Even before COVID-19, investors were already shifting the definition of economic success to include how wealth, resources, and goods flow to everyone and how to steward our natural world and resources for the future. Indigenous wisdom on putting these socially responsible investment principles into practice is increasingly being acknowledged. However, the philanthropic and investment world still lags behind; over nine months into the pandemic, the conversations our organizations have had with investors, business owners, movement leaders, tribal leaders, healthcare workers, policymakers, and many others on how to sustain underserved communities through (and past) COVID-19 feels like trying to put out a blazing fire with a bucket of water.
This pandemic has only exposed and widened the gaps in health, educational, and economic disparities that existed for decades, and the $8 billion CARES Act funds for tribes translates to less than $140,000 per federally recognized tribe. We need a forward-thinking mindset to prevent these kinds of devastating impacts in the first place through resilient and robust local economic systems.
NDN Collective has already leaned in, committing over $14 million in grants to Native Nations, non-profits, Native CDFIs, and individual changemakers addressing frontline, transition, and recovery needs across the US, Canada, Mexico, and Puerto Rico. NDN Fund has created a multifaceted response that will not only help bring our Indigenous economies through the other side but will also support long-term growth for innovative businesses and industries that are pivoting their product lines, supply chains, and delivery to meet the current demands. We plan to launch our multimillion COVID-19 Relief & Resilience Loan Fund in January 2021 to support Indigenous entrepreneurs and tribal enterprises that still need low-interest and flexible capital, including for expansion in “advantaged” industries. We will also offer customized technical assistance for selected businesses. For example, we can help a medical gloves manufacturer secure procurement contracts with hospitals, and federal, state, local governments.
Oweesta has pivoted quickly to address COVID-19 by creating two new loan products a working capital loan and a line of credit to directly support local Native CDFIs immediate capital demand. These Native CDFIs can be the sustaining lifeblood for the financial wellbeing of their communities, especially in times of crisis. Social investors in solidarity have capitalized on this loan fund, and the partners guaranteeing these loans have allowed Oweesta to create a steady stream of emergency funding to communities that need capital for families and small businesses. Oweesta has also been working with the many social investors in our portfolio who are providing deferrals and flexible capital to allow us the flexibility to do the same to borrowers.
Oweesta and NDN Collective continue to stand in solidarity with Indigenous communities who remain uniquely affected by COVID-19. In December 2020, we announced the 25 Native CDFI awardees of $50,000 discretionary grants, each selected based on their response to their communities during this time of crisis, as well as those actively participating in areas aligned with transition and resiliency work, to help us develop future grant and capacity-building opportunities with the field.
Bridging the Gap Between Investors and Development
As national intermediaries, our organizations play an important role in creating an ecosystem and market for impact investing in Indigenous communities, performing the due diligence that investors need to manage risk, reduce transaction costs, and save time. Since social finance is still emerging in Native America, we work to lay the groundwork for other Indigenous institutions to receive impact investments. Since development in Native America is relationship-based, our vast networks and expertise allow access to investors that non-Native lenders and community organizations could never provide. We help tribes and nations build and maintain trust with non-Native entities; we provide customized capacity building services that extend financial, planning, technical, and managerial expertise to attract and manage external investment; and we identify and encourage governance practices that reduce uncertainty for investors.
NDN Fund uses an integrated capital approach, a unique advantage over other Indigenous financial institutions. Unlike many Native CDFIs, we intend to source blended capital solutions through existing investment instruments like New Markets Tax Credits, Low-Income Housing Tax Credits, federal and state solar tax credits, historic preservation, and equity investments (through NDN Collective’s for-profit arm). We also are developing a number of different access points and resources for the communities and other Native CDFIs we work with, such as fellowship grants and funds for pre-development and technical assistance to align the right capital stack and consultants for each project. Our partnerships can include loan participations with smaller Native CDFIs to leverage their on-the-ground expertise.
Oweesta leverages investor dollars through their Native CDFIs 20:1. In last year’s “Equity for Native American Communities, Using Mission Investments Alongside Grants,” Northwest Area Foundation CEO Kevin Walker shared how they use their endowment, not their grantmaking funds, to invest in Native CDFIs: not only have they received a modest return, but they have also seeded important industries, jobs, and potential for future development across the reservation economies they work in. In 2018, Northwest Area Foundation extended a $500,000 Program-Related Investment (PRI), a low-interest loan, to Oweesta’s $10 million lending pool. (In 2020, they also provided a $200,000 Loan Loss Reserve grant for NDN Fund’s COVID-19 lending portfolio.)
In 2018, Oweesta’s historic $10 million Capital Pool for Native CDFIs grew out of a pressing long-term need in Native America: access to capital. We prioritized relationship-building opportunities, such as site visits, between investors and pool members. These relationships offer the opportunity for investors who normally would have very little engagement or understanding in Native America to discover the unique cultural context in which our Native CDFIs operate.
Our $10 million capital pool was deployed in the form of long-term, low-cost capital and will have multigenerational impacts in creating jobs and small businesses, assist families in purchasing their first home and help tribal members enhance their credit through consumer lending products. To date, the pool has leveraged an additional $7.5 million in investment. For Indigenous entrepreneurs, it has created 52 small businesses and 189 jobs. In the last two years, it has also financed 108 homes in Indigenous communities, creating 28 new homeowners. Through creating a safe-investment structure and prioritizing relationship-building, we believe this pilot will create a transformative shift in what is possible for investing in Indigenous communities. It breaks the systematic marginalization from the financial mainstream through a bottom-up approach, on the terms of our local community-based organizations.
The Advantages of Native America:
There is a wealth of opportunity in investing directly with Native America. As Little Fawn Boland, one of our partners and experts in structuring large financial deals, put it: “We have fewer governmental hurdles to deal with so we can fast-track investments in a way that can’t be done outside of Indian Country.” Among the many advantages sovereign nations, tribal enterprises, and enterprises located on Indigenous lands offer for investors are: exemptions from federal and state tax, special consideration for government and diversity contract awards, preferential access to some federal grant and loan programs, special tax credits, incentivized leasing, and specialized investment or trade zones. Intermediaries like NDN Fund and Oweesta can help ease new impact investors into these opportunities.
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SOURCES/AUTHORS
Nikki Pieratos, NDN Fund Managing Director at NDN Collective (Bois Forte Band of Chippewa).
Chrystel Cornelius, Executive Director at Oweesta Corporation (Turtle Mountain Band of Chippewa, Oneida Nation).
