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Community Foundations and Rural Development in Iowa

posted on April 10, 2008 at 1:38 PM

Nearly half the counties in Iowa experience more deaths than births. The median age in many of the state's rural counties is over 40. As the younger generation moves out of rural Iowa, data suggests that they will eventually take the family wealth with them in the form of inheritances when the older generations die. If you can't "keep 'em down on the farm," can you at least keep some of the family money in the community? That's what many rural communities and counties are trying to do by creating community foundations. And in Iowa, they are establishing the foundations with the help of state gambling tax revenues.

In 2005, Iowa's 17 licensed commercial casinos paid more than $263 million in state gaming taxes. It was the first year that one-half of one percent of those revenues – or $5.4 million -- was designated to create grant-making and endowment building efforts in 85 counties that had no state gaming licenses.

A state County Endowment Fund Program disbursed $63,000 to each county. The foundations, established and governed by volunteers in the communities were required to keep 25 percent in a permanent endowment, the principal of which is never touched. 75 percent can be distributed to charitable projects within their county ... such as outdoor art for barns ... and computer software for a local historical museum.

The idea behind the creation of the county foundations was to give residents a place to donate -- or bequeath in their will – a means of holding some of their wealth in the county, in which they lived.

Angela Dethlefs-Trettin, Director, Iowa Council of Foundations, Des Moines: "And it’s a wonderful opportunity for communities to really create a vehicle and say to citizens who live there or who have lived there and say, 'let's give back, let's make a difference in the places where you lived and have raised your families'."

Until the county foundations were created, few rural areas offered a place to stimulate home-town philanthropy with a focus on endowment.

As a result, much of the wealth accumulated by area farmers and other residents may have, upon death, transferred to heirs – many of whom may not have just left town, but moved out of state.

A five-year study of probate records by the Community Vitality Center at Iowa State University revealed that Iowans annually transferred nearly $5 billion. In central Iowa's Greene County-- the study showed $30 million dollars were transferred annually.

Rick Morain, Editor/Publisher, Bee & Herald Newspapers: "If we could capture just five percent of that, in a few years we'd have a huge endowment built up that we could use for improving quality of life and increasing economic development activity and so forth in this county."

In its three-year existence, the Greene County Foundation's permanent endowment is at $236,000 – money coming annually from gaming tax revenues and from contributions from some 200 individuals, who not only get a tax deduction, but are also eligible for a 20 percent state tax credit.

Jacque Andrew, President, Greene County Community Foundation: "What sweetens the pot is that tax credit that folks are eligible for if they contribute to an Endow Iowa Endowment. So that helps a lot."

As for giving money back to the communities in the form of matching grants, the 35-member Greene county board has awarded 55 grants totaling $148,000. The grants have gone toward, among other things, the cost of scoreboards for Little League in Jefferson, playground equipment in Rippey, and the installation of wireless broadband and new computer desks for the library in Churdan.

These expenditures may not seem like a big shot in the arm, there are some who envision the foundation exerting a much broader impact on the local economy.

Rick Morain, Editor/Publisher, Bee & Herald Newspapers: "For instance, I think the IRS laws will allow funds like that to be used for, for training, for economic development purposes, for an incubator if the foundation board decided to take a chance on economic incubator."

To finance such ventures will demand the county community foundation keep growing and will require residents like Alice Walters, to think ahead.

Alice Walters, Jefferson: "When I turned 89 I thought I ought to update my will and things like that."

Walters donated $25,000 to the Greene County Community Foundation.

While some residents have embraced the foundations, philanthropy isn't quite as successful in all of the 85 county foundations created with state gaming taxes. Several are just surviving on their annual share from the gambling industry.

But while some counties see little, if any, growth in assets, the Iowa Council of Foundations points to the overall significant growth statewide.

Angela Dethlefs-Trettin, Director, Iowa Council of Foundations, Des Moines: "When we look at just even those 85 counties, two years ago, so June of '05 they had about $16.6 million or so in total assets, a great start for all those 85 counties, when you think about it. Two years later they have over $33 million in assets."

With numbers like that, many feel the use of state gaming taxes to jump start local philanthropy ... was worth the gamble.

Tags: agriculture development economy farmers finance gambling Greene County Iowa rural taxes


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