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Partners in Innovation

Together, the McKnight Foundation and Minnesota’s Initiative Foundations have transformed hardship into opportunity.

By Gene Rebeck

In 1986, as Greater Minnesota communities experienced high rates of farm foreclosures, widespread unemployment and the shuttering of main street stores, the Minneapolis-based McKnight Foundation pursued a vision that would plant seeds of rural renewal. More than three decades later, their work is paying dividends across the state.

Mindful that they couldn’t solve the farm crisis from their headquarters in the Twin Cities, McKnight—with additional funding from the Minnesota Legislature and the active participation of rural leaders and residents throughout the state—led the charge to launch six regional foundations. Known as the Minnesota Initiative Foundations, these regional entities cover all 80 counties outside of the Twin Cities metropolitan area. With a commitment to rely on local knowledge and leadership, the Minnesota Initiative Foundations have helped to transform desperate economic times into opportunity.

Each foundation’s grants, loans and programming support economic and community development based on priorities established by local leaders who serve on each organization’s board of trustees. To date, the McKnight Foundation has delivered more than $270 million in financial support to Greater Minnesota via the Minnesota Initiative Foundations, an investment that has proven to be one of the most durable in Minnesota’s rural areas.

“For any foundation to support something for 33 years straight is pretty extraordinary, particularly support that has been so steady and on such a large scale,” said Matt Varilek, president of the Initiative Foundation, which serves the 14 counties of Central Minnesota. During those three-plus decades, each of the Minnesota Initiative Foundations has evolved as they’ve matured. McKnight has provided core funding throughout that time. But that has also made up a smaller share of the foundations’ overall budgets, as they’ve established a track record yielding greater support from donors within and beyond their respective regions. Last year, McKnight released its 2019-2021 Strategic Framework, which includes two new focus areas: advancing climate solutions in the Midwest, and building a more equitable and inclusive Minnesota. These add to its portfolio, which also includes the arts, neuroscience and international crop research. As McKnight shifts its emphasis, its relationship with the Minnesota Initiative Foundations also will evolve.

Collaboration and Innovation

In seeding the creation of the Minnesota Initiative Foundations, “the McKnight Foundation really put a lot of trust in local people to make decisions and guide decisions for their respective regions, while providing guidance when needed,” said Dave Gruenes, who served on the Initiative Foundation’s Board of Trustees from 1999 through 2009, including a role as board chair. He continues to lead its investment and audit committee. In addressing the rural crisis, McKnight didn’t want to impose a top-down, one-size-fits-all approach. Its research and face-to-face visits with residents revealed that Greater Minnesota was diverse in its needs and economic assets. Its largely hands-off approach “is a tribute to the McKnight Foundation, and it certainly contributed to the success of the Minnesota Initiative Foundations,” Gruenes added.

“McKnight played that critical founder’s role for us at the beginning, ensuring that we had adequate resources to get off the ground,” said Diana Anderson, president of the Southwest Initiative Foundation based in Hutchinson. “As each of the Minnesota Initiative Foundations built its own capacity, the McKnight Foundation was very quick to respond.”

In many cases, McKnight also has provided additional resources for special projects, said Tim Penny, president of the Southern Minnesota Initiative Foundation in Owatonna. For example, for more than 15 years McKnight funded a Minnesota Initiative Foundation collaboration devoted to early childhood development, a primary point of programmatic intersection for the foundations. The Southern Minnesota Initiative Foundation also has been awarded additional grants for projects devoted to local food production and public art. And the Little Falls-based Initiative Foundation has received special programming money to improve the quality of the region’s lakes and streams and to help the city of Becker and Sherburne County prepare for the economic transition and tax-base implications of Xcel Energy’s plan to decommission the Sherco coal plants.

“Each of the Minnesota Initiative Foundations has really evolved to meet the needs of their respective regions,” said Kara Carlisle, who as McKnight’s vice president of programs oversees the foundation’s grant-making. “Those regions are so vast, and also so very different, that over the years, McKnight has continued to see a deep value in the partnership. The Minnesota Initiative Foundations can do things that we can’t easily do.”

Carlisle noted the deepening economic development role each foundation has assumed in its region. All of the Minnesota Initiative Foundations have special IRS authorization to function as gap lenders in partnership with local financial institutions, often collaborating with the U.S. Small Business Administration and other regional and statewide economic development entities. This kind of lending is customized on a project-by-project basis. A case in point: Initiative Foundation gap lending is helping to fund construction of Brainerd-based Barrett Petfood Innovations’ second production facility, which broke ground in Little Falls in the summer of 2019. The Initiative Foundation joined a large group of lenders, including Alexandria-based Bell Bank (the lead lender), Morrison County Community Development and the Minnesota Business Finance Corporation. Equipment for the new is being financed via the SBA 504 program, which provides loans for purchasing fixed assets.

McKnight and the Minnesota Initiative Foundations also have collaborated on special programming initiatives. An example is a new Southwest Minnesota Teacher Preparation Partnership, a unique career pathway model created by Worthington public schools, Minnesota West Community and Technical College, Southwest Minnesota State University and Southwest Initiative Foundation. The program’s goal is to bring “more teachers in the front of the classroom who reflect the faces of the children in the classroom,” Anderson said. The McKnight Foundation awarded a two-year, $600,000 grant to support the program.

In developing the program, “there was a reciprocal relationship around something that is important to both of our foundations,” Anderson said. McKnight has appreciated “the approach these rural educators were taking to this work,” she added. “And we have learned so much from their connections.” McKnight has introduced partnership organizations to national education experts who are versed on closing the opportunity gap, as well as university faculty who are developing curricula for teacher pathway programs.

“We were really thinking about how we were going to ensure that the faculty and staff that were involved in the program were culturally competent,” Anderson said. “We developed a plan to bring training and resources around cultural competence . . . and that was a real learning opportunity for the McKnight Foundation to see how we did that.”

Another fruitful relationship is the interconnection between the Minnesota Initiative Foundations themselves. “If McKnight had helped to get six of these established anywhere in the country, that would be a great accomplishment on its own,” Varilek said. “But they’ve also done it in a way that creates a cohort of six organizations that collaborate extensively and serve every county of Greater Minnesota, making the Minnesota Initiative Foundation network much greater than the sum of its parts. We have each other to learn from and work with, which illustrates the strength of the network as well as the vision of McKnight and the local residents who established this model more than three decades ago.”

Perhaps the best examples of that collaboration—one that included financial and technical support from the McKnight Foundation—are the programs the Minnesota Initiative Foundations have created to boost early childhood development. “That work has evolved into a significant focus on child care in particular,” Varilek noted. In recent years, the Legislature and the administration of Minnesota Gov. Tim Walz have identified the shortage of quality, affordable child care as a policy priority.

“Because we have a state-wide reputation and serve all of Minnesota outside the seven counties of the metro, the Minnesota Legislature understood if they direct resources to the Minnesota Initiative Foundation network, they can make a broad impact,” Varilek said. “So we were fortunate to receive funding in the last legislative session through two state agencies.”

What’s Next

With McKnight’s emphasis changing, might the relationship between the Minnesota Initiative Foundations and McKnight also change? McKnight’s Carlisle noted that the Strategic Framework is “not a departure from where we’ve been.”

“We have always looked to the Minnesota Initiative Foundations for guidance and insights to help us improve our work,” she said. “For example, as McKnight increased its focus on climate solutions, we partnered with the Initiative Foundation to help the places where the closing of coal plants requires help transitioning to a clean energy economy and the new jobs associated with it. And the collaboration with the Southwest Initiative Foundation is just another example of McKnight’s long-time focus on inclusion and equity throughout Minnesota. Climate change and demographic diversity are issues that affect the entire state.”

The new Strategic Framework reflects McKnight’s desire “to take a more integrated view of transformational systems that we could help support,” Carlisle said, rather than focusing solely on a traditional grant-by-grant approach to change. “It’s a natural evolution about how we think change happens.” As part of that evolution, McKnight is developing a more integrated systems approach that addresses interrelated issues.

“The nature of the collaboration between McKnight and the Minnesota Initiative Foundations will continue to evolve over time,” said Varilek. “And that makes sense.” McKnight will continue its work with its partner regional foundations to further its mission in Greater Minnesota, and McKnight’s new Strategic Framework could be the basis of innovative, collaborative partnership-based programs.

No matter the form of the next evolution, there’s no doubt that the McKnight-Minnesota Initiative Foundation connection will remain strong and beneficial. “There’s nothing like the Minnesota Initiative Foundations anywhere else in the country, at least not on the same scale,” Penny said. “Rural Minnesota is grateful to McKnight for making this investment over this period of time. It has made a huge difference.”

Based in Little Falls, the Initiative Foundation serves 14 counties and two tribal nations in Central Minnesota with an emphasis on entrepreneurial programs, child care, and community and economic development.

Serving 12 counties, the Northwest Minnesota Foundation promotes initiatives that include early childhood development, housing and support for entrepreneurs in a largely rural region.

Serving seven northeastern Minnesota counties and five tribal nations, the Northland Foundation’s focus areas include children and youth; individual and community wellbeing; and economy and jobs.

Serving nine mostly rural counties that reach all the way to the North and South Dakota borders, West Central Initiative’s focus areas include business development, community development and early childhood.

Serving 18 counties and two tribal nations in a region that includes the Minnesota River Valley, focus areas include preventing childhood poverty, business development and supporting community foundations.

Serving 20 counties in the south central and southeast sections of the state, key programs of the Southern Minnesota Initiative Foundation include those geared toward economic development, early childhood and community vitality.