Native Communities
Expanding the NMTC Program to Indigenous Communities
According to chitimacha.gov, “the Chitimacha Tribe of Louisiana is the only tribe in Louisiana to still occupy a portion of their aboriginal homeland.” The Chitimacha Tribe focuses on providing quality social services to the surrounding community and preserving the tribe’s cultural history. In 2017, the Chitimacha Tribe of Louisiana elected Melissa Darden, the first woman to achieve the top post, as Tribal Chairman. The thumbnail photo for this blog post depicts the Chitimacha Museum. Follow along below to learn more about the necessary expansion of the NMTC program to Native American communities, such as the Louisiana Chitimacha Tribe.
Since the creation of the Federal NMTC program, Native communities have been underrepresented in both the number of investments and amount per investment in relation to the national population percentage. According to a report written by Matthew Gregg, Michou Kokodoko, and Elijah Moreno, “for every $100 in NMTC investments involving non-tribal entities, only $1 is being directed for investments with tribal entities.” This issue is further compounded by the fact that a disproportionate number of tribal areas are eligible for NMTC investment through their census tracts. Despite the obvious opportunity for investment in the areas, NMTC interaction remains low even two decades after the creation of the NMTC Program.
In 2019, the National Congress of American Indians (NCAI) created and adopted new legislative efforts to increase NMTC access for Native American communities. To combat the fact that the program lacks means to ensure investment in Tribal lands, the NCAI pushed for five new developments. These developments included (1) adding certain low-income Native American lands to the formal definition of “low-income community” in the NMTC Program, (2) creating the term “Qualified Indian Community Development Entity,” (3) defining an Indian CDE as an entity that is at least 51% owned and operated by an Indian tribe or a Native CDFI, (4) defining a Native CDFI as an entity that directs at least 50% of its activities towards a Native community, and (5) supporting ways to provide assistance to Native/Indian CDEs.
Additionally in 2019, Native American communities received far less investment compared to the Native percentage in the national population. In 2019 the Federal Reserve Bank found that Tribal communities only received $598 million in NMTC investment compared to the $61 billion investment (less than 1%) received in total for the NMTC Program. The program has, however, experienced some increases. For example, in the first decade of the NMTC Program, Native communities only received 0.3% of the total allocated amount, but in 2019, Native communities received 2.55% of the total allocated amount. Unfortunately, this increase does come with some challenges. Of the awarded Native NMTC investments, 10 of 347 tribes received half of the available funding in the lower 48 states and only 36 of the total 347 tribes experienced any benefit from this investment. As a result, Native NTMC investment is generally highly concentrated and does not provide widespread benefit to Native communities outside of this select few. Additionally, this form of equity also generally focuses on four CDEs, meaning the limited number of CDEs can only provide a select amount of investment for a select number of communities.
The NCAI legislation was adopted in 2019; however, most Native American communities have yet to receive any benefit from the NMTC program. In 2021, there were only 69 Native CDFIs and during that round of the NMTC Program, only one Native entity received NMTC investment and no Native-led entities received funding for the previous three years. This single entity, Alaska Growth Capital BIDCO Inc., accounts for only 0.60% of the allocated funds. In the past four years, Alaska Growth Capital BIDCO Inc. has acquired $30 million in NMTC, which accounts for 0.15% of the total $20 billion in NMTC rounds. This entity is a success story that is, unfortunately, very rare for Native-led entities. Fortunately, due to recent legislative changes, this success among Native communities is slowly increasing.
In 2021, the NMTC Program Native Initiative was announced. This program was created to specifically target Federal Indian Reservations, Off-Reservation Trust Lands, Hawaiian Home Lands, and Alaska Native Village Statistical Areas. Collectively, these areas are known as NMTC Native Areas. Through this new initiative, Native communities can apply to become certified CDEs as well as win NMTC awards and loan investments to NMTC Native Area projects. Through this increase in engagement with Native communities, organizations benefit from both direct and indirect projects through the creation of new projects and new construction and permanent jobs. Additionally, the CDFI Fund also recently announced that Big Water Consulting LLC will serve as a contractor to work with the NMTC Program Native Initiative. This entity will create a self-assessment for Native owned/controlled entities and conduct workshops to teach ways to attract NMTC investment. The CDFI Fund hopes that with the use of this new contractor, NMTC Native Areas will experience spurred growth and increased benefits from the NMTC Program.
Because NMTC can be supplemented with other tax credit and funding programs, Native communities can pair NMTC investment with investments from the Native American CDFI Assistance Program. This program gives financial assistance to Native CDFIs for investment in projects that may also qualify for NMTC investment. For the majority of the existence of the NMTC Program, Native communities have been disproportionately underserved. However, with new initiatives created by the CDFI Fund, increased interest from Native entities, and growing awareness of the benefit of Native NMTC investments, the number and positive effects of investing in Native communities will hopefully rapidly increase.
(thumbnail photo credit: KATC)