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Treasury Notes

 Prioritizing Economic Growth in Native Communities

By: Kimberly Beauman
12/21/2012

Earlier this month, Deputy Treasury Secretary Neal S. Wolin spoke at the White House Tribal Nations Conference to outline Treasury’s initiatives to support the economic development of Native Communities across the nation. One program highlighted by Deputy Secretary Wolin was the Native Initiatives, which has already helped many communities, and is administered by the Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund).

The CDFI Fund’s Native Initiatives are a vital component of Treasury’s strategy to promote economic growth in low-income and distressed communities. Created in 2001, the Native Initiatives were specifically designed to address the unique barriers that prevent access to capital and safe financial services in Native communities—communities of Native American, Alaska Native, or Native Hawaiian descent. Through a combination of awards that provide financial and technical assistance and comprehensive training workshops, the Native Initiatives have enabled the growth of Native Community Development Financial Institutions (Native CDFIs) from just seven in 2001 to more than70 today.

The Native Initiatives continue to support this growing financial industry and, toward that goal, today Treasury is opening the fiscal year 2013 award funding round of the Native Initiative’s award program, the Native American CDFI Assistance Program​. Pending final Congressional authorization, the 2013 round will provide up to $12 million in assistance to Native CDFIs. One of the first Native CDFIs, and a true success story of the Native Initiatives, is the Lakota Funds. Lakota Funds serves the Oglala Lakota Oyate people on Pine Ridge Indian Reservation in South Dakota; an area with one of the highest poverty levels in the nation where it’s estimated that half of the population lives below the Federal poverty level and unemployment ranges between 70-80 percent.

Starting off in 1986 as a microlender, Lakota Funds has grown significantly and expanded its loan products to meet the unique needs of its community.  Lakota Funds has now made more than $6 million in loans to 450 businesses and entrepreneurs serving the Pine Ridge Indian Reservation. A critical component of this success was made possible by the CDFI Fund, which awarded the Lakota Funds over $2.4 million through nine separate grants that expanded its lending capacity.

The impact made by the Lakota Funds is very visible on Pine Ridge, and can be seen in the craft shops, restaurants, and construction and maintenance businesses that it has financed for Native residents. Some of the entrepreneurs have been so successful they have returned to Lakota Funds for additional financing to expand their businesses: Rosalie Red Elk and Ron Little Thunder have received financing from Lakota Funds twice to allow them to start-up and expand their quilting business, Rosalie’s Quilting. After using the financing to purchase sewing machine equipment, Rosalie can now produce an average of 160 star quilts monthly.   

What will have an even greater impact is the new Lakota Federal Credit Union, the first ever federally insured financial institution located on the Pine Ridge Indian Reservation—the next closest one is 45 miles away. A steering committee affiliated with Lakota Funds received three separate awards from the CDFI Fund’s Native Initiatives to help stand up the credit union, which will provide an alternative to predatory moneylenders and check cashing services in the community. The credit union will provide savings accounts, debit cards, and financial literacy programs. The Lakota Federal Credit Union opened on December 1, 2012 to lines of people outside of their doors. 

Across the country, Native CDFIs similar to Lakota Funds have established themselves as innovative financial institutions that are driving economic development in Native Communities. . The continual demand for this program ensures that future organizations will be able to expand their ability to serve their local communities and to follow in the success of the Lakota Funds. The CDFI Fund is also in the midst of developing a new study to assess the availability of capital and credit in Native communities—more information about the study can be found on the CDFI Fund’s website.

For more information about the CDFI Fund, the Native Initiatives, or the CDFI Fund’s other programs, please visit www.cdfifund.gov.

Kimberly Beauman is a Legislative and External Affairs Specialist for Treasury’s Community Development Financial Institutions Fund.  ​

Posted in:  Community Development Financial Institutions Fund
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