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Investing in Ourselves: Native CDFIs

The community development financial institution (CDFI) industry has been
around long enough to generate economic change for unserved and
under-served financial markets from the inner cities to rural farmlands.
These financial organizations have helped create homeowners, entrepreneurs,
family savings and community facilities that are the pride of local
populations. At the same time, the socially responsible investment movement
of the last 40 years, pioneered by innovators like the Interfaith Center on
Corporate Responsibility, the Calvert Group, Trillium Asset Management, KLD
Research and Analytics, the Social Investment Forum, and many religious
groups have given wealth creation a much stronger ethical, cultural and
environmental focus. Calvert and Trillium both invest in CDFIs. Asset
ownership has taken a step in a more diversified and thoughtful direction.
All of this has helped investors, both individually and as groups, make the
choice to invest in corporations and organizations that protect the
environment, protect the rights of indigenous peoples around the world and
hold our publicly traded corporations to a higher standard - all while
earning a return on their investments.

This goal of investing with a socially responsible emphasis has now begun
to take a stronger hold with tribes. Through the work of Native advocates,
including social investment and philanthropy leaders like Rebecca Adamson
and Sherry Salway-Black of First Nations Development Institute (FNDI) and
progressive tribes like the Oneida Nation of Wisconsin, socially
responsible investing has become a more common conversation in tribal
council chambers around the country. And the word is getting out in Native
media. A recent example is the February 2004 American Indian Report
article, "Taking Stock of the Market: Tribes Look for Native-Friendly
Investments," by Michelle Tirado. The latest in a series of articles about
this subject, it is clear from this piece that wealthier tribes are
spending more time thinking about where their hard-earned dollars are going
and who is really benefiting. Now is the time for tribes to take a step
further in this investment decision process - a step that is truly

The Native community development financial institution movement is steadily
growing in awareness throughout Native communities. With continued
assistance and encouragement, these organizations can help create assets
such as private businesses and homes, help acquire (reacquire) assets such
as land, and support development in Native communities. Native CDFIs
certified by the U.S. Treasury's CDFI Fund have been developed in roughly
25 different locations, serving local communities, reservations, urban
areas, regional populations and larger national markets. As defined by the
CDFI Fund, the majority of these organizations are business loan funds, but
there are also housing loan funds, housing facility loan funds,
micro-enterprise loan funds, banks, credit unions and one Native CDFI
intermediary, First Nations Oweesta Corporation. But they all have one
thing in common - they must be a financing entity with a community
development mission. And, like the mainstream CDFI movement, these Native
CDFIs are improving economic and social conditions in places where
inadequate or nonexistent financial services and training are the norm.

One great example of the power locally managed financial institutions have
in Native communities is the Lakota Fund on the Pine Ridge Reservation in
South Dakota. During its history, the Lakota Fund, a certified Native
lending institution focusing primarily on business, has provided
approximately 500 loans valued at nearly $2,000,000; provided training to
more than 250 entrepreneurs; and provided marketing services to more than
1,500 arts and crafts micro-entrepreneurs. Moreover, the Lakota Fund has
developed 30 units of low income housing, created a nationally known arts
gallery, and continued to maintain an active Tribal Business Information
Center, when many of these types of institutions have not survived. All of
this created by one Native institution, located in one of the poorest
reservations in the country. Just imagine the impact the existing 25-plus
Native institutions can have in their communities over the next 10 years.
Now imagine the impact if there were 60-plus of these Native lending

As the only national Native CDFI specifically created to develop other
local, regional and national Native CDFIs, Oweesta is one of the
organizations directly involved in the coming wave of Native CDFI startups.
These Native-based institutions will be raising capital, starting their
training and applying for certification through the CDFI Fund. At this
time, new Native CDFIs number close to 60, and there is a groundswell that
continues to grow through ongoing conferences, training and technical
assistance. But, growth takes time, patience and, of course, money.

Thus far, most of the Native CDFIs have received investments (both grants
and loans) from the usual combination of federal programs, foundations and
private investments from individuals, charities, banks and other support
organizations. Oweesta (originally as part of FNDI and presently as a
separate institution) has been investing in a variety of Native financial
institutions since 1987 including banks, credit unions, credit associations
and revolving loan funds. We also provide grant investments through FNDI's
Native financial institution grant program. This model of investing has
been a success for us, but our grant and lending investment resources are
tiny compared to the demand for capital. From personal experience
establishing our own reservation-based Native CDFIs and the tribes and
Native groups we work with on a daily basis, we know the hunt for funding
is always a burden. Early in the life of a Native CDFI you are continuously
seeking new sources in order to provide the invaluable training, technical
assistance and lending services for Native businesses, homeownership and
community development.

This is where the Native CDFI investment model can make a difference -
Investing in ourselves.

We are proposing a model that encourages tribes, Native organizations and
Native people to invest (reinvest) in their own communities and other
communities through Native financial institutions. This model allows Native
investment dollars to earn both a financial return and a social return. In
this way Native dollars begin to help Native communities in a direct
manner. Tribes, Native groups and individuals could select a small
reservation-based loan fund, credit union or bank as a recipient. Or
dollars could be invested regionally or nationally to help grow the Native
CDFI movement and broaden Native economic development. These funds could be
leveraged for matching dollars (loans and grants) from the CDFI Fund,
foundations and private investors, thereby doubling or tripling the impact
their assistance brings to those particular Native CDFIs and the
communities they serve.

Our Native investment model will help open the door for the development of
Native assets through investments and donations to a secure and reliable
organizational structure - a structure that has a community's overall
economic welfare as its mission. There are already a few tribes, tribal
banks and Native groups that have made the decision to directly support the
development of a local Native CDFI to stimulate private businesses and/or
home ownership and we hope to see these numbers grow significantly - and we
will help to make that happen. Following this model, Native investments
will have much more than a financial return since those dollars help start
Native owned business, improve housing and create economic momentum for
Native communities through the Native CDFI movement. With the Native CDFI
investment model, you know the good your dollars are doing - through a
model that exists in Native communities through Native organizations. This
is the ultimate in socially responsible investing.

We encourage you to talk to your tribal leaders. We welcome questions on
the process of starting your own local CDFI and/or those Native CDFIs
already doing such important work in Native communities. This is not an
economic or investment cure-all, but clearly much could be done through
this mechanism to stimulate economic growth and put Native dollars to work
in Native communities. We can be reached at, or (605) 455-1700.