Investing in Thriving Rural Communities in Spring Grove and Across Southern Minnesota

By Benya Kraus, President and CEO of Southern Minnesota Initiative Foundation

“Investing in small towns can do far more than fund projects. It can build trust and remind a community of its own capacity to shape the future.”

There’s a familiar narrative about small towns in America that treats them as places in decline, as if their most meaningful days are already over. From where I sit, that story doesn’t hold. Across southern Minnesota, while challenges certainly persist, small towns are actively shaping their futures. The progress I see doesn’t come from a single breakthrough, but from how communities use what they have to define and celebrate a shared identity — deliberately, collaboratively, and with a long view in mind.

Such work takes financial resources, especially in places that bear the brunt of economic shocks and histories of extraction. But in many small towns, the most important work isn’t simply spending dollars from philanthropic or public sources for one-time projects. It’s leveraging those resources — using funds as a way to bring people together around shared priorities, foster hope and momentum, and build the relational systems that continue to function long after the initial investment is gone.

That approach is on clear display in Spring Grove, Minnesota.

Spring Grove is a town of roughly 1,200, known as the first Norwegian settlement in the state. Like many rural communities, it faces familiar pressures: limited capacity, changing demographics, and the challenge of doing big work with very few people. From the outside, those constraints can sound limiting. From the inside, they have encouraged a thoughtful, collaborative approach to progress.

Spring Grove shows what’s possible when modest resources are used intentionally as a catalyst for alignment rather than as a shortcut to solutions. Over time, funding from a range of partners — including investments from Southern Minnesota Initiative Foundation (SMIF) — has helped connect efforts that might otherwise operate independently: economic development, youth engagement, education, housing, and downtown vitality. Instead of moving from project to project, community leaders have asked how one effort might reinforce another and how today’s decisions can support tomorrow’s leadership.

That mindset has shown up in tangible ways. Spring Grove has worked closely with its local high school to engage students in addressing real issues facing the community, including affordable housing. In 2017, the school received a SMIF grant to support students design and build a Habitat for Humanity home. This process inspired zoning changes by allowing smaller homes to be built in town and eventually led to a formal housing study.

The ripple effects of that early project did not stop there: it inspired more partnerships between the school and the Economic Development Authority. Young people have participated in the Spring Grove 2030 visioning project, which has led to the development of a student union in the downtown cinema building. They are learning that their ideas matter and that they belong in shaping the town’s future now, not later.

Early investments from SMIF also helped support a rural economic development effort that led to the creation of a resource for entrepreneurs on how to start or expand a business, specifically in Spring Grove. The partnerships that were developed during this process eventually led the community to start a farmers’ market and then launch its own chamber of commerce.

Small towns like Spring Grove show us that economic development is no longer just about recruiting the next big employer; it’s also about investing in the local leadership, capacity, and relationships that make a place feel like a community. Resilience has grown from people stepping into overlapping roles: business owners serving on boards, educators shaping civic life, elders carrying institutional memory, and young people contributing new ideas early on.

This work matters because of a larger reality. Despite the many opportunities in places like Spring Grove, there remain large disparities in investment. According to a newly published study by USDA Rural Development, rural America is home to roughly 20 percent of the U.S. population, yet receives only 3.5 percent of total philanthropic giving. In towns under 10,000 people, that share is even smaller. This is one of the reasons the Minnesota Initiative Foundations exist: to help address that imbalance, ensuring resources reach Greater Minnesota communities that are often overlooked and that those resources stay rooted in the regions they are meant to serve.

Spring Grove’s experience also reflects something distinctive about southern Minnesota as a whole. This is a region shaped by contrast and connection — by communities of very different sizes and histories that remain deeply interdependent. We have regional centers like Rochester and Mankato and towns with just a few dozen residents. Long‑rooted families live alongside newer neighbors who bring languages, traditions, and ideas from around the world. That diversity — of people and of place — is not incidental to our region’s future. It is central to it.

Investing in small towns can do far more than fund projects. It can build trust and remind a community of its own capacity to shape the future.

Learn more about Southern Minnesota Initiative Foundation and their work at smifoundation.org.