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Investing To Revitalize Rural America

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Investing To Revitalize Rural America

Written By: Heidi Bush, CFA, Jennifer Leonard, CFA, Craig Metrick, CAIA and John Wilson

Rising income and wealth inequality is a widely recognized social concern in the United States. This is a multi-faceted issue, with root causes that vary according to demographics, and one that impact investors have shown strong interest in addressing.

Since the 1990s, there has been a growing disparity in economic opportunity for rural Americans. This demographic issue has gained public awareness in mainstream social discourse in the recent past. In this report, we lay out the key challenges faced by rural America, highlight approaches to revitalization that have proven effective, and describe existing investment strategies.

Download a brief overview or our full report.

Key challenges

The decline of manufacturing and shift to a knowledge- and service-based economy left many rural communities unable to recover adequately from the Great Recession of the late ’00s. The resulting challenges can be summarized as:

  • Lack of jobs, or a mismatch in skills with available jobs.
  • Poor infrastructure: Rural communities often lack high speed internet, access to quality healthcare, and local banking services.
  • Drug addiction, specifically opioids, which compounds the effect of limited health care access.

Effective strategies for revitalization

Asset-based community development (ABCD) is a “self-help” strategy that sets the stage to attract private loans and investments by taking advantage of a community’s existing strengths. Initially a community might use government or foundation funding to develop community assets, e.g. supporting existing local entrepreneurs or developing local natural resources to offer an attractive quality of life. Once an initiative proves viable it may be possible to attract private investment.

Related: Sustainable Investing Is Poetry

Community Development Finance Institutions (CDFIs) and other local intermediaries can help aggregate capital to support local investment. Aggregators attract capital to an investment theme and allocate sums to projects that need funding.

Real estate development is another possible path to revitalization, with Opportunity Zones potentially attracting investment that might not otherwise be economically feasible.

We highlight several initiatives that are under way related to broadband projects in small communities that may finally begin to deploy this critical infrastructure.

Lastly, we highlight how some communities are making a concerted effort to attract a younger population and stem the “brain drain” of rural youth to urban areas.

Investment opportunities

For investors interested in promoting capital investment in infrastructure and businesses that create jobs in rural America, there are various strategies one can consider across asset classes. We describe these strategies in this report; some are general categories of investment, and in other cases we refer to specific strategies available to our clients

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