What Happens When You Invest In Entrepreneurship At The Margins

Monday, March 26, 2018

By Willy Foote

A few months ago, I visited some rural communities that are struggling. Deep among the rolling hills stood neglected fields, fallen barns, and empty houses. A once thriving farm economy lay fallow, leaving many people out of work. Nearly one in five individuals lives below the poverty line.

This wasn’t the highlands of Guatemala or the patchworked hillsides of Rwanda, where my work usually takes me. This was rural Kentucky—and not even Appalachia, its eastern pocket of poverty, but rather Henry County, just a 45-minute drive from Louisville. Like Appalachia, this area had long relied on an industry that drastically declined in recent decades. Here, it’s not coal mining, but tobacco farming. From 1941 until 2004, tobacco farmers benefited from a federal government program that maintained an equilibrium between supply and demand, guaranteeing parity prices. But when that program died, so did the industry—and the community, like much of Kentucky’s countryside, was left at a standstill.

One in six Americans lives in what’s euphemistically titled a “distressed community,” meaning a place with higher poverty rates and lower incomes than the national average. Some, like Henry County, are rural; but these communities are everywhere. They’re the places that have been left behind in spite of our nation’s general economic prosperity. And it’s not just geographic: There are also demographic communities—African Americans, American Indians, single mothers, among others—that are statistically more likely to be impoverished. In both types of communities, disadvantage is compounded by the lack of access to capital. In a calamitous cycle, those most in need of financing also have the least entry points, which leads to even more need.

There are countless ways that distressed communities in the US differ from the remote areas where my organization, Root Capital, operates. But they have at least this in common: They have an acute need for investment. And we need more gatekeepers of capital to take up that challenge.

Photo courtesy of John Twohig.

Source: Forbes (link opens in a new window)

impact investing, poverty alleviation, rural development