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July 20, 2005
Oneida Nation Loan to Lakota Fund Marks First Intertribal Community Development Financing
    by William Baue

While the World Bank Global Fund for Indigenous Peoples covers only developing nations and socially responsible investors have yet to support the Lakota Fund, a fellow tribe fills gap.

After the Lakota Fund hosted James Wolfensohn in early April for a tour of the community it serves, South Dakota's Pine Ridge Indian Reservation, the outgoing World Bank president left tangible support behind.

"He was totally amazed that conditions such as this exist in the United States--we're the third poorest county in the nation, with about a 70 percent unemployment rate and an average per capita annual income is $3,700, which sound like 'Third World' statistics," said Karlene Hunter, executive director of the Lakota Fund, a community development financial institution (CDFI). "He made a personal investment in the Lakota Fund, and he is looking at helping us to tap into new funding arenas."

With the help of Rebecca Adamson, founding president of First Nations Development Institute (which helped launch the Lakota Fund in 1986), Mr. Wolfensohn established the World Bank's Global Fund for Indigenous Peoples in 2003. Currently this fund provides financial assistance to indigenous peoples only in developing nations, thus barring US-based tribes from benefiting from this fund for the time being.

However, US tribes are starting to band together to help each other financially. The Lakota Fund recently received a loan from the Oneida Nation of Wisconsin, the first such instance of intertribal lending.

"Having the Oneida support us is a major step," Ms. Hunter told "Their investment really breaks the ice of tribe-to-tribe financing."

Susan White, director of the Oneida Trust Department that originated the loan, agrees that the move sets an important precedent.

"The loan is a significant step for Indian Country and the native CDFIs," Ms White told "The loan is an agreement between two native nations to help each other be self determined."

The roots of the initiative date back four years, to when the Lakota Fund recognized the need for restructuring and identifying other funding sources. Until then most of the Lakota Fund's capital came from traditional sources such as the CDFI Fund, created by Congress in 1994 to expand the availability of credit, investment capital, and financial services to underserved urban and rural communities.

"We decided to diversify our fundraising efforts by looking at some intertribal relationships--especially some of the Native American tribes that have been positively impacted by economic growth, such as the Oneida Tribe," explained Ms. Hunter. "We've also approached the Mdewakanton Tribe in Minnesota and the Pequots in Connecticut."

One common denominator amongst these three tribes is successful casino operations.

"But it's a new way of thinking for everyone," she added. "Usually, when tribes approach each other, it's grant-related, but with this we're saying, 'make an investment in us that will reap returns to you.'"

In March of 2005, the Oneida Trust Committee decided to take just such a step by approving a $25,000 loan to the Lakota Fund at a three percent rate of return for three years. The loan will help the Lakota Fund to continue its transformation process. For example, the Fund recently created the Wawokiye Business Institute after recognizing the need to augment loans with hands-on technical assistance the help borrowers solve business problems that could impact their ability to repay their loans.

"We have coaches that go directly into businesses to help them with their specific needs, and if they can't identify solutions, we bring in experts from the outside arena to help with strategies such as e-commerce or accessing international markets," said Ms. Hunter.

Of course, the Oneida loan also provides capital to finance lending to local businesses.

"We're currently working with an entrepreneur who's trying to start the first grocery store in our community--right now I travel 87 miles to get my groceries," said Ms. Hunter, identifying a problem that has plagued the reservation for years. "When a dollar hits here, within 72 hours it's gone."

"From the beginning, we've understood that the only way we are going to reverse our condition is if we have the capacity to turn a dollar over more than once" by keeping it in native-owned community businesses instead of those ringing the reservation, she continued.

When the Lakota Fund launched 18 years ago by providing microloans of up to $1,000 to mom-and-pop operations, Pine Ridge had fewer than 40 small businesses, most of which were owned by non-Indians. The reservation is now home to over 200 businesses owned by Lakota people, 168 of which are financed by the Lakota Fund, which can now make loans up to $200,000.

The Lakota Fund is looking beyond its fellow tribal communities to help it continue its expanding reach.

"Currently, we don't have any investments from the socially responsible investment community--but we'd welcome 'em!" Ms. Hunter proclaimed.


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