The Lakota Fund
Elsie Meeks, Executive Director
Dani Not Help Him, Loan Officer
PO Box 340
Kyle, S.D. 57752
(605) 455-2500

"You spend hours working on a beautiful star quilt. There's bills to pay, food to buy, places where you have to go. It's difficult if not impossible for you to get to town, much less to find a buyer for your work. So you trade it, pawn it or give it away. All that work, all that skill, all for nothing. This is a familiar scenario for a great many reservation artists who too often can't sell a piece for a decent price to even allow them enough to buy basic supplies to produce more work. Gaining marketing skills is just one benefit of becoming a member of a Circle Banking Project. You'll learn how to set fair prices and discover new markets and how to better utilize existing markets."

This is the genius of the Lakota Fund, one of the most effective fully operational "Grameen Bank" operations I've seen in the U.S. Perhaps it's more than coincidental that, when Lakota Fund officials Gerald Sherman and Faith Stone decided in 1989 to consider replicating a Grameen Bank model, they didn't stop halfway. "We didn't go to a model," said Dani Not Help Him. "They went to the real one ... in Bangladesh."

The idea of fostering micro-enterprise development had been around the Pine Ridge Reservation for a while. With hundreds of Lakota capable of producing high-quality arts and handicrafts, a program to foster small-business development seemed natural; and with the help of the First Nations Development Institute of Falmouth, Va., a small-business loan fund was operating by 1987, financed by foundation grants. But it wasn't working well, with extremely high rates of delinquency and business failure. Something was missing, and the Grameen concept of peer support and training seemed like a possible solution. When Sherman and Stone returned from Bangladesh, they quickly persuaded the fund's board and community leaders, and with enthusiastic efforts from all participants, they got the first Circles operating before the year was out.

Operating fairly close to the original Grameen model, Circles may include men and women, and are made up of four to six members, who live in the same community but may not be closely related. Circle members receive a five-week orientation course covering both small-business topics (budgeting, marketing, costs) and social development (goal setting, planning, drug use and alcoholism).

After the circle members complete training and certification, they decide among themselves which member should receive the first loan. That member submits a business plan and may borrow up to $400 in the first year, $800 in the second, and $1,000 in the third. A second member may get a loan after the first borrower has made three payments, and the third, fourth and fifth members receive their loans in turn. Circle members are also required to put $5 every two weeks into personal savings for a "nest egg," and each loan recipient receives (and must repay) $20 more than the requested loan amount, which goes into an "Inner Circle Fund" for the Circle's discretionary use.

While Lakota Fund staff must approve the circle's loan decisions, it rarely second-guesses them. Loans are repaid over 12 months at 15% interest, amortized daily, a procedure that works out to a $17.44 payment every two weeks. As anticipated, many of the small-loan recipients are artisans and crafts people, but loans have also gone to a pig farmer, a caterer, a tire-repair shop and a member of a band. One Circle member, artist and caterer Roseline Spotted Eagle, was invited to the Department of Agriculture's 1993 Hunger Forum in Washington to testify about small-loan programs.

In addition to the Circles, the Lakota Fund's larger small-business loan program remained active, but by using the smaller Circle loan amounts as an entry-level option and by instituting a training component for potential borrowers, the fund has dramatically reduced its delinquency rates.

Now, to qualify for a larger loan, an individual must either provide detailed financial books demonstrating two years of business activity, or complete a six-week training course, taught by Fund staff, covering a broad variety of small-business elements such as financial management, cash flow, budgeting, tax and license information, marketing and basic bookkeeping.

Loans from this program may be as large as $25,000, with interest ranging from 15% for smaller (under $1,000) loans to 11% for larger ones, payable over up to five years but re-financeable. Recipients have opened hair salons, contracting businesses (electrical and gravel hauling), video-rental shops, an arts-and-crafts retail store, a restaurant and a buffalo farmer.

After operating as a member of First Nations Development Institute, subject to its strict regulations and oversight, for four years, the Lakota Fund made the bold decision to become independent in 1993. As of Jan. 1, the Fund is on its own, making its own decisions, raising its own funds and charting its own course. So far, it's going well. Nine Circles are operating, involving about 40 small businesses, and 60 more entrepreneurs have small-business loans, for a total of about $180,000 out in loans of all types. In a community with the poverty and unemployment of Pine Ridge, 100 working entrepreneurs is no small number; and the delinquency rate, seasonally ranging from 4% to 16%, is under control. With hopes for additional funding to spread the fund's reach, and preliminary planning going on to find creative ways to market the reservation's arts and crafts, officials here say that next year's report should be even rosier.

All the feature stories on @GRASS-ROOTS.ORG's pages are reported and written by Robin Garr, a prize-winning journalist who has visited more than 500 innovative grassroots programs in all 50 states since 1990.

Browse his book, Reinvesting In America, at Amazon.com.

Send him E-mail.

Back to the @GRASS-ROOTS.ORG Home Page