The Appalachian region of the United States suffers from “chronic underinvestment,” which some experts argue is partly to blame for the region’s poorer-than-average education and income levels. In fact, according to the Appalachia Regional Commission (ARC), nearly one-quarter of Central Appalachian residents live in poverty, and only around 56 percent of adults have completed high school.
Things have changed in Appalachia since Robert F. Kennedy's famous visit to the region in the late 1960s, but it's still lagging far behind the rest of the country.
The ARC, along with a number of like-minded funders is seeking to change the trajectory of the region by investing in Appalachian Community Capital, a collaboration of partners working to create new sources of capital as well as investment opportunities in the 13-state Appalachian region.
At the latest Clinton Global Initiative, former President Bill Clinton announced the first-round investment closing of Appalachian Community Capital, with a lead investment of $3.45 million coming from ARC. An additional $12 million in debt and equity was raised from regional lending partners, including Bank of America, Deutsche Bank, Ford Foundation, and the Calvert Foundation.
The announcement didn’t disclose how the $12 million investment was split between Bank of America, Deutsche Bank, and Ford Foundation, but the Calvert Foundation announced that its portion of the investment totaled $3 million. This was a bit surprising, because a $3 million investment is a pretty big deal, and while we at IP are pretty familiar with Bank of America, Deutsche Bank, and the Ford Foundation, we hadn’t really heard much of the Calvert Foundation until now.
The Calvert Foundation was established in the late 1980s, when Calvert Investments discovered its clients’ growing desire to invest directly in organizations working with underserved communities. The foundation has since grown to invest over $180 million in some 200 nonprofits and social enterprises around the world. Its work in Appalachia is pretty impressive as well, having raised over $15 million aimed at small business growth in the region.
Though the Ford Foundation’s exact investment amount in this round was not disclosed, it had previously made a $3 million grant to the Appalachian Community Capital Corporation in 2013. The grant was awarded through Ford’s Expanding Livelihood Opportunities for Poor Households and was earmarked for program demonstration and scaling activities.
All in all, ACCs first-round investment capital is expected to finance over 150 small businesses and create nearly 800 new jobs in the region. Of the nearly $15.5 million raised, close to half of that amount has been approved for community loan funds. Additional investors include Mary Reynolds Babcock Foundation, the Claude Worthington Benedum Foundation, the Annie E. Casey Foundation, and BB&T Bank.