Working with communities to create opportunities Philanthropic Strategies for Supporting Community Vitality and Entrepreneurship: An Example from Minnesota 2008 Community Foundation and Philanthropic Academy February 4, 2008 Des Moines, Iowa

Getting Started?  Identify opportunities in your area or county using all available data and resources  Assess what organizations are already doing in your area and across the state  Form collaborative relationships  Seed the startup of other organizations  Leverage resources

West Central Initiative: Context  8,615 sq miles, 125 x 85 miles, 9 counties, 83 communities  Population of 212,000  Lakes area, prairie and river valley  Rural small towns – largest is 33,000  “Minnesota Nice” prevails: teamwork and cooperation are part of culture

West Central Initiative: Context  WCI is the only economic development organization serving this specific region  501(c)(3) org, public charity  13-member Board of Directors and EDD Board  Work to build unrestricted endowment as a permanent resource for the region  We help communities plan and control their destiny  Local ownership of issues: solutions come from the area, from the people impacted  Grew up in relative isolation from other foundations

West Central Initiative: Challenges  1986 – rural economy struggling, people exiting farming, few jobs available, people leaving the region  Goal: equip people for the long term by providing resources through low interest loans and free technical assistance to business, and helping with basic needs  Then in 1992: learned that the job shortage we were currently facing would soon become a worker shortage – time to consider new approaches

West Central Initiative: Catalyst For Revolving Loan Fund in 1986:  Needed more diversified economic base and more jobs  Manufacturing jobs paid higher wages and often matched skills of those seeking work  Businesses needed “gap” financing source For Workforce 2020 in 1992:  Region had the lowest wages in Minnesota  Out-migration and aging population leading to labor shortages  Struggling industry - traditional rural low-wage business strategy fell prey to global competition

West Central Initiative: What Did It Take? Revolving Loan FundWorkforce 2020 Goal: Increase number and quality of available jobs Goal: “Improving Employment” by addressing workforce shortages & improving the value of work Help businesses become stronger financially, become “bankable” Invest in world-class training for workers, maximize their productivity and value Create self-employment opportunities with microloans Build capacity in area colleges to train people in high-demand skills A “gap” lending program initially targeted to primary sector, later expanded to other sectors An industry-driven incumbent workforce training program, funded by WCI and partners Two complementary programs:

West Central Initiative: What Did It Take? Revolving Loan FundWorkforce 2020 Partners: Businesses Banks SBDCs Economic Developers Partners: Businesses MTI Technical Colleges, other training providers  About $9 million, started with $2 million, sources: Federal, State, local, foundations, donations, banks, communities  About 2 FTE  SBDC & SBM partnerships  Other gap lenders, e.g. SBA 504  Board committed $1 million in grant funds over four years, later up to $400,000 per year  About ½ FTE  Business match  MTI partnership

West Central Initiative: Results Overall results for the region:  No net loss of manufacturing jobs during recent recession  Decades of out-migration reversed, population growing by about 1% per year  Twice as many youth choose to remain or return later  Wages were last place among Minnesota’s 10 regions, now seventh  Globally competitive: companies bringing business back from Asia  Between , Minnesota lost 12.2% of its manufacturing jobs; our region experiences a 1.4% gain in manufacturing employment

West Central Initiative: Results Revolving Loan FundWorkforce 2020  Over 5,500 jobs created/retained  Approved over 780 loans  Over $31 million in lending  Leveraged more than $140 million in other financing  Charge off rate 5.9% since inception  About 6 of every 10 manufacturing workers in region have been retrained (8,000 duplicated count)  Increases in manufacturing wage scales  Companies work hard to avoid layoffs and retain workers

West Central Initiative: Results Three Examples:  Shoremaster, Inc.: Using workforce training to remediate a troubled economic development investment  Sunrise Machine & Tool: Substituting training for capital investment to strengthen a company  Rapat Corporation: Fully integrating economic and workforce development to rapidly realize maximized gains

West Central Initiative: Practical Lessons  Workforce development and economic development work best when addressed together  Small amounts can make a big difference for companies  Bringing cultural gap between businesses, government and educational institutions  Partnership-driven model requires much more time  Keeping up with growing demand—”Success Breeds Success”

West Central Initiative: Roles for Philanthropy and Government  Philanthropy can provide support for identification of economic and workforce issues and solutions at the local level and connections to data and research sources  Government can provide data and allow more flexibility in uses of funds for programs such as worker training or economic development lending

Getting Started?  Identify opportunities in your area or county using all available data and resources  Assess what organizations are already doing in your area and across the state  Form collaborative relationships  Seed the startup of other organizations  Leverage resources  Consider how you define prosperity….

What Does It Mean To Be Prosperous? Isserman’s Four Measures of Prosperity:  Good housing  Jobs  Low poverty  Good education “Prosperous counties are places with affordable and well-maintained housing; a well-educated population; plenty of work; and few poor families.” Andrew Isserman Economist, University of Illinois

What Does It Mean To Be Prosperous? Isserman lists 289 counties that meet his criteria  48 are in Iowa  Another 129 are in states bordering Iowa  187 of the 289 counties—nearly 65%—are in the heart of the Plains  These communities are not: all on four-lane highways or close to direct airline service tourist or retirement areas, recreational areas or even very high in natural amenities like lakes or mountains

What Does It Mean To Be Prosperous?  Jobs: “The prosperous counties have a more vigorous private sector, with more jobs per capita” and fewer transfer payments, Isserman wrote  Education: Adults in prosperous places have more education  Social: there are more places for people to meet  They grow more slowly than other communities on average  They are homogenous from

The Point: Prosperity is a function of things that are mostly within local control. “Geography is not destiny” Andrew Isserman

Working with communities to create opportunities Any questions? Nancy Straw, President West Central Initiative