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Theory of Change

Formed in 1988, Southern's initial theory of change was based on a model that focused on accessibility of credit to stimulate entrepreneurship, develop local economies, and spur regional economic development. Southern's initial service area covered most of Arkansas, an enormous area for development with only limited resources. Southern's theory of change at the time did not include the wider elements shared by vibrant communities – education, health care, housing, and local leadership.

After an honest assessment of its impact to date, the Southern's board reconsidered its theory of change in the late 1990s and developed a new strategy, incorporating the lessons learned from its initial efforts. The new strategy focused on working intensively in a defined and limited geographic region and addressing the complex and integrated set of problems that constrained rural communities from developing.

In its new strategy, Southern determined that effective community development must be locally initiated, planned, and implemented. On the basis of its experience and other research, Southern also determined that development processes inserted into a community by outside organizations generally fail because of a lack of sustained community support. As such, community development is fundamentally a local institution-building process, requiring the emergence of community organizations, processes, and structures.

Since development occurs at a community level, Southern concentrates its efforts in communities where it has a banking presence and is thereby already interwoven into the local community fabric. Southern believes that a hub community's influence can extend out in a fifty-mile radius, thereby serving as an economic engine for other communities in the radius, creating a cluster of growth. As the clusters of growth begin to overlap and to reinforce each other, regional change occurs.

Southern uses its community banks as catalysts for local development activities. As long-term and essential financial participants in a community, Southern's community banks are able to provide significant degrees of institutional influence in local financial, business, and political environments. Southern's banks operate with a local board of directors, local management, and local employees who hold positions of community leadership. Southern's banking staff and directors, consequently, are able to influence both public and private policy initiatives and to provide local support for Southern's community development initiatives. Southern also is able to access the community leadership base of professional, civic, and governmental institutions that traditional nonprofit organizations are unable to reach and to organize all of the above in a manner that promotes action and creates core institutional change.

To effect local community development, Southern works with community organizations to

• Develop a long-term and comprehensive community development plan.

• Increase the capacity of local community organizations to enable sustained community development work. In order to increase local organizational capacity, Southern personnel have daily involvement with community leadership and assist local leadership in developing and executing a vision that produces real community change. Southern provides financial support for local organizational development.

• Work on a daily basis with community organizations to ensure that development initiatives progress according to a defined timeline.

• Provide the full range of Southern's development programs, including development banking, nontraditional lending, business assistance, technical assistance to local groups, housing, individual development account programs, bank-the- unbanked initiatives, financial skills training, and workforce development.

Southern recognizes that a significant amount of time is required to achieve results. Given its long-term banking presence in local communities and the complexity of the challenge, Southern views its development efforts as twenty-year commitments, allowing the possibility for change to come at generational intervals.

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