CICD Blog

Indian Business Alliances: Rooted in Entrepreneurship, Growing Native Economies

Indian Business Alliances Support Native Entrepreneurship and the Diversification of Native Economies

Sandy Gerber | Community Development Senior Project Manager

Published January 10, 2018


Part One: Origins and Elements


Introduction

This article represents the first in a series that will highlight the important role Indian Business Alliances (IBAs or the Alliances) play in reservation economies, from assisting Native business owners to forging relationships with state governments. The purpose of Indian Business Alliances is to support the growth of Native entrepreneurship, on and off reservations, through leveraging the resources of diverse partner organizations. The Indian Business Alliances could be a model replicable beyond the Ninth District of the Federal Reserve Bank of Minneapolis.  With active business alliances operating in other parts of Indian Country, we might see an expansion of private sector businesses in Indian Country and more diverse employment opportunities in Native communities.

Upon the request of many Native community development professionals in our region, the Minneapolis Fed helped organize and develop Indian Business Alliances (IBAs) in five of the six states in the Federal Reserve’s Ninth District. The first IBA was founded in Montana in 2006 with the goal of growing Native-owned businesses in Montana and addressing barriers to their success. Stakeholders saw the potential value of a state-based coalition to support Native business development, and IBAs were established in fairly quick succession in South Dakota (2007), Minnesota (2008), North Dakota (2012), and Wisconsin (2013), most often following a statewide Indian business conference that promoted the concept and development of independently-owned Native businesses.   

Since 2006, the five Indian Business Alliances have contributed to changing the business climate on reservations through an emphasis on Native entrepreneurship.  Many reservation economies are based on jobs offered through the tribal government or business subsidiaries owned by the tribal government, such as casinos or hotels. Tribally-operated businesses have often served as needed economic engines that have jump-started reservation economies and provided much-needed employment to Native people, as well as supported the greater local and regional economies.  However, the revenues from tribally-operated businesses often are used to supplement tribal programs and services, with a lesser focus on efforts to increase individual or household income and assets. By concentrating on Native entrepreneurship, IBAs attempt to address the desire of many Native individuals and households for more income and assets, as well as meet the need for locally available goods and services.

The Alliances employ a host of strategies that emphasize economic diversification, increased access to capital for Native businesses, skill-building and training for Native entrepreneurs, legal infrastructure to support private enterprise, and advocacy for the equitable allocation of public resources to advance economic development in Indian Country. More than ten years since the inception of the first IBA, Community Development staff at the Minneapolis Fed have supported the Alliances in their role as a voice, resource, and advocate for a private Native business sector.

Structure and Funding

The organizational structure of the Alliances ranges from a diverse network of affiliated organizations to a nonprofit with designated 501c3 status. Some of the core members include:

  • Native Community Development Financial Institutions (NCDFIs)
  • Tribal economic development agencies
  • Native community development organizations
  • Tribal colleges
  • Lending institutions and bank regulators
  • State and federal agencies
  • Native business owners

Though there are many diverse partners, the key to each IBA’s success is Native leadership with strong Native participation on Executive Committees organized around each Alliance’s bylaws. The Executive Committee designates subcommittees and working groups to implement various projects and objectives, with staff or consultants sharing some of the responsibilities.  Projects and activities include:

  • Community development forums
  • Conferences, workshops, and trainings
  • Research and publications
  • Public policy education and engagement

Nearly all the IBAs carry out their activities with minimal outside funding, though some have added staff with grants from private foundations or financing from their state governments. Additional funding for conferences or special events has generally come through IBA partners and community sponsorships. Consistent and steady funding is one of the challenges in expanding the Alliances’ work and influence.

IBA Strategy

Most IBAs frame their business development strategies around four tiers of economic development:  governance, infrastructure, finance, and resources (see Figure 1.  Business Development in Indian Country - A Strategic Approach to Sustainability). This strategic pyramid embodies the principle that a strong foundation is needed to support the components of economic development. In practice, IBAs can work on all four levels simultaneously, or on one or two, based on the needs and priorities of their communities.

Governance, particularly good governance, is fundamental to creating a positive business environment. The key principles of good governance include separation of powers, an independent judiciary, and promotion of economic development.

Infrastructure includes the establishment of at least three types of infrastructure: physical (buildings, roads, and broadband), legal (commercial codes and court systems), and human development (workforce development). Tribes are sovereign governments with inherent authority to make their own laws and be ruled by them in their own courts. Thus, private businesses on Indian reservations must follow tribal law and jurisdiction, emphasizing the importance of establishing and adhering to business-supportive law and policy.

Finance includes both the capacity to utilize capital investments and access to capital and financial resources such as commercial loans, loan guarantee programs, and tax credit financing.

Resources for entrepreneurs include marketing opportunities, business planning classes, business networks and mentoring, and financial education training.

Within this strategic framework, each IBA has pursued a vision that extends beyond economic development and reaches toward community development—that is, the multi-faceted flourishing of Native individuals and communities. Toward that end, IBAs have contributed to the creation of tribal liaison positions within state government, assisted tribes with adoption of commercial codes, and participated in developing innovative financing tools for Indian-owned businesses.

Minneapolis Fed staff have focused their involvement with the IBAs in two key areas.  One is legal infrastructure development with the objective of reducing the perception of risk for lenders. This work includes the development of a Model Tribal Secured Transactions Act (MTSTA) and its companion Implementation Guide, along with a training curriculum for tribal judges. In addition, Fed staff have assisted tribal leaders with the adoption of commercial codes specific to their tribes.  A second area of focus is access to community development finance.  Minneapolis Fed staff, along with Community Affairs staff from the other banking regulators (the FDIC and the OCC), hold community development forums that include tribal leaders and banks to help raise awareness about Indian Country business opportunities and initiatives, as well as address lending and investing concerns. In addition,  we hold Interagency (Fed, FDIC, OCC) training sessions about the Community Reinvestment Act (CRA), under which  banks are examined to ensure they are lending and investing in all parts of their service area, including those areas that are low- and moderate-income. Since Native communities often contain residents and geographic areas that are predominantly low- or moderate-income, community leaders may be interested in learning how the CRA law might apply to their communities.    

Conclusion

Indian Business Alliances offer an innovative approach to increasing opportunities for private business development in Indian Country, as demonstrated in the Federal Reserve’s Ninth District. Understanding their purpose, conceptual framework, and organizational nuts-and-bolts is a first step in exploring the meaning and value of this model.  The next article in this series will highlight the programs, activities, accomplishments, and commonalities among the various Alliances.

Sandy Gerber is the Coordinator of Indian Business Alliances for the Minneapolis Fed.

 
 

Top