“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
“Native CDFIs are weavers, connecting families, communities, and entrepreneurs to the resources necessary to bring dreams to life for multiple generations.”
Kevin Walker, President and CEO, Northwest Area Foundation
“Want to get a loan? Start a business? That’s next to impossible without a mainstream financial institution. Native CDFIs fill the gap.”
Tanya Fiddler (Cheyenne River Sioux), Former Executive Director, Native CDFI Network
“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
A Win-Win Investment with Long-Term Impact
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.
Why Native CDFIs Are Strong, Successful, and Sustainable
The key to the success of Native CDFIs lies in their commitment to building strong community relationships. Long-term economic impact is achieved by connecting families and communities with the resources necessary to bring dreams to life for multiple generations. With deep cultural ties and understanding, Native CDFIs are poised to build trust and create a powerful infrastructure for self-sufficient economic and cultural wealth.
Partners Are Investing in Native CDFIs as Game-Changing Allies for Cultural and Economic Wealth in Native Communities
We talked to leaders of banks, asset management firms, financial institutions, and other funders and partners about what convinced them to invest in Native CDFIs. It all comes down to successful long-term impact. The video below is a must-see if you’re looking to support the cultural and economic wealth of Native communities.
Adding Up the Benefits of Partnering with Native CDFIs
Native CDFIs weave together culturally informed relationships that bridge traditional cash economies with the financial mainstream. They’re anchored in local culture and passionate about creating opportunities for growth. They lay the groundwork for investment in Native communities by providing capital and financial assistance, education, and training.
This leads to a powerful multiplier effect, which helps Native entrepreneurs and Native-led businesses thrive. It also creates jobs, an expanded tax base, and new business development and market opportunities. These opportunities haven’t often been available in Native communities.
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.
Native CDFIs have default rates that are lower than that of the average financial institution1 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.
A 2012 First Nations Oweesta Corporation-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
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 Treasury’s CDFI Fund fosters partnerships and offers support through its Native Initiatives program.4 In many cases, if you work at a 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 percent loan guarantee to ensure 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
Effective Ways for Financial Institutions to Invest and Partner with Native CDFIs
There are many ways that financial institutions can partner with Native CDFIs, and partnerships can be tailored to match the varying capabilities of institutions:
Provide technical assistance.
One of the ways that financial institutions often work with Native CDFIs is by providing IT support and technical assistance, an area of expertise many institutions already provide to their bank or credit union network. And there are plenty of other ways to offer in-kind assistance.
Offer capital through a small dollar deposit or a larger loan.
Capital investments in Native CDFIs can be impactful at any size—even small dollar deposits impact economic opportunity, and larger investments are easy through First Nations Oweesta Corporation, the only Native CDFI intermediary lender.
Match government dollars to build Native CDFI lending capacity.
The Native American CDFI Assistance Program from the U.S. Department of Treasury’s CDFI Fund 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
Meet requirements in the Community Reinvestment Act (CRA).
Banks can meet their CRA requirements by investing or partnering with a Native CDFI, an opportunity that assessment regulators promote and support.9 Some options include: providing equity capital, funds for lending through deposits, and bank services. Just ask your regulator, who can help you find the right investment fit for CRA consideration.
“I think there is some real room for investors to be able to develop programs where they’re either lending to Native CDFIs, or making private capital investments into CDFIs. . . . If you take into account the huge positive impact on the community you’re helping to bring about, then these are wonderful investments.”
Jodi Neuman, Investment Manager, Trillium Asset Management
“I think investors would get it much faster . . . if they could go see a reservation community and see the work of Native CDFIs and meet some of the entrepreneurs we’re working with.”
Krystal Langholz, Chief Operations Officer, First Nations Oweesta Corporation
“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
“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), Former Assistant Vice President and Director, Center for Indian Country Development, Federal Reserve Bank of Minneapolis
Check Out These Success Stories
Learn how financial institutions are looking to Native CDFIs as secure, knowledgeable partners in responding to community needs.
Native CDFIs’ Beauty and Promise: Five-Part 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.
Native CDFIs We’re Funding
We strongly support the incredible work of these Native CDFIs and encourage you to visit their websites to learn more about them:
Bii Gii Wiin Community Development Loan Fund
Black Hills Community Loan Fund
Confederated Tribes of the Umatilla Indian Reservation
First Nations Oweesta Corporation
Four Bands Community Fund, Inc.
Mazaska Owecaso Otipi Financial
NACDC Financial Services, Inc.
Native American Development Corporation
Native CDFI Network
Native360 Loan Fund (formerly First Ponca Financial)
Nimiipuu Community Development Fund
Northwest Native Development Fund
Oyate Community Development Corporation
People’s Partner for Community Development
Rosebud Economic Development Corporation
White Earth Investment Initiative