This is the seventh in a series created by a partnership between Baptist News Global and the Campbell University Center for Church and Community. Each month’s columns explore one of the seven types of capital described in the Community Capitals Framework developed by Flora, Flora and Gasteyer.
A painting by Bernardo Strozzi (circa 1625) titled “St. Lawrence Distributing the Treasures of the Church” hangs in the permanent collection at the North Carolina Museum of Art. In Dante’s Inferno, purveyors of greed and usury reside in a deeper ring of hell than heretics and murderers. To suggest that the church has had a complicated relationship with money and wealth since its beginnings in Acts would be an understatement.
Frankly speaking, church leaders often dislike (or altogether avoid) sermons about giving. As you will see in this article, there is a case to be made about the importance of giving and philanthropy, especially when it comes to the church supporting broader community projects in rural areas. Within that context, how does the congregation approach a discussion of financial capital?
Flora, Flora, and Gasteyer describe financial capital as “resources that are translated into monetary instruments that make them highly liquid — that is, able to be easily converted into other assets.” As the authors note, it is perhaps common (for individuals, congregations and communities alike) to think of financial capital in terms of money. “But money is not always financial capital, nor is financial capital simply money.”
Financial capital as community capital
When it comes to community partners, including local congregations, how does money become financial capital aimed at building and sustaining flourishing communities?
“How does money become financial capital aimed at building and sustaining flourishing communities?”
As Flora et al. have asserted before, a community capital is any resource capable of producing other resources that help promote sustainable communities, and financial capital is certainly “important because it can be transformed into more productive labor as it is invested to increase human capital and built capital.” This highlights the interrelated nature of the community capitals, as well as the importance of investment.
Examples of this type of investment in rural renewal and entrepreneurship are plentiful, and many great examples from small towns across the United States are documented in a project by NCGrowth called Homegrown Tools. But when the flow of financial capital is disturbed or non-existent in rural communities, this entrepreneurial spirit and opportunities for growth are similarly diminished.
At the community level, Flora et al. describe how “financial capital can be assessed by changes in poverty, firm efficiency, diversity of firms and local people’s increased assets.” And, for many rural communities over the past several decades, assessing these and other indicators have laid bare an unequal distribution of resources and opportunities relative to urban and suburban places.
Changes since the Great Recession
The 2019 edition of the USDA report “Rural America At A Glance” specifically noted differences in rural and urban economic growth since the Great Recession. According to the report, “By the second quarter of 2019, nonmetro employment remained more than 1% below the pre-recession level, while metro employment exceeded the pre-recession level by more than 9%.” This also was the case in our home state of North Carolina in advance of the COVID-19 pandemic, where nonmetro job growth not only lagged behind that of large and small metro counties in the state, but also was well below the national average for nonmetro places, according to the Department of Commerce.
While rural communities certainly differ from one another across any state or region, pockets of unemployment, poverty, food insecurity and other indicators of inequality are visible in communities of all types.
Paramount to this discussion is the flow of financial capital. Once it becomes mobile and is used to raise the entire community, it becomes a community capital, not merely a personal asset. In rural communities, this flow has been disturbed by various macro-level forces and policies over the years.
“In rural communities, this flow has been disturbed by various macro-level forces and policies over the years.”
As one example, Flora et al. discuss the effects of banking deregulation in the 1980s that continues to resonate in rural communities today: “In limiting the interest rates that could be charged for loans or paid out on deposits, banking regulations had been more favorable to rural banks. When the regulations were dropped, financial capital began moving to where it could earn the highest short-term return. Financial capital began to flow out of rural areas.” These policy decisions led to greater economic prosperity in urban centers, essentially built on a rural economic drain, increasing rural poverty since the Great Recession, creating a vicious cycle that contributes to the outmigration of human capital.
In an article published in Rural Sociology in 2018, researchers F. Carson Mencken and Charles M. Tolbert present further evidence of this phenomenon by examining the effects of community banks on the growth of local businesses in nonmetro places. As an over-arching trend, Mencken and Tolbert describe an overall decrease in small business loans to rural counties, as well as “a 248% decrease” in the amount per loan to rural small businesses between 1996 and 2015.
As the authors note, “It is clear from our analysis that the geographical location of the bank decision-making apparatus significantly affects the odds of using conventional financing to either start or expand the nonmetropolitan business in question.” Further, findings indicate that nonmetro areas with more local banks demonstrated a greater amount of financing for both new businesses and the expansion of existing businesses. Based on this work and a discussion of the community capitals approach, the authors argue that “a locally oriented financial sector should have a positive effect on community well-being.”
When financial institutions abandon or ignore nonmetropolitan areas, what happens to the resources for local places as they are cut out of the equation and major corporations become the priority or even the decision-maker? Will they lean toward urban development? These two questions are not new in the conversation of a system that disadvantages the rural community; however, the pandemic also has accelerated the problem. Where rural businesses and restaurants survived, they often relied on the commitment of the people in the community to support them.
How does the church put its capital to work?
The church is an institution in the community that has financial capital. The question becomes how does it put this financial capital to use, especially in the absence of other sources as noted above?
“The church is an institution in the community that has financial capital.”
Research has demonstrated that many who identify as religious give primarily to religious causes as opposed to secular ones, and that those in rural communities are less likely than urban residents to donate money to secular causes. This begs the question of the difference between religious and secular giving once it is based on community flourishing.
The concerns of a community and the investment that leads to community flourishing are not a matter of a church only having designated funds set aside for benevolence issues. Churches can be at the very heart of developing, supporting and funding opportunities that lead to community flourishing.
A few examples of this include small business loans, credit unions and purchasing cooperatives. The financial capital in each of these examples is put to use for community building that addresses systemic needs rather than spending only on symptomatic ones. We submit that sacred and secular giving are the role of kingdom building, often not just intersecting, but overlapping entirely. However, a church may have to redefine its relationship with financial capital and what “giving” and “missions” mean in order to move forward in this way.
Examples of success
The advocacy work of the Cooperative Baptist Fellowship is one example where churches are using their financial capital to combat predatory lending. At federal and state levels, the advocacy work is about changing laws to prevent extortionary practices aimed at keeping people in cycles of poverty through immoral and unaffordable loans often approaching 400% interest. Beyond the advocacy work, there are congregations developing partnerships with credit unions to offer loans that prevent predatory cycles or help people out of those cycles.
“There are examples from across the country of churches using their financial capital to rebuild lives and communities.”
One example from Stephen Reeves, CBF’s director of advocacy, comes from a church in Missouri that began by walking with those in need to the credit union across the street and continues today with the church using its financial capital to secure low-interest loans and connect with financial coaches. Another is from a church in Dallas that purchased the failing credit union to be able to offer community members with financial products that are consumer friendly.
There are examples from across the country of churches using their financial capital to rebuild lives and communities. At the heart of the matter is when advocacy, ministry and community work together in ways that seek to raise the entire community. The church does this through its many capitals.
Financial capital often is the one that has created the most complicated relationship. It does not have to be that way when we continually point to the example of the early church, and more toward how we mobilize financial capital to increase human and built capital. The wisdom that “a rising tide lifts all boats” is not from the Scriptures, but it certainly captures the true meaning of building community capacity.
What the church can do:
- Learn where and how financial capital and power flow in your community.
- Support or open credit unions for investment in local social entrepreneurship projects.
- Join a Network of Churches committed to rescue loans.
- Support public policy changes to change predatory lending laws. See cbf.net/predatory-lending-advocacyor www.lendjustly.com for more information.
- Financial capital investment is often most visible in “built capital” (coming in August). Explore ways to support parks, community gardens and more through mini-grants and other funding sources.
- Visit Homegrown Tools for more ideas and examples of economic development projects.
Brian Foreman
Justin Nelson
Brian Foreman serves as executive director of the Center for Church and Community at Campbell University. Justin J. Nelson serves as assistant professor of sociology.
Previous articles in this series:
- On social capital, churches often do one part well and one part not well
- Let’s begin a conversation about the church in rural areas
- The importance of natural capital for the rural church
- Rural churches need to understand the cultural capital of their communities
- Understanding human capital makes volunteer recruitment easier
- The power of political capital to shape communities and churches