Native CDFI Network Case Study

About 7 percent of the 1,079 community development financial institutions (CDFIs) in the U.S. are categorized as Native CDFIs (NCDFIs), which means they serve primarily American Indian, Alaska Native or Native Hawaiian communities.¹ Due to a combination of historical, political and geographical factors, Native communities tend to face significant challenges, such as high rates of poverty and unemployment; limited physical, legal and telecommunications infrastructure; and limited access to affordable financial products and services. NCDFIs are working to fill credit and capital gaps and to provide Native consumers, entrepreneurs and potential homebuyers with needed information and training to access as-yet untapped sources of capital.

According to a Federal Reserve Bank of Minneapolis Community Development Report titled Growth and Performance of the Native CDFI Loan Fund Sector, 2001–2012, the NCDFI industry is growing rapidly but could benefit from expanding its sources of capital.² To support the industry and strengthen the role of NCDFIs, a national NCDFI membership organization called the Native CDFI Network (NCN) was created in 2009. Since its inception, NCN has worked with constituents to support Native community development and encourage systemic change and equity building. The following sections will discuss the structure of NCN and how the organization is leading efforts to maximize its members’ impact through capitalization and policy advocacy.

I. CDFI Partnership Genesis and Structure

At a breakout session hosted by Oweesta during the December 2008 Opportunity Finance Network conference in Albuquerque, New Mexico, a few leaders in Indian Country economic development met to discuss financial literacy challenges in Native communities. During the discussion, Robin Danner (former President and Chief Executive Officer of the Council for Native Hawaiian Advancement in Honolulu, Hawaii) introduced the concept of starting a policy group for NCDFIs. At the end of the day after much discussion, a steering committee was formed with Chrystel Cornelius (Executive Director, Oweesta), Billie Spurlin II (Former Executive Director, Salt River Financial Services Institution), Tanya Fiddler (then Executive Director at Four Bands Community Fund), Andrea Levere (President, Prosperity Now), Elsie Meeks (Native American community development expert and current Chair of the Leadership Council of the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis) and Robin Danner (current CEO of an emerging CDFI serving native Hawaiians) as its members. Danner and Fiddler were asked to be co-chairs of the new steering committee for the Native CDFI Network (NCN). After this event, the group began to have regular meetings and Four Bands Community Fund was selected to be the fiscal agent and to incubate and raise funds for the network.

In 2009, NCN became official. Since then, NCDFI leaders have met annually, compiled the top challenges and policy solutions for the NCDFI field, and coordinated frequent educational briefings with members of Congress and federal agencies to increase the capacity and access to capital for NCDFIs. The work of NCN was done by its members without any full-time staff.

In 2014, the group held a strategic planning session. The steering committee agreed to hire a full-time staff person to help carry out the objectives identified in the strategic planning document. With funding from the Northwest Area Foundation, Johnson Foundation and Herron Foundation, the committee hired an interim executive director and applied to become a tax-exempt nonprofit corporation under Internal Revenue Section 501(c)(3). In addition, NCN received technical assistance and in-kind supports from several organizations, including Prosperity Now, Opportunity Finance Network, Oweesta, Federal Reserve Bank of Minneapolis and First Nations Development Institute. The 501(c)(3) status was obtained in 2015. In October 2015, Fiddler became NCN Executive Director. The organization now has three full-time employees and works with a policy consultation firm located in Washington, D.C.

The idea behind NCN is simple: formerly unnoticed NCDFIs should now be recognized as viable economic development agency vehicles. In addition, because Native communities have often not been represented by networks and trade associations that could speak effectively on their behalf, NCN organized its staff, consulting firms and committees around enhancing impact and creating opportunities for members to engage in its mission in four ways:

• Policy: Play an active and effective role in developing policy and influencing legislation that contributes to the advancement of NCDFIs nationwide, as well as federal agencies.
• Membership: Highlight membership benefits and recruit new members and partners.
• Peer learning: Provide a peer-to-peer learning environment so that members can share best practices and innovative ideas.
• Data and impact: Work in partnership with other partner organizations to develop community impact data and demonstrate the economic development impact of NCDFIs.

The NCN’s structure provides a platform that facilitates national policy engagement, encourages peer learning, promotes coordination and inspires collaboration among NCDFIs, non-Native CDFIs and any organization interested in contributing to the well- being of Native communities and their residents.

II. Goals and Achievements

NCN’s mission is to be a national voice and advocate that  strengthens  and  promotes  NCDFIs,  creating access to capital and resources for Native peoples. NCN seeks to create opportunities to share NCDFIs’ stories, identify their collective priorities and  strengthen the industry. In addition, NCN works to ensure that Native peoples are represented in the national policy dialogue and that innovative solutions created by CDFIs across the country are spread throughout Native communities. As a strong national  network, NCN’s ultimate goal is to empower its members to engage their best ideas, connect them to one another, and collectively advance policy priorities that foster systemic changes and create sustainable Native community and economic development. To do this, NCN has engaged in a number of activities and initiatives designed to strengthen its membership and serve the community.

NCN’s scope of services  includes:

• Holding an annual NCN meeting and election.
• Convening regional meetings and special events.
• Hosting a bi-monthly webinar series.
• Managing on-demand coaching and mentoring programs.
• Engaging in public education around NCN policy priorities.
  • Assessing member satisfaction through surveys and other means of soliciting feedback.
  • Improving member benefits continually, based on survey results and other feedback.

To date, NCN staff members have provided peer learning opportunities, coaching and mentoring, and brought new partners and resources to its members. They have created social media campaigns on Facebook and Twitter so that member NCDFIs can tell their stories.

In addition, they have developed an online policy and advocacy toolkit with information designed to assist NCDFIs in becoming an active voice for Native communities across the country. An interesting element of the toolkit is a step-by-step guide to help prepare a member to host a member of Congress.

NCN staffers also assist members in developing data and impact reports, and they attend these meetings as members tell their stories. Fiddler reports, “We have met with dozens of congressional offices, sent joint letters and spoken in front of elected officials to the effectiveness of NCDFIs in order to compel the administration for some NACA set aside.”³

NCN has also brought a research component into the field through reports and materials created in partnership with other organizations. Examples include a Native entrepreneurship report in South Dakota⁴ and a Montana Native financial inclusion toolkit⁵ to help NCDFIs address economic development issues at the state and tribal levels.

In 2017, NCN offered its members small grants to support the development of core NCDFI skills that include financial management; fundraising; marketing and communications; and improved understanding of federal, state and tribal policy. Members could request up to $5,000 to cover costs associated with building those core skills.

III. Financing and Nonlending Activities

NCN currently offers no financing products, as it is not a CDFI. Although numerous conversations about providing lending services have taken place within the organization, the board is currently content with focusing solely on non-lending activities. Staff members continue to analyze the existing gap in access to capital for NCDFIs and to formulate the organization’s policy agenda accordingly. The executive director points to increases in NACA appropriations as NCN’s contribution to the NCDFI industry.

Other nonlending activities include assisting with the Native capital access reports initiated by the CDFI Fund, supporting the development of the Oweesta capital pool (a $10 million initiative to fund growth in Indian Country) and the Opportunity Through Impact System (OTIS) — an impact-tracking system created specifically for Native CDFIs — participating in ongoing conversations about persistent poverty in Indian Country and supporting research projects undertaken by the Center for Indian Country Development of the Federal Reserve Bank of Minneapolis.

IV. Impact and Assessment

Member satisfaction surveys are the primary tools NCN uses to assess its impact on the NCDFI industry. Staffers communicate survey results to members through newsletters. Detailed conversations on survey results also take place at annual meetings and board meetings. NCN board members are encouraged to discuss pertinent issues and success stories in the field. Furthermore, NCN tracks interesting developments in the field. The organization has been able to help members such as the Citizen Potawatomi Community Development Corporation successfully participate in the CDFI Bond Guarantee program and use available funds to promote economic development activities in Indian Country. Under NCN’s encouragement, Clearinghouse CDFI, a non-Native organization, expanded its target market to include Indian Country and plans to use its New Markets Tax Credit allocation to finance business activities and real estate development within Native communities.

NCN staffers would like to have the capacity to collect annual data from members and conduct analyses that could help increase recognition of the scale, scope and impact of the NCDFI industry. The organization attempted to do this in the past by hiring a consultant to collect income-statement and balance-sheet information from members. Participation was very low and preliminary reports were not useful.

V. Challenges, Opportunities and Leading Practices

“Being a voice for NCDFIs that are in such a bright continuum of development is very challenging,” notes Fiddler. Since NCDFIs vary in location and asset size, they do not have identical policy-support needs. Moreover, tribal political environments vary. Finding the right pitch for the right-sized loan fund, for instance, is a challenge that NCN needs to overcome. Consequently, NCN webinars are designed to cover the full spectrum of economic development models.

Recognizing the challenge, NCN is currently working with a funder to help groom emerging NCDFIs and implement a plan for NCDFIs’ sustainability. There are currently 72 NCDFIs in the country, and only about 50 percent of them are NCN members. NCN does not have the capacity to develop recruiting materials, so staff members must spend time recruiting through direct communication. The decision to join usually depends on the size of the organization and its understanding of what NCN brings to the table. According to Fiddler, “All NCDFIs should be members, so we will have to work on that.” NCN’s annual meeting this year in Washington, D.C., will explore the issue.

NCN has been at the forefront of racial equity conversations for a number of years and plans to   stay there to raise awareness. The organization is also looking for ways to expand its capital sources. New bank and credit union partners — Federal Home Loan Bank of Des Moines, Deutsche Bank and Wells Fargo, to name a few — have expressed interest in learning more about NCDFIs and their needs. NCN board and staff members have not dismissed the idea of attaining CDFI certification.

With so many new and emerging NCDFIs working with youths, the need to create youth empowerment work continues to increase, especially in persistent-poverty counties. According to the NCN team, initial intervention through savings accounts is what Native youths truly need in order to change their future. Through its partners, NCN envisions creating a child savings account for each child born on a Native American reservation. Local NCDFIs and NCN members will serve as equity partners in the process.

The Access to Capital and Credit in Native Communities Report⁶ reveals that there has been a great increase  in the flow of capital to Indian Country over the last few decades. However, the NCN team believes that Native communities are still 40 years behind the mainstream population and are still catching up to achieve parity with non-Native median household income in the country. Consequently, NCN’s strategies are long-term. The nature of the work may change but the partnership will not end until Native community members improve their standard of living.

The organization highly values collaboration and respect. Every member NCDFI is supportive of NCN’s efforts and there is no barrier to entry. NCN’s board, staffers and members view human capital as the greatest asset in Native communities. They believe that respect for people and tribal sovereignty promotes successful economic development strategies in Indian Country, and that as long as NCN and its partners continue to be transparent and respectful of each other as they come together, success will be achieved.