Lakota Funds Opens First Financial Institution on Pine Ridge Reservation

Two young men stand beside a poster.Lakota Funds is a community development financial institution chartered in 1988 to promote the economic sustainability of the Oglala Lakota Oyate (people) on the Pine Ridge Reservation in South Dakota.

Through a Social and Economic Development Strategies grant from the Administration for Native Americans, Lakota Funds launched the project “Reigniting Lakota Economic Sovereignty” from 2009 to 2012. The purpose of the project was to help the Oglala Lakota people regain economic sovereignty and broaden the financial knowledge and financing options available to Tribal members, Tribal youth, and Lakota businesses. 

At the project’s start, there were no commercial banks or credit unions on all of Pine Ridge’s 2.2 million acres. Lakota Funds established a credit union on the reservation by creating a board, hiring an executive director, securing a space, and applying for a charter from the National Credit Union Association. They received the charter, and the Lakota Federal Credit Union (LFCU) opened its doors in November of 2012. LFCU will serve approximately 40,000 people, a majority of whom are low-income. The credit union offers unsecured and secured loans, direct deposits, check cashing, online banking, and ATM cards. ATM machines will be located at strategic locations throughout the reservation.

Lakota Funds developed and marketed two new loan products: a credit builder loan and a contractor business loan. From 2009 to 2012, they approved 33 credit builder loans, totaling $66,000; the largest increase in a credit score because of these loans was 90 points, with an average increase of 31 points. Lakota Funds also began offering contractor business loans, totaling $641,500. None of these loans have been written off, and they are now the best performing loan product.

Project staff also implemented a financial education curriculum in four schools on the reservation, as well as at alternative sites such as the Tribe’s summer youth employment program and the South Dakota Gaining Early Awareness and Readiness for Undergraduates Program (GEARUP) summer camp, which draws Native youth from all over the state. In addition, project staff and partners held a business plan competition each year at the Lakota Nation Invitational; in the first project year, students submitted eight business plans, and by the third year the competition had 31 submissions. 

Overall, project staff provided 117 financial education sessions to 3,585 youth, who gained a better understanding of the importance of a credit history and how to be a part of the reservation economy.

Prior to this project, the only financial institution available to residents on the reservation was a weekly mobile bank with limited services. Now the credit union plays an important role in keeping people and dollars on the reservation. As a result, Tribal and community members have access to savings and lending services without the time and expense of having to travel off-reservation. Community members reported significant benefits as a result of improved credit scores, including retaining employment and being able to purchase a home for the first time.  Furthermore, the new loan products have improved access to credit and enabled businesses on the reservation to bid on projects and ensure more jobs stay local.  

Established in 1974 through the Native American Programs Act (NAPA), the Administration for Native Americans (ANA) serves all Native Americans, including federally recognized tribes, American Indian and Alaska Native organizations, Native Hawaiian organizations and Native populations throughout the Pacific Basin (including American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands).

ANA promotes self-sufficiency for Native Americans by providing discretionary grant funding for community-based projects, and training and technical assistance to eligible tribes and Native organizations.