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
"Having the Oneida support us is a major step," Ms. Hunter told
SocialFunds.com. "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 SocialFunds.com. "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
"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
"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.
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.