Models for Economic Recovery

Economic fallout from the COVID-19 pandemic as well as the social- and economic-justice protests raging across America in late May 2020 have exposed deep fissures in our economy that have been well known to Native America long before the current crisis. Native Community Development Financial Institutions (CDFI's), public- and non-profit sector partners, Foundations and individual philanthropists have been working to correct the information and capital asymmetry between tribal communities and mainstream capital markets. The following excerpt and adaptation from _Creating Private Sector Economies in Native America: Sustainable Development through Entrepreneruship_ is an effort to provide insights on the path forward.

Tribal Economic Resurgence: Reflections from a Tribal Economic Development Practitioner

Where English canon law was used as a weapon to dispossess Native people of their lands, languages, and cultures; Western-style finance as a tool has been withheld through current times for the rebuilding and resurgence of tribal nations. To this day, the overwhelming majority of tribal communities face social and economic problems arising in part from inadequate community development to support economic opportunity and the overarching challenge is a lack of access to capital. The issue is now so entrenched that it is as if both tribes and conventional financial institutions are operating on completely different planes. The reticence tribes maintain toward the use of private capital comes in large part from a simple lack of precedent in accessing capital – we fear what we don’t know or understand. That inertia is compounded by traditional lenders’ compliance expectations that often require robust legal, programmatic, and administrative infrastructure that many tribal organizations and Native business owners have not yet developed. Moreover, tribal trust land has limited use as collateral and conventional bank credit standards are often inflexible. The consequent lack of capital, collateral, and credit produces a negligible economic base in Native communities.

This resulting economic climate negatively impacts development and inhibits opportunities to strengthen self-governance, social development, industry diversification, and tribal employment opportunity. Consequently, Native people remain locked in what MacArthur Award-winning writer Ta-Nahisi Coates calls compounded deprivation – which can be described as the crushing effect of the shared myriad indignities affecting one group and including political disenfranchisement, health disparities, educational inequities, disproportionate rates of violent crime and incarceration, as well as unresolved historic trauma. Yet, the foundation for lifelong educational and economic equity for Native people rests in tribal governments’ ability to provide economic opportunity. To do so, private capital must be as readily accessible and in use on tribal lands as in any non-Indian community.

Despite the tribal economic success stories, too many tribal governments remain heavily and often exclusively reliant on federal grants for their government operations and economic development costs. Decades of stagnant reservation economic activity make it obvious that grant funds alone are not sufficient to build vibrant economies or successfully affect the social distress in tribal communities. An exclusive reliance on public sector funding may have even exacerbated issues as tribal economic landscapes are often dominated by an institutionalized bureaucracy of social programs. One result is the regular weekend exodus to off-reservation border towns by tribal community members to find any meaningful variety of commerce, banking, and even entertainment.

Non-Indian rural communities in Appalachia, or communities in the deep inner city, also lack commercial amenities. However, by comparison one of the defining characteristics of rural tribal economies is the heavy influence of federally funded institutions as the primary source of employment. Also indicative is the palpable lack of entrepreneurial activity that scales beyond the tailgate on the side of a road or the booth at a fair or cultural event. Aside from the informal economic exchange at local social or cultural events and with some very notable exceptions, Native entrepreneurs who have had commercial success serve markets primarily outside of tribal communities. No doubt, small business opportunities such as the production and sale of high-end Native art and state minority preference or tribal preference in contracting have promoted unique opportunities for small business growth and employment. However, the pervasive and ubiquitous presence of tribal government programs, departments, and their agents seems almost to stifle the creativity and innovation that enterprising activity demands. Yet tribal governmental entities are too often maligned, and their employees are typically the very tribal residents that efforts toward a broader, more just economic environment seek to benefit.

Insights from the Philanthropic and Developing Worlds

Historically, Native American causes receive less than 0.5 percent of philanthropic giving and so when a small group of foundations expressed interest in directing funds to support Native Community Development Financial Institutions (CDFIs), a new model for the work of building tribal economies began to develop. Unlike bank representatives who considered the extension of credit to tribes and Native people residing on tribal lands “brain damage,” private foundation staff and trustees had already spent decades evaluating how to address severe social and economic concerns of Indigenous communities in Central and South America and many other areas of the world. Those investments, as well as those of the World Bank and International Monetary Fund, provide a rich source of data and analysis about community economic development and individual economic behavior that can inform the development of tribal economies in the United States.

Success is closer at hand than before the advent of Native CDFI's and private foundation impact investing efforts and yet we must acknowledge that self-congratulatory language about commitments to palliative measures is the realm of politicians. In addition to the on-going, dedicated effort of Native CDFI's and our allies, an honest discussion about affecting poverty and social distress requires a more consistent, solemn, and mindful internal dialogue about the role each of us plays in our daily interactions with each other.

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