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Empowered to Succeed: How tribes can unlock new capital to grow in Indian Country

What we’ve learned is that “the bank” or any tribal community development effort can be more successful by not relying on just the U.S. government or just on the tribe alone but in partnership with a wide range of people and organizations.

By Dave Castillo

“How is it that the United States can put a man on the moon but not a bank on an Indian Reservation?” A version of this question was asked by a tribal official in 1999 during the Clinton administration.  The question was raised at a tribal event, attended by prominent federal officials, to launch an initiative for increasing access to private sector financing for projects on tribal lands.  Reflecting back on that question now, it’s clear that practitioners in Indian Country have begun to ask: should we rely on the United States to build that bank or does the goal of tribal self-sufficiency require tribes to build it?

The reason for the latter question comes from the fact that progress has been made since 1999 in increasing access to capital for tribal projects.  In select areas of Indian Country, tribes have successfully used Low-Income Housing Tax Credits, New Markets Tax Credits, started their own loan funds (known as CDFI’s) to support local entrepreneurship, and raised private capital to acquire or develop revenue-generating enterprises (other than tribal casinos) that even include small regional banks.  Moreover, a number of Indian — as well as non-Indian — nonprofit and for-profit entities have developed capacity to better serve the needs of tribes as they engage in development across a wide variety of business sectors.

Therefore, it’s a good time to revisit the issue of how tribal nations can achieve self-sufficiency, given both the success that has been achieved but also because of the persistence of static tribal economies and the social distress in tribal communities.  Despite the progress there is much left to do.  How and who will pay the costs for the needed roads, housing, infrastructure, hospitals, renewable energy resources, and job-creating enterprises that remain in demand across most of Native America?

The Stepping Stone housing project in Phoenix brought together a dozen partners for financing and support. Photo courtesy of Native Home Capital.
The Stepping Stone housing project in Phoenix brought together a dozen partners for financing and support. Photo courtesy of Native Home Capital.

No doubt, anyone who has played a role in the activities of tribal governance has a tribal community or economic development story to tell.  There are many success stories but there are still too many that relay the difficulties and challenges that are unique to Indian Country.  Native Home Capital, a Native community development financial institution, was established to focus exclusively on addressing one of these specific challenges – that of increasing access to private-sector financing for tribal projects.

Since our establishment in 2005, Native Home Capital realized that it cannot, on its own, meet the financing needs for housing and community development on tribal lands.  In any case, Indian Country should not have to rely on lenders of last resort.  Therefore, from the beginning we set upon the task of increasing access to multiple sources of capital for tribal projects.

Initially, we sought out robust partnerships with conventional banks.  Although our efforts had limited success, banks remain an important and vital resource for the development of vibrant economies—including tribal economies. However, even with the aid of federal legislation to incentivize banking services in Indian Country, the amount of bank financing flowing to tribes for housing and community development remains dismal.

Therefore, one of our goals is to establish access to alternate forms of capital for tribal projects. Public sector entities have been and remain strong partners.  However, through our work, nonprofit intermediaries, foundations, and global private-sector financial institutions have begun or expanded commitments to Indian Country.

Earlier this year we partnered with the Rural Community Assistance Corporation —  a nonprofit organization serving rural communities in 13 western states.  RCAC is a top rated Community Development Financial Institution and in May 2013 together we funded a HUD (Title VI) guaranteed tribal homeownership project in northern New Mexico.  In addition, we’ve partnered with the Southwest Native Green Loan Fund — a foundation and philanthropic-led initiative that provides mission-related and impact investing options for foundations and philanthropists seeking social and environmental, as well as, financial returns.  Most recently, we’ve partnered with Next Era Capital – a hedge fund with a vision that global private sector capital shall be as readily accessible and successfully used by tribal nations as any other developing nation in the world.

What we’ve learned is that “the bank” or any tribal community development effort can be more successful by not relying on just the U.S. government or just on the tribe alone but in partnership with a wide range of people and organizations.  Although we work primarily in the southwest United States, there are many other organizations – and, of course, tribes – who have arrived at the same conclusion and who are likewise forging strong partnerships to address the dire needs of Indian Country.  Yes, tribal leaders should continue to demand that the U.S. government honor its trust responsibility and the promises enshrined in treaties made in exchange for land that was ceded by tribes during the colonization of this continent.  However, if those of us charged with the specific task of community and economic development in Indian Country were to rely on the U.S. government alone, tribal communities would continue to wait too long and likely see disappointing results.

Tribes can and should access the readily available resources and networks that will provide necessary expertise and assistance.  Federal law known as the Native American Housing Assistance and Self-Determination Act and similar Indian legislation actually mandates such efforts!  Moreover, tribal leaders have stated that if tribes want to be sovereign, they must act sovereign.  Similarly, if tribes want to be economically self-sufficient, they must work towards becoming self-sufficient by developing partners other than the federal government.  The Stepping Stone Place housing development in Phoenix, which drew in 12 funding partners from the United Way to Bank of America to the City of Phoenix, illustrates the wide range of partners that contribute to the typical community development project we help finance.  Many more partners have experience working with tribes or are willing, able, and available to learn how to do business in Indian Country. But these new partnerships will happen only if tribes are willing to embrace the task of achieving self-sufficiency and themselves learn how private-sector and nonprofit entities can help them rebuild Native America.


Headshot  Dave Castillo2010Dave Castillo is CEO of Native Home Capital.