If you follow broadband news, you’d be forgiven for thinking we’re about to end the digital divide. That sentiment has dominated recent conversations we’ve had with foundation leaders who, having initially joined the chorus of voices calling for digital equity at the height of Covid-19, are now drifting to the sidelines, under the impression that the government’s broadband spending push will solve the problem.

It won’t. Despite its ambition, the latest round of public investment will not reach all 42 million Americans still living without internet access.

As the power of technology grows, so too does the cost of being offline. That’s true for foundations as well as those left without access because, whatever your funding focus, the impact of your dollars increasingly hinges on those you serve having an internet connection.

Case in point: Erich, a member of a non-profit tackling hunger that afflicts 1 in 8 people in Southwest Virginia, recently told Chris that the area’s lack of internet access prevents his team from getting food to the people who most need it, when they need it. We’ve had similar conversations with nonprofits working in healthcare, education, community organizing, agriculture, rural development, and disaster relief.

A Connect Humanity survey of 7,500+ civil society leaders paints a clear picture of the scale of this challenge. While more than 90% of respondents said the internet is critical to their work, three in four said a lack of internet connectivity and tools limit their impact. Changing this is critical for the success of philanthropy.

There is good news for Erich and nonprofit leaders like him. The Broadband, Equity, Access and Deployment (BEAD) program has made $42B available to subsidize broadband infrastructure in communities like his. The bad news is that this ‘once-in-a-generation’ funding is likely to pass over many of the low-income, rural, historically marginalized places that most need it. 

The program comes with a huge number of rules and regs designed, understandably, to ensure taxpayer dollars go to viable projects. However, the result is a sprawling, complex program that risks shutting out the very communities it was meant to serve.

At every stage of the process, from challenging the flawed eligibility maps, to raising a 25% minimum match contribution, to attracting good internet service providers (ISP) partners, communities with fewer resources will struggle most to overcome the hurdles embedded in BEAD, putting them at the back of the line for funding. The result? The bulk of investment dollars will go to areas with lower build costs and higher-return potential, leaving gaps in the most undercapitalized communities.

With BEAD alone unable to close the digital divide, there’s an opening for philanthropy to play a critical role in getting broadband to communities most at risk of being left behind.

While few foundations can cut checks large enough to fund major infrastructure builds, many can put up the kind of risk-tolerant capital that brings other investors to the table. By participating in ‘blended capital’ stacks alongside more traditional investors, foundations can catalyze capital at sizes and rates that makes community-focused broadband networks viable in commercially challenging areas.

This blended capital approach is starting to bear fruit, funding broadband networks in places including Macon County, Alabama and in the City of Pharr, Texas, where Methodist Healthcare Ministries awarded a $1 million grant alongside other investors in a city-owned broadband network that has reached 4,000+ homes in its first year at lightning fast speeds. This, in a place that, in 2018, made the worst connected cities list.  

Using tools like guarantees, first-loss capital, program-related investments (PRI), and vanilla grants, foundations can scale the impact of their capital. At Connect Humanity, a nonprofit fund founded to champion these kinds of investments, each dollar we’ve invested has leveraged $15 more to enable our portfolio companies to extend internet access to 160,000 Americans. There remains a full pipeline of great projects that need the kind of capital philanthropy can catalyze.

Foundations with deep links with communities are well-placed to fund local digital equity efforts. Options include grants for pilot networks, digital adoption initiatives like skills training, and contributing the match dollars communities will need for BEAD applications. Again, these are catalytic. For example, the value of BEAD match funds will be instantly quadrupled by bringing in the federal subsidies. In turn, the networks that are built will drive improvements in education, health, financial inclusion, and much more. That’s high impact giving.

Methodist Health Ministries is again leading the way, recently announcing $21 million to support 20 organizations across South Texas to roll out device access, digital skills training, digital navigator programs and assisting low-income residents to access broadband subsidies. Pharr received a further $3.3 million from MHM for 2024 for its digital equity programs.

Community Development Finance Institutions (CDFIs) are vital sources of finance in undercapitalized communities and in the past have led efforts to invest in community assets like water infrastructure, affordable housing, and sustainable energy facilities. But so far, they’ve been minor players in the broadband space. That could change, especially with new rules that target Community Reinvestment Act (CRA) funds for digital infrastructure. This is the kind of values-aligned capital that communities need in lieu of extractive private equity players. By training CDFIs to invest in community broadband, foundations will catalyze long-term funding that brings underserved communities online long after BEAD runs out. In an effort to begin building CDFI capacities, Connect Humanity is designing a training program with CDFIs in Appalachia and is ready to share learnings with interested partners and foundations.

For the first time since the World Wide Web was invented thirty five years ago, closing the digital divide is possible thanks to programs like BEAD. But it won’t be enough without philanthropy engaging where government funds and capital markets fall short.

This is not the moment to ’wait-and-see’. It will be 2030 before we can see clearly where the post-BEAD gaps are. We can’t leave another generation of Americans waiting that long for what is already an essential public good.

So consider how your organization can use your capital to close the digital divide in the communities you serve. Each dollar you invest will unlock more resources to expand internet access, bring more opportunities to American families, and ensure nonprofits like Erich’s can deliver on their full potential.