Learn How Native CDFIs Are Great Investment Partners

Grow economic opportunity in Native communities through secure investments with long-term impact.

“I’ve seen it happen, and when it does, it’s really amazing.”

— Mike Wilson, President and CEO,

Federal Home Loan Bank of Des Moines

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NATIVE CDFIs ARE A WIN-WIN INVESTMENT

Native CDFIs are proven and promising partners for financial institutions and other investors to make a positive difference in Indian Country successfully and sustainably. Banks, credit unions, and other financial institutions wanting to make meaningful community investments can turn to Native CDFIs as a safe, secure way to respond to community needs.

They’re engines of change that expand economic opportunity in Native communities, opening doors to loans, credit, jobs, and much more.

“The thing about this model is that it’s sustainable. As entrepreneurs gain business knowledge, and as their businesses grow, they can seek funding from more traditional sources. To me, that is a compelling strategy.”

— Connie Smith, Program Manager, Wells Fargo Diverse Community Capital Program

#1: Native CDFIs help you reach new potential customers.

In many cases, Native CDFIs are the first encounter Native families and individuals have with a financial institution. Native CDFIs help families reach financial stability through education, credit building, and savings. Because Native CDFIs serve a large unbanked population, staff will frequently refer program participants to a nearby bank or credit union to open their first account and deposit money as part of a savings plan.

Many of these new potential customers are the first in their generation to break a cycle of poverty and move toward building a life of economic prosperity.

#2: Native CDFIs have strong net asset ratios, along with extraordinarily low historical write-off and delinquency rates.

Native CDFIs have default rates that are lower than the average financial institution [1] because they’re anchored in the Native communities they serve. They build lasting relationships with lenders and provide extended services, such as financial education and training, in conjunction with their lending activities.

That edge in their business model is a major piece of the Native CDFI success story.

#3: Your investment can help Native CDFIs respond to huge, unmet capital demands in Indian Country.

A 2012 Oweesta-sponsored Access to Capital study of certified Native CDFIs revealed that as Native economies grow, Native CDFIs are being asked to respond to higher needs for capital. [2] A survey led by the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis showed the additional amount to meet Native CDFI financing needs in 2017 was $48 million. [3]

#4: Federal government programs and agencies are available to help ensure partnerships are successful.

A number of economic and community development programs can provide equity, loans, loan security, and other credit enhancements to help reduce any lending risk and provide worthwhile support.

Treasury supports partnerships
with community financial institutions
The U.S. Department of the Treasury’s CDFI Fund (CDFI Fund) created its Native Initiatives program to bolster economic self-determination in Native communities through a variety of opportunities that foster Native CDFI/community financial institution partnerships. [4] In many cases, if you work at community bank and a Native CDFI is in your bank’s assessment area, your bank establishment could leverage public funds to support technical assistance, trainings, and more.

HUD can guarantee home loan portfolios
Interested in growing your financial institution’s home loan portfolio? Section 184 Indian Home Loan Guarantee Program (HUD) provides a 100% loan guarantee to assure your financial institution’s investment held in Indian Country trust lands will be repaid in full in the event of foreclosure. [5]

FDIC backs up small dollar deposits
Your financial institution can also choose to make a small dollar deposit (under $250,000) to a Native CDFI with insurance from the Federal Deposit Insurance Corporation. [6] Credit unions participating in the Certificate of Deposit Account Registry Service can be insured if making a deposit over $250,000. [7]

“I’ve seen it done. When they [financial institutions] take that leap and partner with tribes, marvelous things happen. . . . Building that business relationship and then really constructing a whole community.”

— Patrice Kunesh (Standing Rock Lakota), Assistant Vice President and Co-director, Center for Indian Country Development, Federal Reserve Bank of Minneapolis
Photo by Richard Marshall

“One of the beautiful things about CDFIs—Native CDFIs in general—is we have to provide education and training in conjunction with our lending activities. So when you pair those two things together, we are seeing great success. We’re changing the economic landscapes of our communities and providing opportunity which normally hasn’t been provided.”

— Chrystel Cornelius (Ojibwe; Oneida), Executive Director, First Nations Oweesta Corporation
Photo by Richard Marshall

“[We] invest in an individual to begin to build their capacity and their family wealth and assets. . . . That’s one of the reasons Native CDFIs are climbing off the [growth] charts.”

— Tanya Fiddler (Cheyenne River Sioux), Executive Director, Native CDFI Network

“We feel strongly about working with Native CDFIs. . . . They can tailor their advice and training in a way that is culturally specific. That’s one reason [they’re] so effective.”

— Connie Smith, Program Manager, Wells Fargo Diverse Community Capital Program

HERE ARE SOME EFFECTIVE WAYS FINANCIAL INSTITUTIONS ARE PARTNERING WITH NATIVE CDFIs

Partnering and investing in one or more Native CDFIs can come in all shapes and sizes. Some basic ways include:

Providing technical assistance.

Many financial institutions often provide IT support/technical assistance to their bank or credit union network. In many cases, that support can be extended to Native CDFIs.

Offering up capital through a small dollar deposit or a larger loan.

Financial institutions have a wide range of options when considering making a capital investment in Native CDFIs. They can make small—but impactful—deposits in Native CDFIs, or they can make larger investments through First Nations Oweesta Corporation, the only Native CDFI intermediary lender.

Matching government dollars to build Native CDFI lending capacity.

The CDFI Fund’s Native American CDFI Assistance Program awards loans, grants, deposits, and equity investments for Native CDFIs, but requires a dollar-for-dollar match from a non-federal source. That’s where you come in! Community banks could help Native CDFIs meet the federal match for financial assistance awards to help grow their lending capacity. [8]

Meeting requirements in the Community Reinvestment Act (CRA).

By partnering or investing in a Native CDFI, banks can meet their CRA requirements. This is a major opportunity that CRA assessment regulators promote and support. [9] Just ask your regulator, who can help you find the right investment fit for CRA consideration. Some options include: providing equity capital, funds for lending through deposits, and bank services.

CHECK OUT THESE SUCCESS STORIES

Learn how financial institutions are looking to Native CDFIs as secure, knowledgeable partners in responding to community needs.

“Those kinds of case studies and examples will go a long way to break down the barriers and perceptions that it’s difficult to do business on Native lands.”

— Mike Wilson, President and CEO,

Federal Home Loan Bank of Des Moines

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Northwest Native Development Fund (NNDF)

NNDF is growing its lending and training programs with funding support from Wells Fargo Diverse Community Capital Program and from us. Recently, NNDF helped a Native entrepreneur open a first-of-its-kind restaurant on the Colville Reservation, giving locals an opportunity to stop by for a nutritious meal. NNDF supplied the training and financing support to get the idea off the ground. Learn why Wells Fargo is proud to invest in NNDF.

Native American Development Corporation (NADC)

NADC has a long, successful history of supporting Native entrepreneurs, providing sustainable business plans, loans, and technical assistance. Over the years, NADC has worked closely with more than 20 tribes in the Rocky Mountains and Great Plains. Recently, they partnered with Billings-based Rocky Mountain Bank to help one tribe get the funding needed to start a major development project that would help them become completely self-sufficient. Learn what was eye opening for Rocky Mountain Bank’s market president in this partnership.

First Nations Oweesta Corporation

The only Native CDFI intermediary, Oweesta offers financial products and development services exclusively to Native CDFIs and Native communities. As investments and homeownership in Indian Country spike, Oweesta helps Native CDFIs meet climbing capital demands through their membership services and by strengthening the connection between financial institutions and Native CDFIs. Check out this example—Oweesta brought together Native leaders and investors for networking and relationship building.

NACDC Financial Services

NACDC recently expanded their program to include homeownership loans after years of successful lending to support Native agriculturalists, artists, small-business leaders, and more. Last year, the Kendeda Fund showed its confidence in NACDC with a multiyear, $200,000 grant to support their lending capital programs. Find out what projects NACDC hopes this funding will help support.

Check out this compelling blog series exploring Native CDFI leaders, their impact, and why Federal Home Loan Bank of Des Moines felt the confidence to invest $5 million into the Native CDFI field.

“This partnership . . . puts capital to work for the benefit of asset-building strategies in Indian Country.”

— Mike Wilson, President and CEO, Federal Home Loan Bank of Des Moines

Join hundreds of professionals who receive the latest updates on Native CDFI case studies, news, and more.

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SAVE THE DATE!

FIRST NATIONS OWEESTA CORPORATION: NATIVE CDFI CAPITAL ACCESS CONVENING
June 12–14, 2018
Pacific Grove, CA

Meet some of our nation’s most influential Native leaders and join us for a rare briefing with other national financial leaders curious to invest in Indian Country. No question is too big or too small!

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