Native American Entrepreneurship – "Challenges and Opportunities for Rural Communities. "

Entrepreneurship Shows Potential For Native Economies Beyond Gaming: New Report Tracks Momentum Toward Indian Small Business Ventures

Despite considerable economic and social obstacles, entrepreneurial business activity on and around Indian reservations is gaining momentum, according to a report released today by CFED and the Northwest Area Foundation. The report, Native Entrepreneurship: Challenges and Opportunities for Rural Communities, looks at the current state of Native non-gaming entrepreneurship and analyzes the support network available to native entrepreneurs.

Native Entrepreneurship: Challenges and Opportunities for Rural Communities by the Corporation for Enterprise Development (CFED) and Northwest Area Foundation is available at http://www.cfed.org/documents/Native_Entrepreneurship.pdf.

In addition to U.S. Census and other trend data showing the number of Native-owned small businesses growing, the report notes that among firms earning more than $50,000 in profits, these companies outperform other minority-owned ventures. Dun and Bradstreet data show that Native American businesses, while representing only 5 percent of minority firms, perform higher than their counterparts in average sales volume and number of employees. At the state and reservation level, however, the picture looks different. In many states where there are high numbers of Native Americans, Native entrepreneurs own private businesses at a much lower rate and earn less per capita than the non-minority population.

“The good news is that more Native entrepreneurs are starting and growing successful businesses than ever before,” said CFED’s Jennifer Malkin, the lead author of the report. “Unfortunately the bad news is that many aspiring Native entrepreneurs can’t get the support they need to formalize or grow their businesses and are forced to operate on the margins.”

The Native Entrepreneurship report draws on currently available research data supplemented by interviews with more than 60 native and non-native leaders in the field of entrepreneurship development.

The report reveals that many native leaders see entrepreneurship as compatible with Native culture and as an important vehicle for expanding tribal sovereignty. The report catalogs a number of governmental, tribal and private efforts that help support native business ventures, but finds they often are under-funded, uncoordinated, and spotty in meeting the overall needs of this group.

“The public and private sector can, and must work together to remove the obstacles, and create the opportunities, for Native American entrepreneurs to become a larger part of our economy,” said Karl Stauber, president and CEO of the Northwest Area Foundation. “Our nation needs these economic engines, and the Foundation is very excited to work with Native American organizations to develop support models that will promote this growth.”

Aspiring entrepreneurs — particularly those living on a reservation – are often a great distance from their end markets, and lack access to financial and business development training and the advice of other entrepreneurs. Just as significant is the severe lack of access to debt or equity capital and the prevalence of predatory lending practices which inhibit the development and growth of Native American businesses. This is compounded by a lack of control of many tribal assets due to land and natural resources held in trust, thereby making it unavailable for loan collateral.

Despite these challenges, however, Native entrepreneurs are creating economic opportunities where many claimed none had existed. In order to help the Native entrepreneurs flourish, the report suggests a number of measures to improve opportunities for native small business. These include:

• Closing the information gap about the state of native entrepreneurship and placing entrepreneurship on federal, state, and tribal policy agendas;

• Implementing culturally appropriate strategies in the areas of entrepreneurship education, training and technical assistance, financing, and networks;

• Providing comprehensive entrepreneur-focused services to native communities; and

• Building on the effective programs currently in place.

CFED, formerly the Corporation for Enterprise Development, is a nonprofit organization that expands economic opportunity. We work to ensure that every person can participate in, contribute to, and benefit from the economy by bringing together community practice, public policy, and private markets. We identify promising ideas; test and refine them in communities to find out what works; craft policies and products to help good ideas reach scale; and foster new markets to achieve greater economic impact. http://www.cfed.org

The Northwest Area Foundation, headquartered in St. Paul, Minnesota, helps communities reduce poverty in its eight-state region: Minnesota, Iowa, North Dakota, South Dakota, Montana, Idaho, Washington and Oregon. The Great Northern Railway, founded by James J. Hill, served this region from 1889-1970. Hill’s son, Louis W. Hill, established the foundation in 1934. Today, the Foundation brings technical assistance and financial resources that help identify, share and advocate community-focused strategies for long-term poverty reduction. The Foundation has approximately $437 million in assets (as of March 31, 2004). For additional information, http://www.nwaf.org or call 651-224-9635.

Contact: Jerome Uher, 202.207.0132