Citizen Potawatomi Community Development Corporation: Financial Inclusion in Indian Country

16 Pages Posted: 30 May 2017

See all articles by Gregory B. Fairchild

Gregory B. Fairchild

University of Virginia - Darden School of Business

Gosia Glinska

University of Virginia - Darden School of Business

Abstract

The case features the Citizen Potawatomi Community Development Corporation (CPCDC), based in Shawnee, Oklahoma. The CPCDC provides microloans, business loans, short-term consumer loans, and other financial services to underserved Native American communities. On one hand, the CPCDC is driven by a mission to deliver responsible, affordable lending and help disadvantaged Native populations join the economic mainstream. On the other hand, the organization strives to offer only financially self-sustainable products and services. In 2010, Cindy Logsdon (the CPCDC's assistant director) helped to implement the JumpStart Auto Loan program, which was to be offered to employees of tribal enterprises. Logsdon must decide whether to continue offering the JumpStart Auto Loan, which fills a market need but is one of the highest-risk products on the CPCDC's books.

Excerpt

UVA-ENT-0202

Jun. 16, 2014

CITIZEN POTAWATOMI COMMUNITY DEVELOPMENT CORPORATION: FINANCIAL INCLUSION IN INDIAN COUNTRY

Cindy Logsdon, assistant director at Citizen Potawatomi Community Development Corporation (CPCDC), based in Shawnee, Oklahoma, faced a dilemma. In 2010, she had helped to implement the JumpStart Auto Loan program her organization offered to employees of the Citizen Potawatomi Nation tribal enterprises. On one hand, the loan filled a need in the market the CPCDC served. As did most of the United States outside of high-density metropolitan areas, Oklahoma lacked an efficient mass transit system, and, in order to get to work, employees needed reliable cars. On the other hand, the auto loan was one of the highest-risk programs the CPCDC offered. In addition, the loan portfolio was small, and so was the income it generated.

The CPCDC was a certified Native American Community Development Financial Institution (CDFI) and loan fund established in Shawnee in 2003 (Exhibit 1). It provided microloans, business loans, short-term consumer loans, credit builder loans, individual development accounts (IDAs), and small business–development services to underserved Native communities. The CPCDC served Citizen Potawatomi Nation members and employees nationwide, as well as Native American–owned businesses throughout Oklahoma.

One overcast day in January 2014, Logsdon sat in her office in Shawnee, reviewing the JumpStart Auto Loan program's financial data (Exhibit 2). Over the past four years, the loan portfolio had grown by only 10 to 13 loans a year, and the average loan size was about $ 10,000. Logsdon had to ask herself whether helping 10 to 13 employees annually was worth the trouble. She recognized that, in addition to the cost of funds—which at 3.5 percentage points translated to $ 7,000 per year and about $ 3,500 per year in miscellaneous expenses—there was also the cost of paying an employee to manage the program. She wondered if the social benefit of providing affordable car loans to a relatively small group of people and the revenue generated by the portfolio were enough to offset the cost of offering the loans.

. . .

Keywords: CDFI, microlending, community development financial institution, Native American

Suggested Citation

Fairchild, Gregory B. and Glinska, Gosia, Citizen Potawatomi Community Development Corporation: Financial Inclusion in Indian Country. Darden Case No. UVA-ENT-0202. Available at SSRN: https://ssrn.com/abstract=2974324

Gregory B. Fairchild (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/fairchild.htm

Gosia Glinska

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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