Nebraska Charities Hope Local Wealth Will Help Revive Main Street

As the sun folds on the edge of the plains, Janet Krotter Chvala’s concerned eyes scan this corn-and-cattle town of 1,400 people.

She has reason to worry.

The kids are moving away. Main Street is teetering. Many of the town’s residents are retired, a bad sign in a place that desperately needs to work toward a future. Even new developments, like the community center and pool built with money left to the town by a local couple, spell trouble. “Now, we have to come up with operating costs,” says Ms. Chvala, an Atkinson resident and a lawyer for governments in several towns in north-central Nebraska.

Like hundreds of small farming towns across the Midwest, Atkinson — 200 miles northwest and another era removed from Omaha — is propped up by federal farm subsidies, Medicare, and Social Security. As family farms dry up because of competition from corporate agriculture and the deaths of their owners — and because of the loss of young people who leave the farm for opportunities in bigger cities — many places like Atkinson are poised to become the ghost towns of the 21st century.

“We’ve got to wake people up, or we’ll become nonexistent,” says Ms. Chvala.

Local Funds Formed

Leaders in Atkinson and more than 100 small towns and counties in Nebraska have begun ringing the alarms. With the help of the Nebraska Community Foundation, in Lincoln, areas with tiny populations are forming local philanthropic funds that can provide the money to build up old charities or start new ones, as well as to redevelop their Main Streets and neighborhoods. Aided by a tool that helps them estimate the amount of money that will be passed from one generation to the next from now until the year 2050, leaders of local funds are venturing out into farm territory in search of donors who might leave endowments or other gifts to help their ailing hometowns.

In Atkinson, town leaders such as Ms. Chvala are starting a fund by soliciting $1,000 gifts from “founding patrons.” They are using the wealth-transfer information, collected during a study performed two years ago, to zero in on potential donors, most of whom are land-rich with large farms. The Nebraska Community Foundation hopes that 5 percent of the transferred wealth in Nebraska will go into philanthropies that can use the money to help rescue the troubled towns that once formed the state’s lifeblood. In Holt County, which includes Atkinson, $1.6-billion in assets will change hands over the next five decades.

Ms. Chvala says that number can instill optimism in a place that sorely needs it. “It gives us a way to change the attitudes of people here, so they’re not so fatalistic,” she says.

To make it easier for small, local philanthropies to get started, the Nebraska Community Foundation allows its local affiliate funds to operate under its tax-exempt status. For small fees, the foundation also manages the funds and offers help with fund raising and back-office functions such as accounting. By doing so, the foundation hopes to eliminate potentially expensive headaches for the start-up funds.

Most of the 100-plus affiliated funds opened after the Nebraska wealth-transfer study was completed in 2001. The affiliates have put together nearly $6-million in endowments since then, and have received nearly $13-million in pledges — triple the amount that had been collected before the results of the study were released, says Jeffrey G. Yost, president of the Nebraska Community Foundation.

Adapted from a 1999 nationwide wealth-transfer study conducted by Paul G. Schervish, a Boston College sociology professor, that estimated the transfer of wealth in the United States over the next half-century to be $41-trillion, the Nebraska study found that an estimated $94-billion will be passed among generations here through 2050, and that Nebraska’s wealth transfer will peak in 2015.

“We’ve used that date as a motivational tool,” says Mr. Yost. “We’ve let people know they’ve got to get moving if they want some of that money to stay in their areas.”

While nearly nine in 10 Nebraskans gives to charity, according to a recent study conducted by the Nebraska Community Foundation, much of that money goes to national or out-of-state organizations. What’s more, the majority of Nebraska’s wealth leaves farm areas when its owners die, as their sons and daughters sell off assets and take the cash with them to their homes in Omaha, Chicago, Detroit, and points in between and beyond.

“There’s a real urgency that we need to deal with this now, before the money is gone,” says Mr. Yost.

Gaining Attention

The Nebraska study has garnered the attention of statewide foundations and other groups in Georgia, Kansas, North Dakota, and Wyoming, says Don Macke, co-director of the Center for Rural Entrepreneurship, the research group that put together the Nebraska wealth-transfer study and has performed work on similar studies in other states. The organization shares office space with the Nebraska Community Foundation.

Mr. Macke used federal and state government information and local land records to determine farm values and assess the wealth of each of Nebraska’s 93 counties. He lowered figures on the incomes of immigrants — many of whom have come to Nebraska from Central America, as well as from Somalia and Sudan, to work at low-wage meatpacking jobs — because many send much of their money back to relatives in their home countries. Mr. Macke also used what he calls “subjective informants,” people who could point him toward sources of wealth typical of the region. In Nebraska, for example, a higher percentage of people carry life insurance than the national average.

“It’s a rough estimate,” Mr. Macke says of the study. “It gives people a ballpark figure to deal with. That’s the best we can do.”

Ford, Kellogg Grants

Although the study may not pass muster as straight science, Mr. Yost says he gets calls and e-mail messages from around the country, a sign, he says, that interest in applying the lessons of the wealth-transfer study to philanthropy elsewhere is growing. “I regularly give talks on how to do this,” he says, citing a session he led during a recent community-foundation conference in Baltimore.

The study and its application have also gotten the attention of major foundations. Both the Ford Foundation, in New York, and the W.K. Kellogg Foundation, in Battle Creek, Mich., announced two-year, $200,000 grants this year to help turn the knowledge from the Nebraska study into dollars that could help rebuild tapped-out rural towns.

The Nebraska Community Foundation’s emphasis on encouraging each fund to determine the use of newly raised money was also part of what motivated the Ford grant.

“This is more than typical, park-your-money philanthropy,” says Linetta J. Gilbert, a program officer at Ford. “This tool helps people revitalize the places they live in. It puts dollars to work.”

In towns such as Ord, a small dot in the middle of a Nebraska map, that means starting a leadership program designed to keep young people in town, and running a charitable-giving program that attempts to get lawyers and financial planners to highlight the prospect of keeping philanthropy local when helping people draw up wills and invest money.

The Nebraska Community Foundation’s strategy includes reaching professionals, such as Ms. Chvala and Robert D. Stowell, an Ord native who is a lawyer. The foundation has held 26 sessions in the past two years across the state with financial planners, funeral-home directors, lawyers, and accountants — those who potentially have some influence on people with wealth.

Like economically strapped people elsewhere in the state, Ord’s 2,200 people face a variety of problems. School funds have been cut by the state, run-down homes dot some neighborhoods, and the methamphetamine trade threatens the area’s sense of safety. Because most jobs don’t pay well — workers are often forced to take more than one job to get by — creating new small businesses with higher wages is paramount, says Mr. Yost.

Over the past 50 years, most small towns in the Midwest and South have tried to lure branches of national manufacturing companies for the many jobs they can bring. But with other countries with cheap labor forces siphoning assembly-line positions away from the United States, and with automation eliminating many manufacturing jobs worldwide, that strategy no longer works, Mr. Yost says.

“Two-thirds of our towns in Nebraska have 500 or fewer people, so the branch-relocation strategy isn’t all that applicable,” he says. “What we want to do is help people find the value-added businesses that are purely local, help them retain them, and help them start new ones that become an integral part of the community.”

He points to the Cabela sporting-goods and outdoor-product catalog company, in Sidney, in the depressed western part of the state, as a model of economic prosperity through small-scale entrepreneurship. The company employs 1,000 in a town of 6,000 residents.

“The Cabela brothers love to hunt and fish, and that area is good for that,” adds Mr. Macke. “That’s where we’re going to get entrepreneurs from — people who want to live and work here, not from people seeking a huge return on investment.”

$1.2-Million Gift

Valley County, which includes Ord, will witness a transfer of nearly $600-million in the next five decades. If trends don’t change on Ord’s Main Street, it will also face blight and the continued flight of its young people, says Mr. Stowell. The idea is to match the need with new donors.

Ord is luckier than most Nebraska towns. A posthumous donation of $1.2-million by John and Alyce Wozab, an Ord couple who had worked in real estate, was made to the city in 1999. Since the town didn’t have enough nonprofit groups to manage the gift, which the Wozabs earmarked for the poor, the county Board of Supervisors turned it over to the Nebraska Community Foundation, which started an affiliate fund for the county.

Since the Wozabs’ gift was announced, the town has received five other large gifts, including one from a farmer for $1.3-million. The Valley County Community Fund at the Nebraska Community Foundation now contains a total of $6.7-million. “We’ve been able to use the Wozabs as a fund-raising example,” says Mr. Stowell.

Encouraged by the ready store of cash, nonprofit groups have started to sprout. An “investors’ group” Mr. Stowell started is looking to piggyback on economic-development grants made by the fund to shore up Main Street. “We need to marry philanthropy and entrepreneurship,” he says.

Not that that will solve all of rural Nebraska’s problems, Mr. Yost is quick to add. “I don’t think charitable giving is the total answer here,” he says. “It’s a way to get started on investing in these communities, because there’s been so much disinvestment. If we can get people talking about reinvestment, we can get hope growing again.”

Mr. Yost says the program does more than reapportion and manage money. “It’s more than just convincing people that there are resources they can get at,” he says. “This tool means hope in the future. It’s about rural revitalization.”

Adds Mr. Macke: “If we don’t succeed at creating more economic opportunities, we’re going to end up with senior centers and libraries and no one to use them. We will have failed in the Midwest.”