April 12, 2018; Indian Country Today

For many American Indians, accessing financial resources to support their business ventures is a struggle. In 2001, the US Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) issued a report entitled “The Report of the Native American Lending Study” (NALS), which documented American Indian communities’ extremely limited access to capital and credit. The report documented unique challenges facing these communities such as a lack of financial institutions on or near American Indian lands, lenders and investors failure to understand tribal governments and their legal systems, inflexible bank rules and regulations, and the inadmissibility of trust land as collateral. These, taken together with other challenges such as poor credit histories and discrimination against American Indians, help explain the severe capital shortfall, the CDFI Fund indicated.

In 2016, The CDFI Fund released a 15-year follow-up study. Titled Access to Capital and Credit in Native Communities, the new report found that:

Native Communities still are significantly handicapped by limited access to capital and credit, particularly in comparison to non-Native communities, and this continues to negatively affect their development prospects. In fact, given ongoing economic development, the effective demand for capital and credit may be greater now that it was in 2001. To keep moving forward, Native Communities need to gain access to much more capital and credit from current and as-yet untapped sources.

In other words, while American Indian access to credit is better in 2016 than in 2001, enormous challenges persist. A major contributor to the growth of capital and credit access that has occurred have been Native CDFIs, which have seen their assets grow fivefold since 2001, aided by the CDFI Fund’s Native American CDFI Assistance Program (NACA Program), which has provided over $93 million in capital to Native CDFIs, in addition to providing grants for training and technical assistance. Native CDFIs are distinct financial institutions that provide much needed capital for entrepreneurs, as well as consumer products and American Indian financial literacy and education efforts. Native CDFIs are critical to the ongoing development of a strong financial infrastructure on the more than 550 tribal nations that exist throughout the United States.

Many Native CDFIs have contributed greatly to the improved financial and economic health in communities they serve. One example is the Lakota Funds, a Native CDFI founded in 1986 as the first Native CDFI in the country and in part modeled on the success of peer-based lending in Bangladesh. When it was founded, 85 percent of Lakota Funds’ clients had never had a checking or savings account, 75 percent never had a loan, and 95 percent had no business experience. Today, Lakota Funds works with American Indians throughout the Pine Ridge Reservation, providing lending and training for arts entrepreneurs, wealth building training and services, youth financial development, operating a credit union, and providing business lending and coaching. An increasing area of focus for Lakota Funds is agricultural lending, as it is the only Native CDFI that is also a Farm Service Agency (FSA) guaranteed lender. It is critical that native agricultural entrepreneurs not only have access to financial capital and training support, but also are able to grow their businesses to address the immediate needs for food access within their communities, which is a major issue.

From a food access perspective, the emphasis of Lakota Funds and other CDFIs in Indian Country on agricultural lending is significant. According to the US Census of Agriculture’s 2012 census for American Indian Reservations, there is a gap between the number of farms located on reservation lands and the number of farms on reservation lands owned by American Indian entrepreneurs. This not only means that farm lands are being used by outside owners to profit on native owned lands, but also means that food grown on American Indian lands leaves for outside markets. For many American Indian communities, the implications of having their agricultural land used by outside owners translates into an economic drain on their communities, as well as a lack of access to food. In fact, according to a recent article in the Journal of Hunger and Environmental Nutrition exploring food insecurity among American Indian communities, American Indians are twice as likely as whites to lack access to safe and food, which leads to high incidences of chronic diseases.

Despite this, many American Indian communities are reclaiming their food sovereignty. The W.K. Kellogg Foundation explores this through their report on Intertribal Food Systems, which is part of their Indigenous Food and Agricultural Initiative. This publication details many tribal food sovereignty efforts and how they positively impact the culture, food security, and economic development on tribal lands, with a focus on collaboration.

Together with a resurgence in interest in tribal food systems and traditional foods, Native CDFIs are paving the way for increased financial security on native lands through access to critical capital and credit for American Indian farmers. Support for Native CDFIs and their distinctive role in native communities is growing. Organizations such as First Nations Oweesta Corporation and Florida-based Native Learning Center provide trainings on establishing Native CDFIs, and foundations such as the Northwest Area Foundation increasingly are supporting Native CDFIs in their efforts. Connecting increased access to financial resources with tribal food systems represent a promising pathway for renewed economic development that emphasizes tribal sovereignty, and at the same time illustrates the transformational power that community-based nonprofits and collaboration play in revitalizing communities.—Derrick Rhayn