How Connect Humanity is Experimenting with Financing Approaches Across Entire Ecosystems
Across the U.S., communities remain locked out of reliable, affordable internet—not because solutions don’t exist, but because the systems designed to finance and deliver digital connectivity and skills often fall short. Connect Humanity presents a different model—one that prioritizes community empowerment and long-term economic growth. That approach is having a deep impact and garnering recognition, most recently by the U.S. Treasury’s CDFI Fund which awarded Connect Humanity a technical assistance grant that will put the organization on track to become the nation’s first Community Development Financial Institution (CDFI) dedicated to the digital needs of rural and low income Americans.
We sat down with Erica Mesker, Samantha Schartman, and Brian Vo of Connect Humanity to learn more about how community-focused internet service providers function; the importance of the U.S. Treasury’s grant to help Connect Humanity become certified as a CDFI; how Connect Humanity’s model has shifted in response to the current funding environment; what the organization is learning about the ripple effect of internet connectivity; the enormous economic growth unleashed by affordable and reliable internet; the role of philanthropy in catalyzing change and piloting new initiatives; and the urgency of finding alternative and sustainable funding sources that spread the costs across an ecosystem of beneficiaries.
Connect Humanity invests in community-focused internet service providers (ISPs). How does this strategy help you to meet your mission?
Erica Mesker, Chief Development and Operating Officer: At Connect Humanity, our mission is to finance the internet access and adoption programs that communities need to expand opportunity and improve lives. Historically, we’ve done that through traditional grants and impact investing into community-focused ISPs as well as providing grants to communities and providing technical assistance to develop plans and programs to close the digital divide. Now, especially with our CDFI Technical Assistance award, we are exploring what other tools in the toolbox can be leveraged, particularly within community development finance.
What are community-focused ISPs and why are they important?
Brian Vo, Chief Investment Officer: Let’s first think about internet providers in general. Internet providers build and provide internet service to a community. Community-focused ISPs incorporate deep community engagement into how that network is designed, how it’s priced, and how it’s operated. Community-focused ISPs make sure that internet is not just something that is done onto or for a community; it’s really done with the community. Community-focused ISPs prioritize service, quality, and affordability, as opposed to value extraction.
They can take a lot of different forms: co-ops, nonprofits, and others. But it’s less about the legal entity, and it’s more about the intent. Is there primarily a profit motive, or do they demonstrate accountability to community interests? A lot of that is then driven by how the ISP is owned and how it’s financed. Private investors tend to view the asset as more of a cash cow rather than seeing the ISP as a vehicle for helping the community get online while still making a reasonable profit.
What does it take to finance community-focused ISPs? How is that process different from ISPs that do not have a community focus? How much financing is necessary?
BV: Many of the community-centric ISPs that we work with fall into the ‘missing middle of financing.’ Their capital needs are too big for grants, but they’re too small for larger private investors, like infrastructure or private equity. They often ask banks for loans before they come to us. But banks typically don’t know how to underwrite the technical part of broadband. As a result, many community-centric ISPs are left in the lurch; they can’t compete because they can’t access capital.
Compared to other infrastructure projects, broadband doesn’t require that much funding. Our smallest investment was $140,000 to wire three rural counties in Northern California that had experienced wildfire damage. At the other end of the spectrum are projects that cost $15 million or $20 million. The average need in our pipeline is $3 million to $5 million.
These are fairly small investments relative to the impact of these projects. For example, we did one investment in Macon County, Alabama. The network cost $3.9 million but created around $200 million of economic development investment in Macon County. You can only achieve that type of multiplier effect through digital infrastructure.
To do that work, you pursue partnerships, typically serving as an intermediary between ISPs and communities. What do you look for in partners?
Samantha Schartman, Director of Philanthropic Programs: No matter the model, our north star is always the community. Before we talk infrastructure or funding structures, we ask, ‘What does this community actually need? Who’s been left out of past decisions?’ We bring those answers into every room we enter and we make sure they stay front and center, whether we’re negotiating with an ISP, structuring a grant, or drafting a long-term plan. We often say in our field that partnerships move at the speed of trust—and trust is built by listening.
BV: For us, the main questions are: How do we get community voice elevated? How can we help community members identify the type of internet they want? How can we determine the support needed so that the internet is meaningfully adopted and used? And how can we create power for the community in these conversations?
That process begins with how we pick partners and continues in how we underwrite and conduct due diligence for investments. We see some ISPs say, ‘I don’t think it’s a good use of my time to do town halls,’ as if that’s the only way to engage a community. Others will say, ‘I’ve worked with this library to build the network to make sure the school right next to it is served. I’m working with the library to do this digital literacy program. I’m writing it into my operating expenses to support it, because that helps my business.’ That’s the kind of mentality that we’re looking for. Further along, we write those community engagement processes into our loan agreements themselves, so that they have teeth.
EM: Something that I hear a lot of folks say in our work is that there is nothing for us without us. We don’t intend to ever be the organization that says, ‘This is what you must do.’ We always intend to be a facilitator, a connector, a translator, to make sure that people who are going to live with the results of a program and a decision have their voice represented at the table.
There are also some instances where we might take a more active role in magnifying community voices and building power and coalitions. For example, we’re doing some work in a very small town in rural New Mexico. The community lacks reliable and affordable connectivity; across all of our on-the-ground surveys and interviews, people say that connectivity and access is a problem. Yet there’s no community organization to take up the mantle to advocate for community needs. In that case, we have become the driver on behalf of the community. We engage the community, especially small business owners, in developing plans and we present at community and county council meetings. We’re more involved day-to-day than we are typically. It’s an example of how bespoke our programming can be based on community engagement and needs.
In addition to these partnerships, you’ve created an Alternative Funding Working Group and are developing a guide for alternative financing models that capture the value of connectivity to different community actors and then look for reinvestment from those actors. Tell us more about the Alternative Funding Working Group and the guide you are developing.
SS: The core idea is to shift the mindset of who benefits from digital inclusion investments, and who has a responsibility to help sustain them. Here is a concrete example. Rural residents often lack access to primary and preventive care, sometimes living hours from the nearest clinic. When connectivity is absent, telehealth is not an option, public health suffers, and people end up in emergency rooms for conditions that could have been managed earlier and at far lower cost. Investing in connectivity and digital skills changes that equation.
But the benefits extend well beyond the patient. The hospital that avoids a preventable emergency room visit saves real money. The insurer that sees better chronic disease management saves real money. Yet neither the hospital nor the insurer typically reinvests in the community technology programs that made those outcomes possible. The Alternative Funding Working Group exists to change that, by developing practical models for how the sectors that benefit from digitally skilled communities can become co-investors in sustaining the programs that create that value. We now have over 120 community technology professionals contributing to this work across six sectors covering healthcare, housing, workforce development, education, telecommunications, and local government.
Why is it so important to develop alternative financing models now?
SS: Twenty years in this field teaches you to recognize the pattern. When the Broadband Technology Opportunities Program (BTOP) ended, it did not create a slow decline. It created a cliff, with massive layoffs and programs shuttered almost overnight. That program had essentially built and professionalized the modern digital inclusion field, and when federal funding disappeared, there was nothing underneath it. We are living through the same moment again with the cancellation of the Digital Equity Act funding. The cliff looks familiar today because it is the same cliff.
What that history makes clear is that a field built entirely on federal funding cycles will always be one budget decision away from collapse. It seems pretty clear that we needed an alternative approach to funding, since government funding for this work is so unstable.
What has the Alternative Funding Working Group found so far?
EM: The Alternative Funding Working Group is producing a guide to help digital inclusion practitioners think through how to build the kinds of partnerships Sam described. Each chapter focuses on a specific sector and asks a series of questions: Have we seen alternative funding models and partnerships emerge and work? Or have we not? If they exist, what do they look like? What other funding tools and partnerships can we bring to the digital access sector?
BV: For example, there was a hospital in Maryland that was spending a lot on high care utilization patients. A nurse in the chronic care management team asked, ‘What if we got these patients on remote patient monitoring? What could happen?’ So they started a pilot with her delivering telehealth services to just three high care patients. Within six months her work had reduced Emergency Department visits for these patients by 55%.
From there, the hospital scaled the program to seven full-time nurses serving a bigger population. Within two years they had reduced readmissions by 81% and delivered over $5 million in cost savings to the health system. Not only did these savings pay for the program, but also covered the costs of devices for patients so they could use patient portals.
That’s one example, but it hits on a common theme that we often see. In communities across the country, providers are often searching for the next grant flywheel when there’s this institution—a hospital, in this example—that sees demonstrative cost savings or revenue uplift. We’re trying to merge those two worlds. We urge nonprofits to speak a different language and private institutions to open their aperture on where they’re actually deriving economic value.
What is the role of philanthropy in the alternative funding models that you are developing?
EM: I believe the role of philanthropy is to catalyze good in the world and bring others along with it. We can’t do our work without philanthropy’s voice. A handful of the people involved in our Alternative Funding Group are philanthropic funders; most are nonprofits. But we’d like to bring more funders into the conversation.
But at the same time, even if philanthropy puts all of their money into social services—including digital skills and access—that alone will not cover the gap left by the loss of federal funding. We need to start looking beyond philanthropy to other sources that can help fill the pool of capital to make sure that these programs continue.
Philanthropy plays a catalytic role in that, testing alternative financing models and innovative partnerships. In fact, we’re in the early stages of developing a revolving pooled fund that will deploy grants, recoverable grants, low-cost capital, and technical assistance to digital inclusion programs and community broadband builds.
This pooled structure lowers the barrier for funders to get involved. Contributions are de-risked, and side letters will allow funders to direct their dollars to specific geographies. The returns generated will revolve back so the same dollars can be deployed again and again—proving models, building evidence, and keeping capital circulating into essential programs.
SS: In addition to that catalytic function, philanthropy plays an important role in conducting research, translation, and developing the digital inclusion field. For example, health systems talk about their meaningful metrics of success. Yet they don’t understand how workforce programs or housing authorities understand success. Philanthropy can help with that translation, matching the outputs and measurements that we’ve developed in the digital equity space to the metrics of success and value creation across other sectors. That’s quite an undertaking.
We also need philanthropy to help us co-design solutions along with nonprofits, the public sector, and the private sector. If we do that, we will strengthen communities, we will broaden the tent.
How do you think about impact at Connect Humanity? How do you plan to think about and measure impact across the new alternative funding models that you are developing and testing?
EM: When Connect Humanity first started, we measured very traditional things. How many households were connected? How much investment funds did we contribute? How many programs did we launch? How many training sessions did we hold? How many plans did we work with communities to produce?
Then we had an “ah-ha” moment when we were working on the Macon County, Alabama, project that Brian described earlier. We invested $500,000 into a capital stack. That led to 5,500 households and businesses gaining access to a high-speed fiber connection. Prior to closing that deal, we learned that fiber was an absolute must-have for an auto parts manufacturing company considering building a factory in Macon County. They were about to pull the plug on the factory due to lack of fiber. The day after we closed our investment, Joe Turnham who leads the county’s Economic Development Authority called up the company, and the auto parts manufacturer signed the deal because they had evidence that fiber would be available to their building and to the whole community.
In that case, we went from thinking about very basic, direct beneficiaries to thinking about larger ripple effects. We dropped the pebble into the pond with our initial investment. It led to $3.4 million in co-investments for the new network. That secured the auto parts manufacturer, which invested $128 million into the community for its build. That led to 172 high-paying jobs with a further 1,800 expected at a growing logistics hub. The Economic Development Authority estimates that this activity will generate an additional $34 million annually in economic activity.
We try to understand the ripple effects of each engagement, quantify those as best as we can, and then tag them as primary, secondary, and tertiary ripple effects. This kind of measurement and tracking allows us to build the mechanisms to recapture the value created and translate between sectors. So far, we’ve identified $421 million in ripple effects across our programs and investments.
SS: Plus, maybe the auto parts manufacturer and logistics hub could contribute funds back into the system to ensure there is a digitally skilled and ready workforce, for example.
BV: It’s important to emphasize that this isn’t asking for a handout. Rather, it’s revenue sharing. You’re gaining economic value. This investment will power this plant and the improvements you need to put on it for decades to come. Plus, your workforce is digitally skilled now. Our argument is that businesses and other beneficiaries of the investment need to invest in local digital skills and fiber infrastructure because they are going to continue reaping the returns on that investment.
It’s a complete mindset shift for the nonprofits who are taking the money and doing the digital skills training. They are used to trying to find grants to subsidize their work. Now they’re recognizing that they are creating value and are asking to be paid for the value they’re creating.
EM: I like to say we are working on solving the ‘tragedy of the philanthropic commons.’ Philanthropy and federal funding pay for programs where many, many sectors benefit but don’t ever have to pay back in to replenish the source of that benefit. This keeps going until the source is depleted or absent, and everyone loses. We want to change that. And I think we can, especially if we use all the tools in the toolbox and think innovatively.
What are the challenges in this work? What keeps you up at night?
EM: So many things! I value using AI, but I worry about the rise of unfettered AI, along with the rise of authoritarianism, along with the decline of privacy and social services. I worry about the lack of community ownership and voice and power. That’s why philanthropy needs to be at the table. Money equals power and funding can be used to bring so much more power to what is foundational for the future of all of us. We need to be able to communicate and live and have healthcare and jobs.
BV: There is a very big cost to fully outsourcing broadband to the private sector. The only way for community ownership and community governance is community capital. Broadband investment is uniquely positioned to deliver that impact. It’s the only type of investment where I’ve seen community members shedding tears of happiness. People hug and cry at the groundbreaking for broadband projects.
The scale of the connectivity challenge is huge. But when you look at communities, you see what’s at stake. People connecting with their primary care provider without driving for hours. Reliable access to 911. Kids able to do their homework. Students who didn’t know they were eligible applying for student aid. The sheer tenacity of the communities that we work with is so inspiring. They know this is as important as water and electricity. And they never give up. Their perseverance gives me hope. And gives us a deep sense of responsibility to get this right.
