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October 25, 2005
Community Development Financial Institutions Spread Like Wild Grass in Indian Country
    by William Baue

First Nations Oweesta Corporation serves as a national umbrella organization providing the structural framework and organizational support to fuel current exponential Native CDFI growth.

Community development financial institutions (CDFIs), which target populations left unserved by traditional financial institutions, are perhaps most vitally needed in Indian Country, where control of access to capital by federal and tribal governments hamstrings the private economy. The first Native CDFIs, such as the Lakota Fund on the Pine Ridge Reservation in South Dakota, were launched two decades ago. Ten years later, however, only two of the 115 CDFIs federally certified by the CDFI Fund were Native organizations.

This slow development has exploded into exponential growth since then, so that now 36 of the 747 federally certified CDFIs are Native. And if last week's annual conference of the National Community Capital Association (NCCA--a network of more than 170 CDFIs) is any indication, continued growth is on the horizon.

"The field of Native CDFIs has grown tremendously and is continuing to grow--we had more than 20 different tribes represented at the NCCA conference that are somewhere in the process of starting CDFIs," said Elsie Meeks, executive director of the First Nations Oweesta Corporation. Oweesta is the only certified national Native CDFI intermediary, which acts as an umbrella organization for Native CDFIs. "What's driving this growth is the knowledge tribes are gaining about creating vehicles that can help them gain self-sufficiency for their tribal members and for the tribe."

Native CDFIs at the conference include Four Directions Development Corporation of Orono, Maine; Council for Native Hawaiian Advancement of Honolulu; Navajo Partnership for Housing of Gallup, New Mexico; and Lummi Development Authority of Bellingham, Washington.

"For so long we've had to rely on the federal government in hopes that they fulfill their promises," Ms. Meeks told "We're finally taking these things into our own hands and using tools that non-Native communities have used for a long time."

"I see CDFIs as a way to make structural changes in how Native communities can advance their own interests," added Ms. Meeks. "The next question is, how?"

That is a project Ms. Meeks has been working on since 1986, when she helped start the Lakota Fund with the mission of establishing a private sector economy on Pine Ridge, which had never been done before in Indian Country according to Ms. Meeks. As with many other tribes, lack of community-owned businesses sapped the government money funneling onto the reservation right back out into the border towns, perpetuating cycles of poverty and disenfranchisement. Native-owned businesses could reverse these cycles, placing ownership and control back in the reservation communities, and CDFIs could provide the capital and technical assistance necessary to support the startup of such locally grown business.

"For many people, this is their first credit opportunity, so when you start operating a CDFI in the community, it's about behavioral change--teaching people financial education and how to operate a successful business, which is hard under any circumstances," said Ms. Meeks. "Operationally, it's tough work because the everyday crises prevent you from moving forward in a bigger way--Native CDFIs have learned a lot of lessons about how not to make mistakes."

"The progress I see at Pine Ridge in the Lakota Fund and what we've learned, honestly, has taken about 20 years to figure out--we've only just recently started taking a more systematic and structural approach," she added. "I don't know that we really got it as an overall system until the last year or two."

Ms. Meeks remains chair of the Lakota Fund, but she now focuses her attention primarily on Oweesta, which promotes Native-owned asset building through three program areas: technical assistance and consulting; capitalization; and research, policy, and advocacy. Capitalization is perhaps the most challenging aspect for Native CDFIs, even for tribes with significant casino revenues.

"Just because a tribe has gaming operations doesn't mean their CDFIs are more capitalized than tribes without gaming" explained Ms. Meeks. "We've been trying to get tribes with substantial gaming revenues to recognize that CDFIs are a great way to invest back into their communities, but CDFIs are new enough that they're not even on their radar screens--these tribes are busy trying to provide healthcare and so many other things that have been at a deficit for so long."

Meanwhile, federal funds are diminishing, and foundations are experiencing "funder fatigue," so Native CDFIs are increasingly looking for other capital sources--including socially responsible investing (SRI).

"SRI support is absolutely key," said Ms. Meeks. "The whole CDFI movement really started with the premise that there are people with money that want to get a return by investing it in helping develop communities."

"I don't think we've tapped these sources to the degree we hoped," she concluded. "There's much more out there, we just have to figure out how to bring it in."


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