Rural funding targeted – Golden Leaf already has $93M

By Todd Cohen

Tar Heel foundations are being asked to pick up the tab for big new initiatives recommended by the task force created by Gov. Jim Hunt to help boost economic development in the state’s rural areas.

The Rural Prosperity Task Force is counting on the new Golden Leaf Foundation to provide the bulk of the funding, with the state’s 10 largest foundations also making significant contributions.

“We’re seeking money for rural North Carolina anywhere we can find it,” says Leslie Boney, staff director for the task force.

Hunt created the task force a year ago to address long-term challenges facing rural North Carolina and to create a blueprint for Golden Leaf.

The new foundation, which will receive $2.3 billion through 2025 as part of the settlement between 46 states and the tobacco industry, has just begun searching for a chief executive and has hired Research Triangle Institute to help develop its funding procedures.

“We’re not ready to start talking about allocations because we don’t have our system in place,” says retired UNC System President William Friday, chairman of Golden Leaf’s board.

What’s more, he says, the foundation’s “current intention is to fund out of income” and not dip into assets or issue bonds.

Making grants using only income from investment of its assets could mean significant limits on the foundation’s initial funding of rural initiatives.

The issue of whether to dip into assets – and possibly also issue bonds in anticipation of ongoing payments to the foundation by the tobacco industry –- remains perhaps the biggest challenge facing the foundation’s board.

Golden Leaf already has received $93 million from the tobacco industry.

One of the task force’s big recommendations was the creation of a new Rural Development Authority to help fund new development projects. The task force recommended that Golden Leaf capitalize the new agency with $50 million a year over four years.

The task force also recommended that Golden Leaf contribute another $5 million to support agricultural projects.

And the task force is counting on other foundations in the state for $10 million a year that will be needed for three related initiatives to spur economic development, including technical support to help local groups plan new development projects; a civic “venture capital” fund for community groups; and a separate fund to support development of local leaders.

Charlotte investment banker Erskine Bowles, who chairs the task force, met in April at the Duke Endowment with representatives of North Carolina’s 10 largest foundations to seek support for the three initiatives with the $10 million annual pricetag.

Paying for those initiatives in the first year would cost an estimated $4 million.

The Z. Smith Reynolds Foundation in Winston-Salem already has approved $100,000, and the Appalachian Regional Commission has approved $200,000. Other applications are pending.

Boney, the task force staff director, says the next step would be to seek funding from national foundations.

“We want to make sure we’re looking at all the potential sources in North Carolina first,” he says.

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