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Evaluating Community Development Efforts Through the Rural Innovation Fund

Evaluating Community Development Efforts Through the Rural Innovation Fund

In 2010, Congress authorized the U.S. Department of Housing and Urban Development (HUD) to administer the Rural Innovation Fund (RIF), a competitive grant program to improve housing stock and spur economic development in rural communities with high poverty and unemployment rates. Succeeding the Rural Housing and Economic Development (RHED) Program, a similar program funded from 1999 to 2009, RIF was funded for only 1 year. PD&R’s recently released Evaluation of the Rural Innovation Fund research study examines how rural housing and economic development organizations used RIF to benefit distressed, rural areas, such as Native American and seasonal farmworker communities and the lower Mississippi Delta and whether the larger grant amounts under RIF generated greater impact than the smaller RHED grants.

From October 2013 to December 2015, the research team conducted data collection through visits to RIF program sites, stakeholder interviews, telephone survey data, and review of administrative files.

Research Findings

During the period of this study, a total of 20 states and Puerto Rico received RIF grants, with California receiving the largest number grants (seven) and Arizona receiving the most grant dollars ($4.5 million). More than 70 percent of successful applications proposed housing development activities, and 38 percent proposed economic development initiatives.

Most RIF grants went to Native American organizations, which tended to have lower leverage rates than non-Native American organizations. The major types of RIF and RHED projects completed included the following:

  • Housing development and rehabilitation.
  • Business enterprise startup.
  • Commercial real estate or infrastructure development to facilitate business activity.
  • Direct development of infrastructure improvements.
  • Loans to homeowners or to multifamily rental developers and owners.
  • Loans to business owners.

Housing-related grants were the most common, at 41.4 percent for RIF and 51.3 percent for selected RHED grantees. Commercial real estate to spur economic development covered about 22 percent of activities for both RIF and selected RHED grantees. The RIF program included more direct business lending than did the RHED.

Researchers determined that the larger Comprehensive grants (up to $2 million for broad-scope economic development and housing infrastructure projects) and smaller Single Purpose grants (up to $300,000 for narrowly focused projects related to housing) had proportionately the same program outcomes. Comprehensive grantees did not improve their financial well-being or partnerships any more than Single Purpose grantees. All Indian Economic Development and Entrepreneurship grantees (federally recognized Native American tribes who received up to $800,000 for business development activities) and many Single Purpose grantees, on the other hand, indicated expansion to new areas such as business lending or historical renovation and improvements to provide technical expertise in workforce training and construction.

The study identified several benefits of the RIF program. Grantees reported that the flexibility of the grants allowed them to use funding at their discretion based on local needs and priorities. Furthermore, RIF grants enabled communities to leverage nearly twice as much money for distressed areas.

Recommendations and areas for future research

The researchers recommend that policymakers establish a mentorship model whereby previous grantees advise new applicants. To ensure user-friendly systems, the researchers recommend that HUD staff provide technical assistance to new grantees to facilitate access to necessary resources. Because of the short period between the project start date and data collection, evaluating the broader community impact of the programs is difficult. Longitudinal studies could track the long-term development of projects to gather more comprehensive findings.