Building Community through Finance: A Wisconsin Native CDFI’s Story

This article is the fifth in a series of articles that NPQ is publishing in partnership with First Nations Development Institute (First Nations). The series, which will conclude next week, aims to highlight leading economic justice work in Indian Country and identify ways that philanthropy might more effectively support these efforts.

Native CDFIs (community development financial institutions) are lenders operated by and serving Native American communities. In the first round after the CDFI Fund launched in the mid-1990s, the number of certified Native CDFIs was two. Today, there are 69. Even so, enormous gaps remain. The national Native CDFI Network, on whose board I serve as vice chair, reports that 23 states are still without Native CDFIs. An estimated 86 percent of Native communities still lack a single financial institution. But our movement is growing rapidly, and there’s a promising road ahead.

I have committed nearly 15 years of my life to this movement thus far. I was the founding CEO for 14 years of the Wisconsin Native Loan Fund (WINLF), whose mission is to advance financial self-sufficiency for Native American communities statewide. I now work at the Oweesta Corporation, a national Native CDFI intermediary, where I manage partnerships with Native CDFIs across the country, including WINLF. Here I will focus on my experiences at WINLF, including the changes that COVID required.

WINLF began in 2007 in Lac du Flambeau, a small rural community of roughly 2,000 people that is home for the Lac du Flambeau Band of the Lake Superior Chippewa nation. The fund’s loans reach communities that are totally off the map and facilitate access to capital.

Back in 2016, WINLF went statewide. In Wisconsin, there are 11 federally recognized tribal nations. Ten are reservation-based, and one has different parcels of land. These communities are: the Bad River Band of Lake Superior Chippewa; Ho-Chunk Nation; Lac Courte Oreilles Band of Lake Superior Chippewa; Lac du Flambeau Band of Lake Superior Chippewa, where WINLF is headquartered; the Menominee Tribe of Wisconsin; the Oneida Nation, where I am an enrolled member; Forest County Potawatomi; Mole Lake Band of Lake Superior Chippewa; the Stockbridge-Munsee Community Band of Mohican Indians; the St. Croix Chippewa; and the Red Cliff Band of Lake Superior Chippewa.

WINLF started very small, with $50,000, in 2007. Today, it has nearly $6 million in assets and a nearly $4 million loan portfolio. And, with a new award just received from the US Treasury Department, assets will soon be closer to $7 million. I am very proud of what has been accomplished.

Most CDFIs, especially Native CDFIs, are doing business lending. WINLF is different, having begun primarily as a housing-based lender. The fund’s very first loan product was for home improvement loans. Now WINLF does extensive housing lending and consumer lending (such as car loans and debt consolidation), and it does business lending as well. Along with serving those three sectors, WINLF envisions building its capacity to help finance tribal projects.

WINLF Responds to COVID

When COVID hit, WINLF had to pivot to stay open and accessible. This required operating on a hybrid model—people either had to socially distance in the office or telecommute. (Some were already telecommuting; most staff have that ability.) This also required rolling with the punches. I don’t know how many times I heard, “I don’t know what to do next. How can you help?” Many clients were like deer in the headlights, pleading, “How do I navigate this?” We had to be ready.

WINLF developed a new COVID relief loan product to help people make ends meet. We deferred payments and otherwise tailored services and products to clients’ needs. Within all of this, as an organization, we had to be flexible and ready ourselves and make sure we were not going under. We had a large loan portfolio, and we had to ask ourselves: Is it going to go south?

Fortunately, the measures put in place worked. This included adding interest payments on the back end of loans on a case-by-case basis and creating working capital relief funds. With the latitude provided by one funder, for the first time WINLF had the ability to provide small grants of $500 to $1,000 to assist with delinquent loan payments. Technical assistance, which had been one-on-one in person, was shifted to Zoom meetings. Classes were also moved online and webinar offerings expanded.

I should add, despite the challenges, there have also been massive opportunities. The state provided WINLF a little funding and a more cohesive working relationship. Then, there has been the support from the US Treasury and different acts of Congress. I’ve always looked at CDFIs as beacons of hope. The pandemic has been a game-changer for our industry, with CDFIs gaining access to unprecedented funding and resources. CDFIs are masterful at leveraging dollars and creating generational ripple effects of impacts with their funds.

How Native CDFIs Build Communities

The biggest thing to understand about the impact of a Native CDFI in a community—not just WINLF, but any CDFI—is the transformative effect of having access to capital. When a Native CDFI comes to a community, suddenly there is a new resource that had never existed before. Buying a car, a home, or starting a business becomes achievable. Just creating these institutions in Native communities, especially small rural Native communities, the message that gets sent out is clear: “Wow, there’s this financial institution that is for me.” Building that trust has been fundamental. People come to us as a resource. The loans are education-based; the foundation of all Native CDFI lending is based on education.

Many people in Indian Country live in subsidized housing. They want to be homeowners—the first generation of homeowners in their families, at times. At WINLF, we worked with one family on their credit history. They had an existing auto loan through a finance company. We realized they were paying 44.4 percent on the auto loan. They were not aware of the exorbitant, predatory rate they were paying. We were able to refinance the loan at seven percent, enabling them to finance the purchase of their home. They are now first-time homeowners. This is just one example of how a CDFI can be a game-changer.

Teaching people how to read a credit report, and know about assets and how to leverage them, is one of the foundations of Native CDFI work. Helping people understand all these concepts that aren’t taught in school is a baseline of the work. Native CDFIs level our people up by sharing financial tracking tools and teaching important financial concepts.

The same is true with small business. Having a Native CDFI as a resource paves the way for entrepreneurship. WINLF’s business lending has been widespread. The loans made vary, from construction businesses to beauty salons to dog groomers.

One WINLF client supports Native American craft businesses. The uniqueness of their business model is that it operates with an incubator model. They also do workshops. They assist 30 Native entrepreneurs in selling their wares. People can sell their wares through this brick-and-mortar shop without having to build their own storefront and having the overhead that goes with it.

Successes and Challenges

At WINLF, there have been many successes. Loans have been made to members of every tribal nation in Wisconsin and in urban areas. WINLF has done the gamut of what the fund’s name speaks to. Other successes have been the results of partnerships of Native CDFIs working together.

One critical partnership is that WINLF joined forces with three other Native CDFIs in the state—First American Capital Corporation (FACC), First Nations Community Financial (FNCF), and NiiJii Capital Partners, Inc. (NiiCaP)—working together in a sphere of trust to form the Wisconsin Indian Business Alliance (WIBA). Combined, the four CDFIs have loaned out over $32 million to tribal members to date, and the groups intend to turn this partnership into a formal 501c3 corporate structure. There are so many stories of building up clients, boosting Native-owned businesses, increasing homeownership, and helping people out of debt. This work has a ripple effect and helps break the cycle of intergenerational poverty. This work instills a sense of pride and self-worth—and has a synergistic effect on tribal communities.

The challenges of this work, of course, are many. At WINLF, I sought to grow the organization as its own business while doing as much lending as possible. I was a staff of one for the first seven years of operations; we didn’t have the capacity. Now it’s getting there, but even today, WINLF has a limited staff of five people. The challenge has been to grow the organization and be able to operate on the level that is needed. It’s a constant struggle, like a dog chasing its tail, to raise the capital required to stay ahead. It feels like a corner has been turned in the last couple of years. But much work remains to be done.

What Philanthropy Can Do—And Should Not Do

Philanthropic support is important in the work that Native CDFIs do. Every CDFI works toward self-sufficiency. WINLF, right now, is at 45 percent. WINLF wants to reduce its reliance on grants, but to do that requires growing the portfolio by many millions. Of course, as the portfolio grows, the staff grows as well.

I always preach that operating capital is the hardest money to come by. If I could, I would get funders to remember one key thing: pay for people. That’s the bottom line. People get the job done. If you want to do a grant, do it holistically. Human resources, human capital, is the most important thing. Funders sometimes miss the mark on that.

Despite some notable exceptions, some funders think they know what we need and how we need to do it. They don’t understand the nuances. They don’t understand the administrative burden they put on people at times. There are times where, if hindsight is 20/20, the opportunity cost isn’t worth the administrative burden. Answering the call to action by addressing the needs of our communities should be deliverables enough without being bogged down in extensive reporting. Balance is the key to the administrative piece of the grantor-grantee relationship.

If I were a funder, I would listen—truly listen—and ask Native CDFIs, “What are your true needs? What are the burdens, challenges, and opportunities of partnering?” The onus is on Native CDFIs too. We need to bring funders and partners in and show them these are the real issues that need to be addressed. Sometimes, we need to be very creative. We work at a lot of different levels. One example might be that some clients handle their finances on a cash basis; the whole notion of a check register is a new idea for some. Funders sometimes look from such a high level that, often, they don’t see that we are dealing with baseline issues.

Building Thriving Communities

At WINLF, a central goal is always to leave no client behind. Native CDFIs need to ensure that everyone is aware of our resources and that people are accessing them. I would like to see more CDFIs like WINLF partner with tribal nation projects and help them finance the building of different facilities, such as tribal grocery stores and other tribal enterprises.

My vision is that Native people are self-sufficient and knowledgeable about money, leveraging assets, and becoming homeowners and business owners, and knowing how to use their assets wisely. This includes not overdoing credit and teaching their children how to use credit wisely.

At WINLF, we partnered with schools. Financial education needs to be built into school curriculums across the nation. Wisconsin’s governor used to be the superintendent of the department of public instruction. The time is ripe for a fundamental shift to ensure that practical things have more emphasis in our schools and our homes. For example, my teenager asked recently, “Teach me about insurance—what is a deductible?”

I was just talking with the treasurer of one tribal nation. We agreed that this needs to be dinner-table talk among families. I want CDFIs to be at the forefront of that. I am hoping that as an industry, we can grow our capacity (meaning human capital) and our impact to get that job done. I believe that education is empowering. Education is the foundation of everything we do. We can thrive, from there on out, as a people.