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Native economies move beyond gaming

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New report tracks momentum toward small business ventures

WASHINGTON - Despite considerable economic and social obstacles,
entrepreneurial business activity on and around Indian reservations is
gaining momentum, according to a report released recently by CFED, formerly
the Corporation for Enterprise Development, and the Northwest Area
Foundation. The report, "Native Entrepreneurship: Challenges and
Opportunities for Rural Communities," looks at the current state of Native
non-gaming entrepreneurship and analyzes the support network available to
native entrepreneurs.

The full report is available at

In addition to U.S. Census and other trend data showing the number of
Native-owned small businesses growing, the report notes that among firms
earning more than $50,000 in profits, these companies outperform other
minority-owned ventures. Dun and Bradstreet data show that American Indian
businesses, while representing only 5 percent of minority firms, perform
higher than their counterparts in average sales volume and number of

At the state and reservation level, however, the picture looks different.
In many states where there are high numbers of American Indians, Native
entrepreneurs own private businesses at a much lower rate and earn less per
capita than the nonminority population.

"The good news is that more Native entrepreneurs are starting and growing
successful businesses than ever before," said CFED's Jennifer Malkin, lead
author of the report. "Unfortunately, the bad news is that many aspiring
Native entrepreneurs can't get the support they need to formalize or grow
their businesses and are forced to operate on the margins."

The report draws on currently available research data supplemented by
interviews with more than 60 Native and non-Native leaders in the field of
entrepreneurship development.

The report reveals that many Native leaders see entrepreneurship as
compatible with Native culture and as an important vehicle for expanding
tribal sovereignty. The report catalogs a number of governmental, tribal
and private efforts that help support Native business ventures, but finds
they often are underfunded, uncoordinated, and spotty in meeting the
overall needs of this group.

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"The public and private sector can and must work together to remove the
obstacles, and create the opportunities, for Native American entrepreneurs
to become a larger part of our economy," said Karl Stauber, president and
CED of the Northwest Area Foundation. "Our nation needs these economic
engines, and the Foundation is very excited to work with Native American
organizations to develop support models that will promote this growth."

Aspiring entrepreneurs - particularly those living on a reservation - are
often a great distance from their end markets and lack access to financial
and business development training and the advice of other entrepreneurs.
Just as significant are the severe lack of access to debt or equity capital
and the prevalence of predatory lending practices that inhibit the
development and growth of Native businesses. This is compounded by a lack
of control of many tribal assets due to land and natural resources held in
trust, thereby making it unavailable for loan collateral.

Despite these challenges, however, Native entrepreneurs are creating
economic opportunities where many claimed none had existed.

In order to help Native entrepreneurs flourish, the report suggests a
number of measures to improve opportunities for Native small business.
These include:

Closing the information gap about the state of Native entrepreneurship and
placing entrepreneurship on federal, state, and tribal policy agendas;

Implementing culturally-appropriate strategies in the areas of
entrepreneurship education, training and technical assistance, financing,
and networks;

Providing comprehensive entrepreneur-focused services to Native
communities; and

Building on the effective programs currently in place.