Tag: Additional Articles

Above: A scene from Mazaska Owecaso Otipi Financial, a Native CDFI in Pine Ridge, S.D. Mazaska was one of 11 Native CDFI loan funds to provide data for a CICD study of Native CDFI lending outcomes. Jeffries Design/Image courtesy of Mazaska Owecaso Otipi Financial

Imagine financial institutions across Indian Country focusing on goals rooted in social impact investing. Their missions might include fostering financial inclusion, providing culturally informed services and improving access to capital and credit in low- and moderate-income communities. 

These institutions exist, yet many people remain unfamiliar with them. Historically, economic data gaps have masked economic conditions and opportunities in Native communities. The Center for Indian Country Development, a research and policy institute based at the Federal Reserve Bank of Minneapolis, is working to change that. 

CICD advances the economic self-determination and prosperity of Native nations and Indigenous communities through actionable data and research that inform public policy. As part of our portfolio, we’ve worked with a team of researchers (Valentina Dimitrova-Grajzl, Peter Grajzl, Joseph Guse, Michou Kokodoko, and Laurel Wheeler) to conduct a series of studies on the unique role of Native Community Development Financial Institutions (CDFIs) in addressing capital and credit gaps in Indian Country. Those looking to engage in economic well-being in Indian Country may be interested in four key themes that have emerged in our research.

One important finding is that proximity to community improves credit outcomes. CICD’s research has found that establishing Native CDFIs on or near federally recognized American Indian reservations can improve credit outcomes. In a study of areas lying in or within a few miles of a federally recognized reservation, our researchers looked at the impact of CDFI activity on client credit performance during the post-financial-crisis years (2013–2017). Using loan volume and staffing levels as indicators of activity, researchers found that adding one Native CDFI staff member per 1,000 residents associated with, on average, a 45-point increase in Equifax risk score for individuals without established credit. For investors, this finding underscores the potential for Native CDFIs to mitigate systemic barriers and deliver measurable results. Native CDFIs’ proximity to the communities they serve allows them to offer tailored solutions that resonate deeply with Indigenous values and needs. 

Our research also found that Native CDFIs’ knowledge and understanding of their clients can reduce uncertainty in lending outcomes. Many Native CDFIs have expanded the measures they use to predict loan risk beyond conventional lending criteria such as credit score and income. These Native CDFIs employ what’s known in the financial industry as “character-based lending” practices, bringing in loan officers’ assessments of prospective borrowers based on their community knowledge and the professional relationships they build with their clients.

In a working paper, we presented analysis of loan data from 11 Native CDFI loan funds that showed these character-based approaches to assessing credit risk can reduce uncertainty in lending outcomes. Looking at consumer, home, and business loans, our researchers found that a loan was less likely to be delinquent when the loan officer perceived the borrower as at least “somewhat engaged” in the borrowing process. For business loans, our researchers found that a loan officer’s knowledge of the borrower’s community reputation and business qualifications were key predictors of loan delinquency. In these ways, character-based criteria emerged as important predictors of risk, in addition to traditional measures such as client credit scores. In the case of business loans in our analysis, character-based measures predicted delinquency even better than credit scores.

Another theme from our research is that financial counseling can help borrowers meet loan obligations. In addition to holistic lending practices, some Native CDFIs also mitigate lending risk by providing clients with free financial counseling. They may offer this service via group training or individual coaching sessions. Lesson topics may include budgeting, credit scores, taxes, and goal setting. To investigate the impact of this lending practice on loan performance, CICD’s research team obtained detailed loan data from one Native CDFI. Findings from this analysis may not be representative of the industry as a whole, but the research provides evidence-based insights into the role of developmental services that Native CDFIs offer their clients.

In our analysis, free financial counseling was associated with a 12.2 percent lower probability of bad debt when the borrower lacked a credit score profile and when at least a half hour of counseling was provided. That is, the benefits of counseling appeared to be most pronounced for those without established credit. 

Finally, our research has found that Native CDFIs face resource and capacity challenges. Financial counseling and relationship-based lending models can be staff-intensive. As a result, some Native CDFIs operate with capacity constraints and relatively limited resources, making it difficult to assess their impact and grow their operations. Financial and technical assistance awards to expand the capacity of Native CDFIs are available but limited.

Native CDFI leaders and partners have explored potential solutions to address resource and capacity challenges. Proposed solutions include identifying resources to build the capacity of small Native CDFIs, fostering collaborations between Native CDFIs and traditional banks, pursuing more private-sector investment, and positioning Native CDFIs to leverage the Community Reinvestment Act to secure capital.

Native CDFIs offer a pathway for community-centered economic transformation aligned with Indigenous values, yet their role has not been well documented. CICD’s research is changing that—and providing new insights for stakeholders interested in understanding opportunities to strengthen Native economies. 

Article by Casey Lozar, vice president at the Federal Reserve Bank of Minneapolis and director of the Center for Indian Country Development (CICD). Before assuming leadership of CICD, Casey was assistant vice president/outreach executive in the Bank’s department of Public Affairs, and the leader of the Bank’s Helena Branch. Prior to joining the Minneapolis Fed in 2018, Casey served in economic development and higher education roles for the State of Montana. Additionally, he held executive leadership positions in national Native American nonprofits, including the American Indian College Fund and the Notah Begay III Foundation. Casey received degrees from Dartmouth College and Harvard University and an MBA from the University of Colorado-Denver. He serves on the Montana Board of Regents of Higher Education (past chair). Casey is the 2021 recipient of the Janet L. Yellen Award for Excellence in Community Development and a 2022 recipient of the Honorary Leadership Award from the Native American Finance Officers Association. A Montana native, Casey was raised on the Flathead Indian Reservation and is an enrolled member of the Confederated Salish and Kootenai Tribes.

Above: Elyse Dempsey, team member at Roanhorse Consulting works to change power dynamics in health and wealth systems by using an Indigenous worldview to co-create solutions to complex problems. Photo courtesy of Roanhorse Consulting.

Starting a business in the United States and being an entrepreneur are two related yet distinct experiences. In 2019, the Kauffman Foundation launched the Capital Access Labs and found that 83% of all entrepreneurs in the U.S. could not access formal financing to start or grow their businesses. By 2023, another national landscape analysis revealed no significant change. For many entrepreneurs, access to capital begins with a “friends and family” round — a privilege often unavailable to Indigenous individuals raised on reservations where generational wealth is more about shared community values than financial assets.

Entrepreneurship is a tool for agency and mobility, particularly in Indigenous communities. In 2020, Indigenous businesses generated over $50 billion in revenue, with approximately 60% of these enterprises led by women – who are paid less than .58 cents to the dollar, are two-thirds the breadwinners in their families and one in three women will experience violence in their lifetimes. Yet, these women are starting companies two times faster than their white non-Hispanic counterparts and are an $11 billion dollar industry with little to no help or support. Despite this growth, Indigenous women founders still face unique challenges, including a lack of technical assistance, limited access to networks and, most critically, insufficient access to capital that fundamentally understands their lived experiences. Geographic and legal barriers exacerbate these challenges, as many investors remain unfamiliar with Tribal legal systems and protocols, resulting in hesitancy to navigate them. 

In 2024, Native Community Development Financial Institutions (CDFIs) received unprecedented funding — $76.32 million from philanthropic sources, with an additional $3 million from the U.S. Department of Treasury. MacKenzie Scott contributed $103 million to Native CDFIs, signaling a historic opportunity to address the capital gap faced by Indigenous founders. These investments have the potential to catalyze new lending and investment products tailored to Native communities’ needs. For many Native bankers, financial champions and innovators, this level of deep investment has the potential to be transformative and catalytic for Indigenous people and communities, if we can create space and runway for the desperately needed broad landscape of diverse capital products that redefine risk and innovative strategies for more inclusive and meaningful underwriting due diligence practices and frameworks.

As part of the National Strategy for Financial Inclusion, the U.S. Treasury released a report in December 2024 outlining several recommendations to improve financial access for Native communities. These include promoting low-cost transaction accounts, expanding alternative data to improve credit access, and supporting special-purpose credit programs tailored to underserved communities. Expanding financial services on Tribal lands and providing technical assistance to Native-owned small businesses are critical steps.

Reauthorizing the State Small Business Credit Initiative (SSBCI) under the American Rescue Plan Act marked one of the most significant federal investments in Tribal small business financing in history. The Treasury approved over $500 million for more than 200 Tribes, potentially resulting in $5 billion in additional financing for Native entrepreneurs. These programs are vital in creating accessible and sustainable financing solutions on Tribal lands. For example, the Treasury’s Native American CDFI Assistance Program (NACA) has awarded nearly $270 million since 2001, increasing the number of Certified Native CDFIs from 14 to 64. These funds support lending capital, loan loss reserves, and financial services that enhance access to capital in Native communities.

Alongside these critical federal programs, Indigenous founders and communities need Indigenous-led intermediaries designing investment vehicles to bridge the gap for what is happening on the ground, testing new products to redefine risk and who should bear the most significant impact.

Catalytic and integrated capital, as outlined in a 2023 report by First Peoples Worldwide at CU Boulder, Integrated Capital Investing and the Croatan Institute, can advance Indigenous-led solutions and foster long-term infrastructure development. One key recommendation is to invest in “Indigenous-led intermediaries, which are the most effective conduits for increasing catalytic capital flows to Native entrepreneurs.” These include CDFIs, social enterprises and nonprofit organizations developing funding vehicles to serve Native founders and their communities. For example, Roanhorse Consulting LLC, (RCLLC) co-created Native Women Lead’s Matriarch Funds, a scaffolded lending platform that leverages character-based lending to support Indigenous women founders. This effort was possible due to a deep partnership with Nusenda Credit Union to leverage their financial back office infrastructure and assets under management to develop a micro-loan program designed for overlooked and under-invested founders. This catalytic opportunity has since provided close to four million dollars in lending capital to entrepreneurs across the southwest region by bringing together program-related investments, grants, low- to zero-interest debt and working with community partners. It has empowered Native-led organizations to determine their potential as lenders and investors, with some launching their funds, like Change Lab’s Kinship Lending platform.

RCLLC’s efforts focus on building institutional alternative financing infrastructure that aligns with Indigenous values of community health and access to land, language and culture.

Recent partnerships with Rural Community Assistance Corporation (RCAC), with resounding support from philanthropist MacKenzie Scott, have enabled the partnership to design and pilot a new lending program, Rooted Relative Fund, providing $30,000 to $250,000 loans. These loans are for established Indigenous entrepreneurs who demonstrate a need for growth. This initiative aims to increase capital flow while empowering Native-led organizations to become lenders and investors in and where they serve. As a CDFI, RCAC can activate the innovative power and structure this model to leverage unsecured capital to create new opportunities for underwriting strategies that are powered and led by the organizations on the ground to co-define. 

RCLLC’s work involves bridging ecosystems, capital, institutions and policymakers to develop sustainable strategies beyond pilot projects. This is where RCLLC sees a clear opportunity to push progress forward by investing in and supporting the missing middle, especially for Indigenous founders and Indigenous community markets. Micro, small and midsize enterprises (between 10 and 250 employees) are too large to be served by microfinance institutions and too small and high-risk for the more formal banking sector to support. Despite their significant role in local and reservation-based economies, they do not have access to critical financial services. This isn’t new or groundbreaking, but it is a challenge emerging markets globally face, which we know most entrepreneurs in the United States face.  

In 2024, RCLLC took its nine years of learning and programs and decided to launch its venture studio, Return on Indigenous (ROI), to address gaps in the lifecycle of the Indigenous-led ecosystem. This studio takes an ecosystem approach by developing and financing new businesses that fill the gaps for Indigenous people while working across networks to increase and enhance learning, data collection and resource flow sharing. ROI incubates ventures like the Rematriating Economies Apprenticeship (REA), Monsoon Fund (MF) and Center Native. Each initiative targets specific needs, from placing Indigenous women in investment management roles to providing revenue-based financing for Indigenous femme founders experiencing the missing middle financing gap. This approach ensures we have seats on both sides of the capital table. 

Despite progress, much work remains to dismantle systemic barriers and ensure equitable access to financial resources. With unknown challenges ahead, the federal, philanthropic and private sectors must commit to work together so Indigenous people can access the capital needed to drive innovation to build meaningful wealth. These efforts show that with the right investor relationships and committed funding support, it is possible to make a financial system that meets the potential that is on the horizon for Native people. Our concerted job is to weave and bridge financial solutions and products that don’t exist so that Indigenous people can have agency, mobility and liberation. As the original inhabitants of these lands, Indigenous wisdom and innovation will continue to shape the future far beyond this time.

Article by Vanessa Roanhorse, founder of Roanhorse Consulting, leads initiatives in ecosystem building, access to capital, and community-driven economic development. She co-founded Native Women Lead, advancing Indigenous women in business through initiatives like the 5R’s of Rematriation and the Matriarch Funds. A champion for Indigenous-led economic solutions, Vanessa is co-building the Rematriating Economies Apprenticeship to empower women in fund and asset management. She serves on boards including Delta Institute, Seven Fires, and Potlikker Capital. Recognized with awards such as the 2021 PayPal Maggie Lena Walker Award, Vanessa lives in unceded Tiwa Territory with her partner and son.

Above: Kevin O’Neal-Smith (center), Impact Strategist for Adasina Social Capital, presents at the 2024 First Nations Major Projects Coalition conference – Our Collective Advantage: Indigenous Consent. Photo courtesy of First Nations Major Projects Coalition

The push and pull of corporate and social priorities puts socially responsible investment in constant flux. This requires the strategic and intentional integration of social justice and right-based perspectives in environmental, social and governance (ESG) metrics and approaches.

Through collaboration and partnership with shareholders and all stakeholders in our financial system, opportunities abound to embed issues and voices that are often excluded – including Indigenous Peoples, women, people of color, those living below the poverty line, regenerative agriculture practices, etc. – as a central component of overall strategy and portfolio design. Investors can embed these insights into real-world investment decision-making, working directly with grassroots movements, social justice organizations and value-aligned investors to gain insights into material business risks not yet understood by the market.

This is the approach taken by Adasina Social Capital for 5 years. Together with communities most impacted by racial, gender, economic and climate inequities, Adasina designs impact solutions for investors and financial advisors through our social justice values. We serve as a bridge between social movements and financial markets, and work to ensure our investment and screening approaches are more inclusive and accessible.

We understand that an investor’s impact can go well beyond their investment portfolio and contribute to broader investor mobilization. By articulating and integrating risk factors that have been long ignored by mainstream investment industries, we can use our role to prioritize intersectional approaches to racial, gender, economic and climate justice. We can also show that understanding the convergence of these issues allow investors to achieve financially sustainable portfolios and create an avenue for real systems change.

One clear example of this work has been Adasina’s efforts to protect Indigenous Peoples in portfolio design. Indigenous Peoples’ rights span not only racial, gender, economic and climate justice considerations, but also environmental, social and governance criteria, providing a key measure of material business risk. 

Through collaboration with community partners, we identified key areas of risk related to Indigenous Peoples’ rights and activated due diligence through Adasina’s portfolio. These risks include demonstrated patterns of violating Indigenous Peoples’ rights, instances of cultural appropriation and discretion of sacred spaces, among others.

Using this criteria, we developed an exclusion list of publicly traded companies, which is now available for all investors to use, then embedded these perspectives into real-world investment decisions. By incorporating a comprehensive framework around Indigenous Peoples’ rights into portfolios, investors can effectively mitigate risk from destructive development projects and initiatives that negatively impact Indigenous communities and harm people and planet. 

While defining risk and exclusion criteria are critical first steps, there are other ways investors can develop more comprehensive frameworks. There is a pressing need to conduct more research and develop more tools that transmit the materiality of Indigenous Peoples’ rights and other intersectional issues to companies and clients. This is especially important to address major gaps where the financial industry does not yet fully understand potential or ongoing harm.

Screening to Prioritize Indigenous Peoples’ Rights

First and foremost, from a risk standpoint, infringing on Indigenous Peoples’ rights is bad business. Involvement in any of the previously noted areas exposes businesses to legal and regulatory risks through lawsuits and fines, permitting delays, or even sanctions. Businesses are also more likely to incur financial and operational risks as a result of their disregard of these rights, potentially resulting in project disruptions by way of community resistance as seen with the Dakota Access Pipeline protests and blockades in 2016. 

Secondly, integrating Indigenous Peoples’ perspectives into decision-making not only avoids risks but also creates opportunities for sustainable growth, innovation and strengthened stakeholder relationships. Working directly with Indigenous communities to gain input and feedback on projects that impact those same communities can identify risks and opportunities that industry standard metrics or measurements often overlook. This then inspires innovative approaches to environmental challenges, product and service development, and long-term viability of the project. 

Lastly, protecting and centering Indigenous values and perspectives is the right thing to do. If an investment firm is truly committed to ESG initiatives, there is a clear through line of Indigenous Peoples’ rights in ESG and rights-based considerations. Through land stewardship, unwavering commitment to future generations, and systems of accountability in service of community and balance, Indigenous values and perspectives have protected environmental and human wellbeing since time immemorial – long before ESG and socially responsible investment became financial industry practices.

In conclusion, incorporating Indigenous Peoples’ rights as a framework in investments mitigates material ESG risk. As demand for sustainable and right-centered business increases, Indigenous Peoples’ rights need to be integrated and amplified throughout project design to create a more just and equitable society. Indigenous or otherwise, working with and in service to the communities most impacted by our decisions is not only good business, but the right thing to do.

Woosh een yéi jinaxtoonei! (Let’s work together!)

Article by Kevin O’Neal-Smith, as a lifelong Alaskan, he has pursued a career that supports and celebrates community, business, and the environment. Joining Adasina Social Capital in early 2021, Kevin serves as Impact Strategist and as a member of the Portfolio Management Team, helping coordinate the integration of social justice considerations into real-world investment strategies. Kevin has experience managing data and systems required for portfolio screening and construction aligned with social justice values, as well as developing and contributing to investor mobilization campaigns focused on addressing racial, gender, economic, and climate justice within public markets. Kevin holds a bachelor’s degree in both economics and business administration from Fort Lewis College, as well as a certificate in ESG investing from the CFA Institute.

Through service as Vice Chair of the Seacoast Trust and as Board Member of the Katlian Collective, Kevin is committed to supporting new economic models in which access to capital and a strong foundation of Indigenous values is the basis for healthy communities and the conservation of natural resources that benefit future generations. Kevinis Tlingit, Yéil (Raven), Gaanaxteidí (Frog clan), Kutis’ Hít (Looking Out to Sea House). His Tlingit name is Yaa sh kanda. éts’.