The strength of a Tribe’s economy is intimately related to the well-being of its members, growth of their community, and expression of their sovereignty. A perpetually evolving and always important discussion, political economist Dr. Alexandria Wright brings a timely perspective to the topic of Building Stronger Tribal Economies. This series explores a number of specific, relevant areas for Tribes to consider as they continue the process of building stronger Tribal economies: entrepreneurship, enhancing broadband, resiliency, and workforce development.
Part I: Enhancing Tribal Entrepreneurial Ecosystems – A path to greater resiliency in the 21st century
American Indian Tribes hold the distinguished role of being the first entrepreneurs on the North American continent. As such, the entrepreneurial spirit is rooted deep within Tribal cultures and economies. Rich in ingenuity, Tribal cultures have a generous history of vibrant, sustainable economies grounded in entrepreneurial enterprise.
While Tribes look to strengthen their local economies amidst recovery efforts from pandemic-related disruptions, much attention has been drawn to communities’ and economies’ resilience against future shocks—be they natural disasters, health pandemics, or global recessions. Success in this endeavor will require a holistic approach to resource development for entrepreneurship and small businesses. Applying a well-rounded and vetted strategy to support small business development will create a system that both brings dollars into Tribal lands, through the expansion of small business exports, and keeps dollars on Tribal lands, by encouraging the replacement of imports. The following article summarizes best practices that will assist your community in building an advanced Tribal Entrepreneurial Ecosystem which will result in a stronger Tribal economy.
Fostering Start-ups & Expansion
Building a strong entrepreneurial ecosystem is a two-fold task involving (1) investment in community programming and (2) developing relationships with external partners. Most Tribal communities have some variation of these elements, though few have fully established all of them. Community programming for entrepreneurship should include two parts:
1) Youth programming. Strong entrepreneurial programming for youth that teaches and puts into practice basic elements of the entrepreneurial spirit including perseverance and recognizing opportunity—both key characteristics of the entrepreneurial mind.
2) Technical business programs for Adults and special populations. These are the “nuts and bolts” of owning small business. Topics including legal structures, small business financing, financial statements, marketing and demand research, export assistance, government contracting, disaster preparation, and recovery.
Creating and maintaining youth and adult business counseling and support for pre-venture entrepreneurs is essential to fostering an entrepreneurial ecosystem that will deliver outcomes for your community.
Developing relationships with external partners is an essential step in establishing robust small business resources, and one that is often overlooked. There are two key components to this step:
1) Establish strong lending relationships. Access to capital is essential to fostering small business development, and this means developing long term relationships with banks and lenders that will provide Tribal entrepreneurs with access to microloans to start their business, working capital to expand their business, loans for construction and equipment, and loans to expedite the creation of exports. Building lending relationships involves working with regional community financial institutes like CDFIs (Community Development Financial Institutes) and CDCs (Community Development Corporations), and local microloan funds. Lending institutes that participate in SBA Loan programs offer easier access to capital due to SBA Loan Guarantees. Tribes may also choose to establish their own CDFI or microloan fund to increase access to capital for Tribal members. The establishment of such a program can be funded through the State Small Business Credit Initiative included in the American Rescue Plan relief.
2) Partner with regional technical assistance providers. USDA and SBA subsidize Resource Partners across all states including Agricultural Extension Offices and Small Business Development Centers, which are often hosted by universities and colleges. These partners can provide technical assistance to small business owners and may be able to establish satellite offices on Tribal lands with minimal financial sponsorship.
Incubators & Economic Gardening
Incubators and makerspaces involve setting up space where entrepreneurs can access equipment and technical expertise when designing a product or software. These entities will often contain a variety of equipment, including CNC machines, Computer-aided Drafting software, electronic testing equipment, and clean rooms. They also offer subsidized office space for entrepreneurs along with access to Venture Capital Groups and Angel Investors. They may be funded through public funding opportunities and grants available through the U.S. Department of Agriculture and the U.S. Department of Commerce.
Economic Gardening is an approach to economic development that is focused on growing local, stage two small businesses that have potential external markets—growing your exports. Economic Gardening typically involves concentrated support for second-stage firms. These are defined as for-profit businesses that employ 10-99 people and generate annual revenues of $1 to $50 million, though this floor may be adjusted to reflect smaller markets on Tribal lands. These businesses may be Tribally-owned enterprises, independently-owned/privately-owned businesses by Tribal members, or businesses owned in partnership with non-Tribal members. A Tribal economic development strategy that focuses on Economic Gardening can provide a holistic, enterprise-based growth strategy for both a Tribal economy and community.
Building strong Tribal Entrepreneurial Resources will involve leveraging multiple sources of funding, many of which are designed to work symbiotically with one another. American Indian Tribes have the unique distinction of receiving priority for most federal funding through their own federal set-asides in each agency.
- U.S. Department of Agriculture Rural Development Office (USDA) provides annual funding for small business support services, microloan funds, economic development planning, and more.
- The Economic Development Administration (EDA) provides funding for Economic Development Strategic Planning, small business technical assistance, and cash match for capital projects (buildings and infrastructure) including building workforce development training facilities.
- U.S. Small Business Administration (SBA) subsidizes Resource Partners which Tribal entities may host. These include Women’s Business Centers, Small Business Development Centers, and Veteran’s Business Outreach Centers. The SBA will also unveil a new funding opportunity this year, the Community Navigator Program, intended to extend outreach to underserved communities by funding existing community-based organizations and nonprofits to tap into their local communication networks and expand access to SBA programs.
- The Naval Defense Logistics Agency runs annual announcements for funding opportunities to start and maintain Procurement and Technical Assistance Programs (PTAP). PTAPs specialize in assisting small business owners in obtaining federal contracts in a variety of industry sectors including construction, professional services like marketing, education, and engineering, custodial services, catering, and more.
- American Rescue Plan (ARP): State Small Business Credit Initiative (SSBCI). The ARP includes an amendment to the SSBCI to include Tribal Nations in the program’s definition of eligible entities, setting aside $500 million. The SSBCI includes support for 5 types of programs: Capital Access Programs, Loan Grantee Programs, Collateral Support Programs, Loan Participation Programs, and Venture Capital Programs. Interested Tribal Nations must file a notice of intent to participate by June 11th through the United States Department of Treasury.
Economic independence accentuates and helps to sustain Tribal sovereignty, cultivating self-determination and building community resilience to economic disruptions like a natural disaster, health pandemics, and global economic recessions. Building stronger Tribal economies will require substantial investment in Tribal Entrepreneurial Ecosystems. This investment will produce multifaceted returns, bringing financial prosperity to households, cultural revitalization through heritage industries, and enhanced sovereignty through economic independence.