Plains near Sawtooth Ridge and Castle Reef in Montana.

Over the last few years, Sweet Grass has supported several credit union feasibility studies and chartering efforts in Native communities. What we’ve noticed is that in communities where Native CDFIs have existed for a long time, there’s growing demand for more financial services. To understand why, it’s helpful to first understand the role Native CDFIs have played in Native communities over the last several decades.

Native CDFIs were created to address significant gaps in access to capital, financial education, banking services, and credit. The growth of Native CDFIs over the last four decades has been one of the most significant developments in Native economic development. When the Native American CDFI Assistance (NACA) Program was established through the US Treasury in 2001, there were only 14 Native CDFIs operating nationwide. Many of them started as community-based loan funds, well before the CDFI fund existed.

Today, more than 70 Native CDFIs serve Tribal Nations, Native organizations, and Native entrepreneurs across the country. Collectively, these institutions have become a vital part of the Indigenous finance industry. They provide access to capital, financial education, homeownership support, business lending, and credit-building opportunities in communities that have been intentionally and historically prevented from exercising traditional economic models based in reciprocity and trade. At the same time, these communities have been excluded from participating in the mainstream financial economy.

Our extensive work with Native CDFIs documents the power of combining financial services, technical assistance, relationship building, and long-term community investment. Across Indian Country, Native CDFIs are trusted organizations helping individuals and businesses navigate complex financial systems. They’re also leaders in community and economic development, delivering creative solutions driven by local leadership.

While there remains a tremendous need for Native CDFIs across Indian Country, we’re seeing strains on the traditional CDFI system, most notably in access to the secondary market, higher-dollar projects like housing and economic infrastructure development, and sustainable funding models. Some are asking: Is a credit union the solution? What are the pros and cons of a credit union?

To help answer those questions and determine if a credit union is the right choice, we’ve distilled some of our findings from supporting credit unions through accreditation, conducting feasibility studies, and writing business plans.

Considerations when starting a credit union

Opportunities	Limitations	Best practices and resources
Community members have trusted access to a more diverse array of depository functions.	Startup costs, even for a small CDFI, range between $600,000–$1,000,000.	Balancing demand, supply from other banks and credit unions, and startup costs are a concern for many communities with a small population base or competing institutions.
Revenue is generated from members rather than grants and federal funding.	To reach desired ratios, a large number of members or deposit amounts is required.	If your community receives a low-income designation, the credit union can receive deposits from non-members. Major employers could require employees to use credit unions for ACH deposits for paychecks, increasing membership and demand.
Loans can be sold more easily to the secondary market, opening up capital for higher-dollar lending. This could mean easier access to loan programs like HUD 184, USDA 502, and VA NADL.	Accessing the secondary market often requires conforming loans and could threaten the personal relationships CDFI clients appreciate.	When a CDFI exists in the same community, credit unions tend to do more mortgage and consumer lending while CDFIs do more business lending.
There’s increased potential for larger investments from tribal governments and enterprises.	For many, relationships between financial institutions and the US government have been carefully curated. Receiving high-dollar deposits and/or loans can change those approaches.	The Center for Indian Country Development notes the strong growth of tribal enterprises as a core component of tribal economies, so preparing for that is wise.

While the table above details some of the most common opportunities, limitations, best practices, and resources we’ve come across, there’ve been other exciting developments in the industry. Because of the demand and the growing number of CDFI-certified credit unions, the Native American Credit Union Coalition created a space for Native communities to share lessons learned, explore emerging opportunities, and think collectively about what successful Native credit union development might look like in the future. Additionally, credit unions are getting more space at events like Oweesta’s Capital Access Convening and at the Opportunity Finance Network Conference. While small in number, other Native credit unions are helping to pave the way and increase the knowledge and understanding within the field and at the NCUA. Those organizations include the Lakota Federal Credit Union, Tongass Federal Credit Union, Otoe-Missouria Federal Credit Union, and The Morning Star Federal Credit Union.

Another example is Clearwater Credit Union and the amazing mentorship and partnership it has with Native credit unions and CDFIs. Clearwater has been showing up at conferences and events, serving on boards, and providing small-dollar funding to Native CDFIs and credit unions. The role of non-Native allies in this space helps secure access to funding, partnership, and specialized knowledge.

The conversations about credit unions are taking place within a larger movement toward Indigenous financial sovereignty. Over the last two decades, the work being done by the Indigenous finance industry has been a crucial tool for building wealth, supporting tribal economic development, and keeping more financial decision-making within Native communities.

Viewed through that lens, credit unions represent an additional avenue for expanding Native control over financial systems and increasing access to services that most Native communities have historically been excluded from. What makes this moment particularly interesting is that there is no single model emerging. Communities are conducting feasibility studies and business plans to right-size their approach based on their population, economic conditions, existing institutions, and long-term goals. Some may pursue standalone Native credit unions. Others may develop regional partnerships or shared-service models. And others may continue strengthening their existing CDFIs while exploring opportunities for collaboration with established credit unions. What’s important are solutions that are as unique as the people they intend to serve, and first and foremost, this means meeting people where they are.

As long-term supporters and partners of the Indigenous finance industry, we’re excited to explore the role of credit unions across Indian Country and what the future may bring for increased and continued access to banking and credit services.

Read more about our market study and business plan for a new community credit union in rural Montana.

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