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Data from a Native CDFI yield new insights on wealth gap in Indian Country

In the absence of public sources, sample data from a Native community development financial institution point to a striking household wealth gap between Native Americans and other groups

August 3, 2022


Donn Feir CICD Research Fellow (former)
Elijah Moreno Senior Research Assistant, Center for Indian Country Development (former)
Lakota Vogel Class B Director
Data from a Native CDFI yield new insights on wealth gap in Indian Country, key image
A view of the Cheyenne River Sioux Reservation in South Dakota. Four Bands Community Fund, which serves residents of the reservation, provided data to help Minneapolis Fed researchers explore Native household wealth. Dawnee LeBeau for Minneapolis Fed

Article Highlights

  • Sample data from a Native CDFI’s clients suggest breadth of Native-White wealth disparity
  • Native Americans have unique mix of assets and debt
  • Economic marginalization and limited credit access contribute to wealth gap
Data from a Native CDFI yield new insights on wealth gap in Indian Country

Wealth supports economic flourishing in important ways. Not only does wealth confer economic security during times of personal financial crisis, it also enables investments in education, homeownership, entrepreneurship, and other forms of human and physical capital that pay off down the road. Consequently, pervasive racial differences in wealth have serious economic implications. These differences may play an important role in explaining why low-income households of color experience more downward economic mobility than White households. Given the history of Indigenous dispossession and its potential implications for Indigenous wealth today, it is critical to identify the contemporary, racialized patterns of wealth and highlight the unique challenges in building assets in Indian Country.

How do the wealth, assets, and debt of Native Americans compare with those of other groups throughout the United States? Available data allow researchers to explore wealth and wealth disparities among Black, Latino/a, Asian, and White Americans, but they do not permit investigation of wealth differences between Native Americans and other groups in the United States. For example, the Federal Reserve Board’s Survey of Consumer Finances (SCF), the key national survey used to measure wealth in the United States, does not identify Native Americans in public versions of its data, and its confidential data contain only a small number of Native American respondents.* In the absence of such data, we examined the assets and debt held by clients of Four Bands Community Fund, a Native CDFI (community development financial institution) on the Cheyenne River Sioux Reservation in South Dakota. While the Four Bands clients in the sample we analyzed—all of whom are Native—differ from the overall American Indian and Alaska Native population in the United States in some ways, these differences likely balance one another out on the whole. (For more on the data and the representativeness of the Four Bands sample, see our “About the data” appendix.) As such, the Four Bands sample can inform us about the striking wealth differences between Native Americans and other groups.

What is a Native CDFI?

A community development financial institution, or CDFI, is a specialized entity that provides financial products and services, such as small business loans and technical assistance, in markets not fully served by traditional financial institutions. If a CDFI has at least 50 percent of its activities in Native American, Alaska Native, and/or Native Hawaiian communities, it is referred to as a Native CDFI. As of 2021, there were more than 70 Native CDFIs operating in the United States. Four Bands Community Fund, which provided the data we discuss in this article, is among the first-established and largest of the group.

Native CDFIs’ program offerings include loans, business development services, credit counseling, and financial education. According to a recent study conducted by our Center for Indian Country Development team and research partners, the presence of Native CDFIs can lead to significant increases in the credit scores of individuals who live nearby. Read more.

Understanding Native wealth

The median Four Bands client’s household has much lower wealth, assets, and debt than the median White, Black, and Latino/a households in the SCF. See Figure 1. The median wealth, or net worth, in the Four Bands sample was roughly $5,524, while the median net worth of a Black household was $20,730 and the median net worth of a White household was $181,440. Comparing these numbers to those of White households in the SCF implies that the White-to-Native net worth gap is 32 to 1. This wealth gap has real consequences. For example, data from the National Financial Capability Study reveal that while 45 percent of White respondents said they were certain they could come up with $2,000 if an unexpected need arose within the next month, only 25 percent of American Indians and Alaska Natives answered in the same way.

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It appears that lower wealth for households in the Four Bands sample is accompanied by lower assets and debt. The median value of assets held by Four Bands clients was $16,650 and the median debt was $8,521, by contrast to White median assets and debt of $296,000 and $35,000, respectively. (Note that median debt cannot be subtracted from median assets to calculate median wealth, given that medians are calculated separately for each variable.)

A unique mix of assets and debt

Assets and debt can take on very different forms. Housing is the largest component of assets for White, non-Latino/a households, making up 43 percent of all their assets. See Figure 2. Black and Latino/a wealth is also largely driven by housing, at 32 percent and 37 percent, respectively. However, the pattern is strikingly different for our sample of Native Americans from Four Bands Community Fund. The total value of residential housing accounts for only 17 percent of all the assets the Four Bands clients own, which is similar to the role of wealth held in life insurance policies (13 percent). Vehicles are by far the largest component of assets for the people in our sample. Another notable difference is the significant proportion of wealth that the people in our sample hold in non-financial assets, which consists largely of art, regalia, and guns.

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The higher proportion of reliance on vehicles as assets may be related to the rural location of Four Bands clients and the relative availability of auto financing. While vehicles are useful assets, depreciation of their value is a potential concern for their ability to provide a financial buffer in times of emergency, like during the disruptions caused by COVID-19.

The nature of home mortgaging on reservations is a factor in generating lower housing-based wealth. Much of the land on reservations is held in trust by the federal government, and as a result, many homeowners on reservations do not hold full title to the land underneath their homes. This implies that home values will not rise with the value of land, limiting increases in households’ wealth. For households living on trust land, other mechanisms than traditional homeownership may need to be considered for building asset value.

As for debt, mortgage debt is by far the largest form for White, non-Latino/a households, while other debt, such as personal loans, accounts for the largest share of debt for Black households. See Figure 3. On the other hand, by far the largest form of debt for our sample of Native American Four Bands clients is auto loans. This is consistent with the relatively high share of assets in the form of vehicle value seen in Figure 2. Mortgage debt, credit card debt, and other loans appear to be much less significant drivers of Four Bands clients’ overall debt.

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What’s driving low Native American wealth

There are many reasons—rooted in historical and contemporary experiences—for differences in wealth, assets, and debt between Native Americans and White Americans. Economic marginalization and, on average, lower incomes and fewer employment opportunities for Native Americans make saving more challenging and building assets more difficult. These differences can compound over generations as inherited wealth contributes to disparities between groups.

Limited access to reasonably priced credit is another potential cause. In a large survey of Native Americans by the U.S. Department of the Treasury in 2001, 65 percent said that conventional mortgages were “difficult” or “impossible” to obtain. Native American borrowers whose mortgage applications are approved face higher interest rates: nearly 30 percent of mortgage loans between 2010 and 2017 made to Native Americans living on reservations were 1.5 percent above the average prime rate, thus officially counting as “high-cost” loans. Paying a higher interest rate makes accumulating equity more difficult.

Native-owned and -led development organizations, particularly Native CDFIs such as Four Bands, are at the forefront of policy conversations and the on-the-ground work of supporting wealth creation in Indian Country. This analysis would not have been possible without Four Bands’ support and its focus on helping build Native wealth. However, individual data holders can only offer a partial picture of wealth in Indian Country. Future efforts to fully represent Native Americans in the SCF would be a critical piece in the policy conversations to close the suggested Native-White wealth gap.

The authors thank Dillon Corrigan for his initial data analysis.

Appendix: About the data

This analysis uses a securely transferred, anonymized sample of confidential data from 213 clients of Four Bands Community Fund, a Native CDFI (community development financial institution) located on and serving the Cheyenne River Sioux Reservation in South Dakota. The data are from 2016 to 2018; for comparison with the 2019 Survey of Consumer Finances (SCF), we adjusted these values to 2019 dollars.

To get a better sense of how representative the Four Bands client sample is, we compared it with a sample of Native Americans living on the Cheyenne River Sioux Reservation from the 2015–2019 American Community Survey. We found that Four Bands clients have somewhat lower incomes, despite being older and more educated on average. When comparing the Four Bands clients to the American Indian and Alaska Native population of the United States overall, we again found that the Four Bands clients are older, have lower incomes, and are more educated. Given that the Four Bands clients are older and more educated than average, they may have more wealth. However, their lower incomes may suggest they have less wealth. We believe that, on average, these factors counterbalance each other. While our analysis likely does not precisely reflect the experiences of Native Americans overall, it is nonetheless informative in the absence of comprehensive data from the SCF.


* One of the few reports that measures Native American wealth comes from a case study from the National Asset Scorecard for Communities of Color Project, which oversampled the local urban Native population in Tulsa, Oklahoma. It found that among some tribal nations, the median net wealth was less than one-tenth the wealth of the local White population.