Put Your Money Where Your Farm Is

The national economy has been thriving in recent years. Unfortunately, rural communities have often been left behind as corporate consolidations continue at an accelerating rate and as business activity has drifted to larger centers of commerce.

To sustain Minnesota’s rural communities economically, the rural citizenry should be able to invest in local businesses, regional natural resources and agriculture-related enterprises.  Currently, it is difficult – if not impossible – for the rural citizen to put her or his money where her or his heart is when it comes to investing in the private sector.

The Sustainable Financing Project for Rural Minnesota is a task force project chaired by Dean Harrington (above), president of the First National Bank of Plainview and Experiment in Rural Cooperation board director, to address the possibility of establishing new mechanisms that allow investors from rural Minnesota to target their investments locally. The goal is to generate more equity capital – raised locally – that would be available for locally based investments. Many rural businesses suffer from an over-dependence on credit capital. In the absence of patient equity capital, it is challenging for these enterprises to expand or stay in business.

The Task Force

The Task Force has accomplished many in-depth feasibility interviews. Seasoned investors, bankers and economic development specialists were asked questions on the present status of rural investments and what they view as opportunities for local investment in local businesses.

The Task Force undertook research on equity-investment practices elsewhere in North America having relevance to rural regions. The intent is to learn what does not work as well as what works. For example, the availability of out-of-region venture capital is of little importance in many rural areas where high-tech companies are few and far between and, more importantly, where the goal is to generate wealth within the community and to support local, patient long-term ownership in the cause of sustaining a vital homegrown economy.

Several policy or model possibilities have emerged that Minnesota could adopt to increase rural investments. Models are being developed on a multi-stage basis that include a variety of options for rural communities. The next phase is to begin addressing model development options and model implementation strategies.

The project was launched by a steering group comprised of citizen leaders, U. of M. Extension educators, and faculty members (Law School, Humphrey Institute, Carlson School of Management, College of Agricultural, Food and Environmental Sciences, etc.). Initially staffed through the University’s Minnesota Institute for Sustainable Agriculture, the background research was completed by a Conservation Biology graduate student recruited through the University’s Community Assistantship Program.

A project supported by the Experiment in Rural Cooperation (651 345 4336).