whatever. Developers in more urban markets have many opportunities close at hand to deploy their capital. I think there's a gap in existing capacity to move projects, and that extends as well to the contractors. When this project got put out to bid, you might get one bid. But you're trying to balance your dollars and compete in the public procurement process, so getting enough bids to make that work can be a challenge.

Sablik: You both have, in our conversation, been praising the Richmond Fed's Community Investment Training, which I promise listeners I did not tell them to do. But I'm curious to learn a bit more about what prompted each of you to apply for that training, and maybe what you expected to get out of it and what you actually did get out of it.

Farmer: I wanted to apply because I realized that there would be a lot of folks who would be in the same boat as me who had really no clue where to begin. Even though I work with some really great individuals that have a lot of great ideas, I knew that there were other folks that we could together come to a greater understanding of what it's all about, but also share with each other our successes and our setbacks and prop each other up a little bit so that we keep that momentum going forward. I think that's critical.

Donnan: I consider myself a training ally. I was part of recruiting someone from our community because we realized if we were going to get some of these projects moving, we needed more skills in our community. So, when I was talking with the town manager, he mentioned a community member who was also working part time with our Clifton Forge School of the Arts. Her name is Katie Ryan. Both Chuck, our town manager, and I recommended Katie Ryan as a participant in the first cohort of training.

One of the best things I did was set up time periodically with her after she went to one of her trainings to hear what did you talk about, what did you learn? One of the lessons from being a training ally is sharing that knowledge as it's developing helps expand the width and the reach of the training. It was a nice way for me to learn, but more importantly, it brought some of that capacity into our community to tackle this first project and then pave the way, we hope, for future projects to unfold with some local leadership.

Sablik: Turning to the question of funding, how did you each go about securing the funding for your projects, and what did the capital stack ultimately look like? I think what we've been talking about is the fact that these are big projects that require a lot of different funding sources, so I'm curious how you went about assembling that and what it looked like.

Farmer: We have been working on getting some technical assistance funds through various local entities and some private foundations and so forth. We've been able to secure some of that. We have cash in hand to pay for things like the preliminary architectural drawings. We're going to be doing a feasibility study in connection with this project. It's a continually changing work in progress.

Donnan: I 100 percent agree that it is going to be a patchwork quilt. We love those in the mountains of how you assemble all the different pieces to put it together. The acquisition funds came from the Alleghany Foundation, so we're a private foundation.

One of the highlights I'd like to lift up about working with a public entity is they can bring some in-kind contributions to the table that are immensely helpful. In this case, there was a water and drainage issue that was identified in some early feasibility work, and the town public works was able to take care of one of those issues. Local leadership is really helpful, both for practical purposes of getting permitting and things through, but also for the financial stake that they have in this project.

Our project was selected for the Rural Investment Collaborative for some of the higher level implementation [funding] that came from some collaborative philanthropic fundraising. [Note: The Richmond Fed does not provide any funding to participants in the Community Investment Training program. Money is provided by the collaborative's partners.] We're excited about that.

All in all, I think we just keep each step, finding where is there a fit between different resources that can help meet the need that the project is facing at the moment.

Sablik: On the topic of public funding, has the public funding landscape changed since you started these projects, and are you facing any new challenges on that front?

Farmer: I think the public landscape has changed significantly. It has created certainly more challenges for everyone. But I think that those are challenges that can be overcome if we stick to the basics. We go to the public [and] we say, "What is it you really want in your community?" Start with that data and just keep after it. We continue to work on those partnerships. Bring more people on board and continue to talk to each other. Keep plowing forward. Don't quit. The projects wouldn't be on the board if they weren't important to a lot of people.

Donnan: Yeah, I think the landscape has changed as well. I feel very positive that the state of Virginia continues to invest in some critical programs, particularly around housing as the state has identified that this is a topic that matters in lots of different ways in all parts of the commonwealth. There are federal issues, there are state issues, there are local issues, and they all go up and down with economic well-being and the political winds.

And so, to Victor's point, we do have to find ways to just keep our focus on what we're trying to accomplish. I think we're finding ourselves trying to figure out are there low interest loans? How do we try to make sure that these are projects that are expensive but they actually do have a return for the community?

Sablik: I think you've both been sharing a lot of great insights throughout our whole conversation today. To close things out, I'm curious what's the key advice that you would give to other philanthropic funders or rural community leaders who are looking to start a similar revitalization project in their town but don't know where to start.

Farmer: I would suggest just talking to a lot of folk. Bring more partners on board. Let people know what your vision is. You know how important it is, not only to you but to other folks that you've talked to. Talk to your local governments and your local churches and various civic organizations.

Donnan: Those were great words of advice from Victor.

I would say it's not rocket science new to most people. Listen for what the community wants. A downtown that's going to support the community needs to provide the things community members want to buy and seek in that space. So, listening for the needs, doing what Victor and his project was doing — looking for what makes a healthier community.

And then [there's] looking for those opportunities that have those spark plugs — the people who say, "I really want to make something happen" — and keeping that dialog going. What holds us back and what tiny steps can we take? How can we get going?

Finally, to the philanthropic groups, there are a lot of different ways we can use our capital. There's a fairly robust community of foundations — both community foundations and private foundations — that are trying to have a good conversation about being able to get bigger returns in the community for the way we use our dollars. Creating those as low-interest loans or program-related investments as they may be known or finding ways to do recoverable grants or other kinds of activities that work well in this development space is just a topic for us to all learn together with but not be scared of.

I certainly want to offer to speak with anyone who's listening to your podcast and want to have any follow up. I may not be able to answer all the questions, but I do think it's important for us to try to figure out where to look for the answers.

Sablik: Victor and Mary, thank you both so much for joining me today.