Starting in 2008, residents of the Crow Creek Indian reservation and some apparently unlikely bedfellows—a prominent businessman, a church congregation, and two freshly minted attorneys—came to be deeply involved in improving the reservation's economic circumstances. Their partnership led to the establishment of Harvest Initiative and Hunkpati Investments, two community-based, locally controlled entities that are contributing to stirrings of economic development on Crow Creek. While the reservation is a small geographic area in a remote corner of America, the story of what happened there may provide lessons for other regions and actors in the realms of economic development, race relations, antipoverty strategies, and philanthropy.
A desire for microlending
Barry Griswell is the former CEO of the Principal Financial Group, a financial services corporation headquartered in Des Moines, Iowa, and current CEO of the Community Foundation of Greater Des Moines. He is also a member of Ashworth Road Baptist Church in Des Moines, which is affiliated with the Cooperative Baptist Fellowship (CBF). One Sunday in late 2007, two representatives of a CBF-sponsored antipoverty initiative spoke to the Ashworth Road congregation. They pointed out that one community in the region—the Crow Creek Indian reservation in central South Dakota—was among the poorest in the nation. Griswell gave the speakers a donation to help cover community needs on Crow Creek and was then asked to come to the reservation and take a look for himself. He agreed, and traveled there to meet with Crow Creek community leaders and tour the reservation's three towns—Fort Thompson, Crow Creek, and Big Bend.
"The living conditions and the poverty were shocking," Griswell recalls. His comment is borne out by statistics. According to recent census figures, 53 percent of Crow Creek's approximately 2,200 residents were living below the poverty level, compared with 13.5 percent in both South Dakota and the United States. Median household income was $23,558, compared to $44,828 for South Dakota and $51,425 for the United States.1/ In addition to facing high poverty rates, residents faced decaying institutions and infrastructure. To name just a few examples, the water system was disintegrating, the Head Start building was condemned due to black mold, and the ambulance service had been discontinued.
Reversing the decay through investment and job creation seemed out of reach because financing was an obstacle. "They couldn't start businesses, couldn't get financing. They were met with a lot of prejudice when trying to get loans," Griswell says. In fact, there were only two private businesses on the reservation. During Griswell's visit, Crow Creek leaders noted that one of their greatest desires was to develop a microlending program to serve entrepreneurs, but they had no technical or financial capacity to even begin exploring the idea.
A substantive proposal
In January 2008, Griswell paid another visit to Crow Creek, bringing along two young attorneys he met through Ashworth Road Baptist Church. Jason Yates had interned at the Iowa office of USDA Rural Development, where he had become familiar with agricultural development programs and revolving loan programs. Dustin Miller, a law school buddy of Yates', had also interned at USDA Rural Development and had spent a summer in Kenya doing microlending.
After observing and discussing the conditions on Crow Creek, Yates and Miller asked Griswell if he'd entertain a proposal for substantive engagement on the reservation. Griswell agreed, and the two attorneys then wrote a development plan that had an ultimate goal of launching a Native community development financial institution (CDFI)2/ to do microlending on the reservation. The plan called for a sustained effort to build deep, ongoing involvement from Crow Creek community members. Yates and Miller proposed to move to the Crow Creek area with their families and stay for two years while integrating into the community, engaging with residents, getting input on the plan, and working to implement it. Griswell contributed the money to pay for Yates and Miller's services for two years, enabling them to dive into the work at hand rather than spend time fundraising.
To establish credibility in the Crow Creek community, Yates and Miller determined that they had to remain independent of the potentially messy entanglements of tribal politics. In the summer of 2008, they moved to Pierre—close to the reservation, but not on it—and established an independent nonprofit organization, Harvest Initiative (HI), to explore the potential for community and economic development projects on the reservation. HI was designed as "a bridging organization that could pave the way for the CDFI, while involving Des Moines church members committed to getting the ball rolling," Yates says. Ashworth Road Baptist Church continued to provide support in the form of funding and service work. Additional financial support for HI came from the Citi Foundation, the South Dakota Governor's Office of Economic Development, and Barry Griswell.
HI was a means of engaging with community residents on projects that were important to them while building trust and relationships along the way. Acting as HI's representatives, Yates and Miller spoke one-on-one with community members and business owners.
"We took a bottom-up approach," Yates says. "Our first step was asking people what they wanted to do." Yates and Miller also engaged in a number of education and service projects around the reservation, such as teaching business planning and development at the tribal high school twice a week.
Sandra K. Isburg, whose family owns Shelby's Minimart, one of the only private businesses on the reservation at the time, recalls, "Jason and Dustin approached me and my sister and asked us about the challenges facing Native American businesses. We thought they were fly-by-night white guys who wanted information but would do nothing. So we gave them about ten minutes of our time. When they came back, they talked with us longer. Each time they came back, they gained more credibility, and we eventually told them the challenges our community faced."
Creating Hunkpati CDFI
While building trust and relationships in the community through their work with HI, Yates and Miller began researching the feasibility of their ultimate goal: to establish a CDFI on the Crow Creek reservation. With Tribal Chairman Brandon Sazue's support, along with assistance from the Opportunity Finance Network (OFN, the national trade association for CDFIs), HI undertook a market analysis, interviewing present and former tribal government leaders, other community leaders, and current business owners. The analysis convinced Yates and Miller that there was enough money coming into the reservation to support the businesses a CDFI would help create.
"Money does come into the reservation, even though people are low-income," Yates observes. "We looked at how much money leaves the reservation every month and goes to Chamberlain or Pierre. Even looking at the minimum subsistence checks that people get, if they spend it on the reservation, it can support businesses there."
Encouraged by the results of the market analysis, Yates, Miller, and Crow Creek community leaders moved ahead with forming a CDFI. They held an initial meeting in the winter of 2009, bringing in a consultant from OFN "who explained what a CDFI was, formed the first board, developed goals, discussed what kind of loans they could make, and developed a funding strategy," Yates says. In May 2009, Hunkpati Investments, a Native CDFI, was born. The entity's board of directors has a Native majority that includes several business-savvy reservation residents such as Sandra K. Isburg, who currently serves as board chair. Funding support comes from the U.S. Department of the Treasury, the U.S. Department of Agriculture, the South Dakota Community Foundation, the U.S. Department of Health and Human Services Administration for Native Americans, Citi Foundation, First Nations Development Institute, and First Nations Oweesta Corporation. In addition to providing funding, First Nations Oweesta Corporation provides Hunkpati with ongoing technical assistance.
A burst of new businesses
To date, HI and Hunkpati's programs include a small business equity fund, a revolving loan fund, a free tax-preparation program, financial literacy classes, a credit builder loan program, a business development curriculum and training program, community gardens, and a health and fitness program to address high rates of diabetes. In addition, an IDA (individual development account) program is under consideration.
All told, HI and Hunkpati have provided educational, financial, or other services to approximately 500 people, more than one-fifth of the Crow Creek reservation's population. The equity fund, which was initially run by HI and is now administered by Hunkpati, has made eight equity grants totaling $48,000. Since it began its lending operations in November 2010, Hunkpati has made seven microloans totaling more than $23,000. HI and Hunkpati have contributed to the development of nearly 20 new businesses on the reservation, including Dion Guide Service and Bait & Tackle, Pop's Coffee Shoppe, Ray's Body Shop, Hawk Tire Service, Bad Nation Barber & Beauty Shop, Dawnee's Home Repair, and MGF Roofing. In addition, HI has led the design, fundraising, and construction of a new community center that is being built in Fort Thompson, the reservation's largest town.
Relationships bear fruit
Hunkpati has been able to facilitate some relationships between Native entrepreneurs and several banks located in border towns. For example, business owners who receive Hunkpati funds are required to open separate business accounts at banks. However, bank loans to reservation-based businesses have been few so far. One bank in Chamberlain has made loans on the reservation and is willing to do more. Another bank has provided volunteer hours to evaluate Hunkpati equity and loan financing and would be willing to consider a loan for an expanding business that might be "graduating" out of an equity loan. Yates comments, "It's about building relationships; once they see that businesses can pay their loans back, they might be willing to make loans."
Krystal Langholz, executive director of Hunkpati, says, "We've been able to finance a lot of projects internally, but we're going to have to get ahold of more financing as businesses expand, and Hunkpati will be in second position." Langholz is hoping more banks will recognize that investing in a CDFI may help them earn a favorable rating under the Community Reinvestment Act (CRA).
Other connections established through HI and Hunkpati have led to some economic development breakthroughs. For example, in the fall of 2008, Yates and Miller read a Community Dividend article about a promising state-funded program in Montana that provides equity investments to Indian entrepreneurs.3/ HI and Hunkpati leaders met with the program's manager to learn more, then convinced the State of South Dakota to launch a pilot equity program modeled after Montana's, if matching funds could be found. Citibank and the Citi Foundation came on board to provide the match. The State of South Dakota has recently agreed to support similar programs on other reservations.
Another emerging initiative involves agricultural development. The Crow Creek tribe has a lot of agricultural land that isn't being used to its full capacity. "It's their biggest asset, and they're only realizing approximately ten percent of its potential," Yates comments. With that in mind, Miller built a relationship with Pioneer Hi-Bred, a DuPont Corporation subsidiary, that led to a multifaceted agricultural development agreement between the company and the Crow Creek tribe. The agreement involves identifying the best uses of Crow Creek's agricultural lands and determining what types of value-added food processing could be done on the reservation.
Lessons to share
While the Crow Creek reservation is small, tucked away in the hinterland, and made up of a mostly Native American population, the emergence of private businesses there can be a reference point for low-income, disinvested communities of many sorts. The principals in the HI-Hunkpati story believe that portions of their approach are replicable, and they have several basic lessons to convey. Specifically:
- It's about building relationships and trust. Gain the trust of the people you're trying to help, so they know that you have their interest at heart. Listen to their stories, get their input on what they need, and act on the information you receive.—Barry Griswell, Sandra K. Isburg, Krystal Langholz, Jason Yates
- Focus on economic development. To create more jobs and economic development, find ways to support local businesses and provide a practical education for residents.—Barry Griswell
- Keep it local. Ensure that a committed local board is driving the work. If you don't have that, it's probably because your programs don't fit the community.—Krystal Langholz
- Be clear and consistent. Have a clear strategic vision. Know what you want to accomplish, and don't just chase money. Then, deliver on what you say you're going to do.—Barry Griswell, Sandra K. Isburg, Krystal Langholz, Jason Yates
- Cover your costs upfront. Get direct financing for the work at hand and in a large enough amount, thus eliminating the need to fundraise for ongoing operations, and enabling a clear focus on the work.—Barry Griswell, Jason Yates
A wide wingspan
Yates, Miller, and Griswell's formal, two-year commitment to Crow Creek ended in 2010, but their work in Native economic development continues. Yates, who now lives and works in Des Moines, serves as board chair of HI. Miller works for the U.S. Department of Agriculture's Office of Tribal Relations in Washington, D.C. Griswell remains engaged with Crow Creek as a financial contributor, advisor, and frequent visitor.
Through their efforts, Yates, Miller, Griswell, Isburg, Langholz, and the many other individuals involved in the story of HI and Hunkpati have enabled Crow Creek to promote and support entrepreneurship, develop investment and consumer services, establish a potentially lucrative connection with a major corporation, and rebuild an important community institution. While community leaders recognize there is more work to be done, particularly in attracting bank loans for reservation-based businesses, they are confident that the stirrings of economic development that HI and Hunkpati have helped bring about in the last few years are just the beginning.
"There's great promise in the community," says Isburg. "We have a good group that's going to make improvements—in the community, for individual members, and even in assisting other tribes. Our wingspan is going to be wide."
For more information on Harvest Initiative and Hunkpati Investments, visit www.hunkpati.org.
Sandy Gerber is a senior project manager in the Minneapolis Fed's Community Development Department.