When Failure Is Your Starting Point There Is Nowhere to Go but Up. Are you the type of person that’s always looking for a good challenge? Here’s one for you to consider: We want you to provide financial literacy and entrepreneurial training to one of the poorest communities in your state. In fact, it’s also one of the poorest communities in the nation. The community of nearly 9,000 people doesn’t own land for homes or businesses. In many instances the people there have no credit score. Less than 1 percent of the businesses in the community are owned by a community member, and more than 47 percent of the jobs in the community are not in the private sector, but are government-related. Are you up for the challenge? It’s exactly what Tanya Fiddler took on when she became executive director of the Four Bands Community Fund, which serves the members of the Cheyenne River Indian Reservation.
The Four Bands Community Fund was started in 2000 as resource for financial literacy training, entrepreneurship education, and small business training and lending. To date the fund has lent out more than $8 million in cumulative deployment to its community. The people there are building credit and the community is growing because Tanya Fiddler accepted the challenge. She wasn’t satisfied with the status quo and wanted to make both herself and the community stronger through financial independence. This is her story.
[This article was originally published in Pollen on October 23, 2014]
Q1. Many of us are not familiar with the challenges of building financial literacy programs on a reservation. Can you share some of the hurdles that you faced starting out – including public versus private sector jobs, banking, and property ownership?
It is important to know that according to a CFED report, 55 percent of our tribal population is unbanked and/or under-banked (see map – the reservation spans Dewey and Ziebach Counties in South Dakota). Most have very limited experience with banking. Our tribe is federally recognized and has “sovereign nation” status. The nation owns and controls most native-owned land/assets and tribal members can get a “lease assignment” for business or homeownership purposes. In addition we can also get tribal range unit leases for native-owned ranchers. Having no land assets or property complicates the collateralization required to access financial products for loans or credit. So although you build a home on your five-acre land lease assignment, there is no value on the land or property. This also means that property taxes aren’t collected. Often that money is what sovereign states use for infrastructure development and maintenance.
When Four Bands started the reservation population was 80 percent Native American, however they owned less than 1 percent of the businesses. This was the major driving factor for our loan fund. We wanted to increase access to capital, provide business training and technical assistance, and support native business incubation.
We knew many of a tribal members lacked personal and business financials skills. Since our inception we have trained thousands of tribal members in these skills, along with bookkeeping, marketing, and other specialized courses. Knowing that our market had this low skill level going in, we tied all of our financial products to a training or technical assistance requirement. So far this work has resulted in over $8 million in loan capital deployed in two of the poorest counties in America. We say in our work that we are “creating our economy” because of the lack of historical investment in private sector development and job creation.
Job creation presents another unique hurdle in our community, as evidenced by the disproportionate number of government jobs provided on “the rez” (reservation). Our research shows that 47 percent of the jobs on Cheyenne River are government jobs, compared to 15 percent statewide and just 14 percent nationally. We needed more jobs in the private sector in order to create a more stable economy, circulate dollars locally, and decrease our dependency on the tribe and the federal government for jobs.
Q2. We know that many of us learn best from example. As you launched the Four Bands Community fund, how difficult was it for these communities to identify “examples of good” in financial literacy to learn from?
It was extremely difficult. We were trying to expand the financial education work in many ways, but because of the huge need for it we knew that we were going to have to identify partners and systems that could help us leverage our limited resources. Originally we thought we could leverage many of our Tribal Program Service providers who already work with our low-income, distressed community members. Since these providers already work with the same group we hoped to reach, we tried partnering with them.
We hired a financial skills trainer to deliver a “train-the-trainer” session for our Building Native Communities – Financial Skills for Families program. We thought since these providers were jobholders, they would have a general idea of money management and credit. We set out to create a delivery system supported by one trainer and 36 service providers that had gone through the training. This leverage would quickly increase the number of tribal members that could get help and training.
But while the service providers graduated as certified trainers, none of them felt confident enough to help anyone else. It was eye opening to say the least, and we realized that we needed a new approach. From this failure we devised another strategy that eventually became our Making Waves Campaign.
Q3. You had mentioned that early on you tried to launch an after-school program to teach financial literacy that failed. Looking back, can you share the shortcomings of the program?
We started by going into the schools trying to operate an independent after-school program to teach financial literacy. We soon discovered that most of the 2,000 kids rode the bus and couldn’t stay after school. Those that could stay were often in sports so they couldn’t make the meetings. We realized we also lacked an internal champion within the school system itself. Teachers thought what we were doing was critical because of the high poverty on the reservation, but they were already overcommitted and couldn’t take on additional after-school duties.
That’s when we figured out that we needed to meet the students and teachers where they were at by integrating the concepts into the core subjects that were already being taught. Hence the Making Waves K-12 Teacher Toolkit was created and tested. There have been many other challenges in our delivery model, but we have trained several other tribes and tribal programs on how to service the delivery model we created.
Q4. When you began your work you mentioned that there were systemic failures that prevented your communities from finding success. One of those failures was a lack of credit reporting on the reservation. Can you explain how your group is working to resolve that shortcoming?
We had three banks in the local community and none of them reported their lending to credit bureaus. We were told that their attorneys advised against it because of all of the regulations and potential lawsuits that might come from any inaccurate credit reporting. This was a huge barrier in a low-income community because its individuals have no credit score. Those that are in successful repayment of a loan cannot show that they are creditworthy to other lenders for personal loans or business loans. With no credit score, our members are vulnerable to predatory lenders because no one else will lend to them. There is an exorbitant number of payday, predatory, or title loan companies that are actively advertising on the reservation.
We were new in the Community Development Financial Institutions (CDFI) industry, but were networking and learning from other microenterprise development organizations both rural and native to try and find a solution to the problem.
Finally, our advocacy was heard and a national nonprofit called Credit Builders Alliance (CBA) formed and began to work with the credit bureaus to launch a plan to warehouse our loan repayments so they would hit one of the major bureaus. I think currently two of the three national credit reporting agencies receive our data.
When credit reporting became available we launched a credit building loan product. It was a short-term, low-cost loan to help people begin to build credit histories. We began with personal finance training, ordering the customer’s credit report, and then setting goals to build or rebuild their credit histories. We have a credit coach that helps members create an action plan to maintain good credit and have seen astonishing results. We had found that 55 percent of the folks coming in our door had no credit histories at all. Many of our clients went from no file, to building a score in the low 600s after the first year. Most that did have credit files had scores nearly 100 points below the national average of 700. The credit builder loan helped members clean up bad debt and rebuild their credit histories. The CBA evolved to create a system/service for “soft pull” of credit reports that didn’t impact credit inquiries on the customer credit file.
Q5. How much in community loans did you make your first year and how much has that grown since? Which organizations have been most supportive in helping that growth?
We did $19K in micro business loans our first year and broke the $1 million mark in 2008. In seven years we built a capacity for larger loans and new loan products. We expanded our lending seven times over the last six years, with a total cumulative deployment of more than $8 million to date.
Our growth can be contributed to our Making Waves Strategy that has been deployed through 12 community organizations to implement financial literacy and entrepreneurship behaviors. These partnership opportunities helped expand program outreach and gave us additional ideas for loan products and services. Our advocacy network, the South Dakota Indian Business Alliance, is the other organization that helped escalate our growth through statewide access to capital through the Native Entrepreneurship Investment Fund. We managed and grew that fund from an initial Citi Foundation investment of $100K, to $1.2 million in off-reservation lending.
Q6. You mentioned before that most of these financial concepts were foreign to you – having grown up in poverty yourself. How have you personally managed the steep learning curve you faced?
I am trying to serve tribal members that have a similar story to me.
I completed my first personal finance class after I got divorced and moved back to the reservation with my two kids. I worked as a loan officer for a housing nonprofit developer that was promoting homeownership using federal programs. I worked to get borrowers ready or prequalified for the lending programs. When I got divorced I had to file for bankruptcy and start from scratch. I got counseling from Consumer Credit Counseling of the Black Hills and later discovered its curriculum “Credit When Credit is Due.”
I took the course and I woke up. I didn’t have any previous financial education beyond that. Growing up it was embarrassing when your mom gives you a bad check to buy groceries while she’s traveling and trying to provide for six kids. There was always so much stress, shame, hurt, and anger in our world around money. I hadn’t seen anyone that was successful at it.
So after taking the course and working on my own personal finances, my experiences directly translated to many of the customers I had in housing and then later at Four Bands. It was a life changing moment when I began to pursue financial education. I rebuilt my finances after bankruptcy and put my kids through college.
Once I came out of income poverty I had to deal with asset poverty. I didn’t have assets to leverage for my kids’ education and they were no longer eligible for aid because of my income. Everything was an out-of-pocket expense. Only later in life did I develop financial skills and asset-building strategies. I just didn’t have ample time to create college funds for my kids.
This is why I think it’s important to have an Individual Development Account program where families can save and get matched for that initial investment into homeownership, business startups or higher education. Many outsiders assume these assets are readily available, but that’s not the case in reservation communities. Without a community development organization to provide the initial investment in that person, things such as a home, business, or college education are out of reach.
Last year I lost my husband so retirement planning has taken on a whole new meaning for me. Luckily my kids have all completed personal finance training, have great credit histories, and are now coaching me on how to plan for my future. My son has even become my financial advisor. I feel like we have broken the cycle.
Q7. What advice do you have for other leaders who want to make a difference in their communities but are facing similarly difficult starting points?
Leaders, especially community leaders, need to see what’s right about the place instead of everything that’s wrong. Messaging and the media in Indian Country are usually negative and frequently cite everything that is wrong. A good leader is able to look past that and identify the assets in the community to create products and services to meet people where they are at with dignity and respect.
You also have to be authentic and truthful about your own experiences. Talking about my financially reckless life gave other people the ease to talk about themselves.
I also discovered that for the most part, credit reports from our community were not as bad as people thought. Just the education alone helped people develop comfort and proficiency in having a discussion around credit. There is a lot of shame and suffering in low-income households, so we focus on providing a supportive environment to eliminate that shaming. We have countless examples of how our customers benefited and saved themselves from financial woes because of the education they’ve received.
Q8. If Pollen readers want to offer a helping hand in your work, what’s the best way to get involved?
We collect a lot of information that we could use help analyzing. Folks can invest in our loan fund to keep the work rolling. That info is available on our website: www.fourbands.org.
I would also encourage readers to come and visit Cheyenne River for hands-on learning about the realities on our reservation – both good and bad. We have some people who think we still live in teepees, and others who are afraid to drive through the reservation because of news reports on violence. We invite people into the community so that can help us debunk these myths and help us make connections with the outside world that may benefit our work.
Finally, if readers are considering expanding a business, give us a chance at the opportunity. Our CDFI is innovative and resourceful, with keen expertise in successful community economic development.
Tanya and the Four Bands Community Fund have undoubtedly made great progress, but they will tell you that there is still much to be done to improve the lives of people in their community. Their first attempt to teach financial literacy in an afterschool program failed, but it was a move in the right direction. Tanya and the team knew it was going to be a challenging journey and that they would make mistakes along the way, but they were willing to pick up the pieces and try again. If not for the lessons learned, they might not have found success with their revised Making Waves program. You can read more success stories from the community on their website at http://fourbands.org/success.htm.
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