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Spotlight on Rural Community Development Finance

A variety of supply-side and demand-side barriers exist to investing in rural communities. The community development finance landscape is vast and complex, encompassing public, private, nonprofit, and philanthropic sources. Banks, credit unions, and community development financial institutions (CDFIs) are also important sources of capital. The variety of potential funding sources can itself pose a logistical challenge for rural communities trying to align and secure financing for projects. Additionally, some key sources of funding, such as grants from philanthropic foundations, are underrepresented in rural places.

Some strategies we've seen for overcoming these challenges include:

  • Leveraging and building on existing community assets. For example, communities across the Fifth District are utilizing their natural amenities to attract tourists and residents.
  • Developing partnerships between local leaders, businesses, community members, local and state agencies, and funders to achieve a shared vision. Community development projects — such as the revitalization of Warsaw, Va.'s downtown — are often complex, require multiple funding sources, and can take years to complete.
  • Increasing community organizational capacity. The Richmond Fed's Rural Investment Collaborative seeks to improve economic investment in small towns and rural communities through the Community Investment Training program, a 16-week course that equips rural leaders with the knowledge, skills, and confidence to produce a viable community or economic development proposal. The Richmond Fed also leads a national survey of CDFIs to improve understanding of these sources of community funding.

Have ideas? Let us know!

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