Change Labs

Change Labs, a Native American-female-led and majority Native American-controlled organization operating on the Navajo and Hopi Nations introduced the Native American Kinship Lending program in March of 2020. For many years, we listened to Native American entrepreneurs in our communities describe the daily challenges they confront. A common concern was that the design of traditional banking systems is not inclusive of Native American entrepreneurs operating on sovereign Native lands who, due to a multitude of factors, have little to no banking history or financial assets. Kinship Lending provides an inclusive, culturally responsive, and holistic lending program that helps first-time Native American borrowers access capital while providing them with the support and resources needed to learn how to have and manage a loan through a 4-pronged approach: 1) Robust financial education; 2) Executive coaching; 3) Network building; and 4) Loans up to $5,000.

Kinship Lending offers low-interest (5%), relationship-based microloans of up to $5,000 that require no collateral, credit check, fees, or costs to apply. The first of its kind in our Navajo and Hopi communities, Kinship Lending is the only local alternative to traditional lending and the only culturally-competent lending model. 

In addition, borrowers participate in our six-month financial training to create a strong business foundation for future generations, receive 12 months of business coaching, and engage and learn with other Native American entrepreneurs.

Our solution directly addresses barriers that make it difficult for Native entrepreneurs doing business on sovereign Native land to obtain and maintain loans due to lack of local financial institutions and lack of credit and collateral to prove eligibility. 

Only 5 banking institutions exist on the Navajo Nation to support a population of more than 170,000. All offer conventional financial products that utilize collateral, credit, and pre-existing financial capacity for approval. A study from the University of AZ found that on-reservation average credit scores in AZ and ND were more than 70 points lower than off-reservation averages (scale = 300-850).

Another issue is capital and credit access, a 2001 Native American Lending Study showed that for 61% percent of Native American respondents, business loans were either “impossible” (24%) or difficult (37%) to obtain. Although capital and credit access has expanded, it continues to be a challenge. The Center for Indian Country Development still estimates a $48 million gap in financing needs.

Traditional lenders require collateral, such as real estate before lending. Native borrowers are disadvantaged, since 90% of Native land is owned by the U.S. government. While there has been some effort to collateralize leaseholds, banks often lack expertise to accept alternative forms of capital such as business or home-site leases, vehicles, or equipment. 

All of these issues lead to the leakage of earned income on the reservation to off-reservation border towns. Prior to COVID-19, $0.65 of every dollar earned on reservation was spent off the reservation.

Native entrepreneurs doing business on Native land face incredible and unique barriers unlike any other businesses in the US and our solution enables them to overcome these barriers so they can grow, develop, and sustain. 

Grow: The majority of small business owners applying for Kinship Loans have hit a growth ceiling largely due to funding restraints. Kinship funds are used to purchase materials and equipment, build inventory, and develop new business lines that help entrepreneurs break through glass ceilings to reach higher levels of growth and economic security. 

Develop: Kinship funds are coupled with financial training to develop necessary skills and a mindset for entrepreneurs to be successful in the long term. Entrepreneurs who receive Kinship loans are placed in a cohort with other Native entrepreneurs to provide collective learning space and experience. With their cohort, entrepreneurs receive 12 hours of training and 12+ hours of one-on-one business coaching.

Sustain: Kinship Lending is just one of three programs offered by Change Labs. Our analysis reveals that one of the primary motivations for the successful completion of our programs is peer networking and support. Just over 80% of entrepreneurs who graduate from our business incubator are still in business two years later. By creating a network of peers, entrepreneurs are able to discuss challenges, solutions, and opportunities with each other rather than navigate these issues alone. This way borrowers can learn from and empower each other, therefore further embodying our kinship model.

Kinship Lending serves Native American small business owners operating in some of the most impoverished and remote communities in the US (reservation communities.) 100% of our participants are Native American.

 The effects of historical racism, disenfranchisement, and exclusion have negatively impacted Native communities since colonization. Despite living in one of the world’s wealthiest nations, 29% of Native Americans live in poverty, making us the poorest of any race group in the United States. On the Navajo Nation, the poverty rate is nearly 40% and in Tuba City, AZ, home to our headquarters, 34% of Navajo and Hopi residents live below the poverty line. Because poverty correlates with poor mental and physical health, low literacy rates, unemployment, and inadequate standards of living, Native Americans are disadvantaged minority citizens in our own homelands.

Our program is putting the power of entrepreneurship and economic mobility in the hands of the communities that need it the most. Every day we work with entrepreneurs with new or existing businesses that span across multiple industries supporting the long-term sustainability of businesses that entrepreneurs have made their livelihood.

Cherilyn Yazzie received a Kinship loan in July 2020. She saw the need for increased local food production as travel restrictions to and from the reservation became more severe. With her loan, she constructed two caterpillar tunnels to dramatically increase her annual yields and allow her to establish a community-supported agriculture model. Cherilyn repaid her loan in full in November 2020.

The Southwest US is home to 20% of all Native Americans in the United States and the entrepreneurial challenges experienced on the Navajo Nation are similar in other southwest tribal communities. This presents an opportunity for our model and its impact to be replicated in tribal communities beyond the Navajo and Hopi Nations.

We are currently planning to expand our Tuba City campus and, after which, will expand to six other communities on the Navajo Nation, beginning with Keyenta, AZ and Shiprock, NM, to align with the Navajo Nation’s six regional business development offices. Our planned expansion provides access to a Change Labs entrepreneurship center within a 90-minute drive to any Native entrepreneur on the Navajo and Hopi Nations.

To facilitate our expansion beyond the Navajo Nation, we co-founded the Indigenous Economic Wellbeing Alliance in 2021 in partnership with Native Women Lead, NM Community Capital, and Native Community Capital. We secured funding to design and implement a collective impact model for Native-led entrepreneurship support organizations across the Southwest. As an alliance, we plan to focus our impact on new ways for Native American entrepreneurs to access capital and to establish an Indigenous-centric evaluation framework for Native American/indigenous entrepreneurship support programs. 

Change Labs was established to launch, grow, and sustain Native American small businesses. 

We currently focus on four programs:

• Business Incubation of Native American entrepreneurs starting a business on Native land
• Creative co-working space on Native land, allowing entrepreneurs to leapfrog the common barriers
• Data collection to document the ease of doing business in Native communities. Our data collection and analysis provide evidence for decision-making and guide our advocacy.
• Kinship loans to Navajo and Hopi entrepreneurs on the reservation who need between $5,000-$10,000 to spark business growth. 

The general theory of change for Change Labs programming is as follows: our program activities result in an output (or immediate product), and those outputs theoretically link to improvements in the targeted outcomes (the social impact). 

Change Labs is made up of several activities with varying outputs, however, they all share the common goal of encouraging small business growth on tribal lands through entrepreneurship. All activities link to one of four of the following outcomes:

Activities Outputs Outcomes

• Social Capital: Linkages to a network of actors, such as peers, mentors, business support organizations or business coaches, who provide an enriching set of resources such as business knowledge or support

• Human Capital: The education, experience, and knowledge of an individual

• Financial and Physical Capital: The tangible assets used in production, such as loans and work equipment

• Social and Economic Agency: The social and psychological traits needed to act on the skills and assets provided by the other outcomes; the ability to successfully navigate business activities

 Our theory of change diagram illustrates the specific pathways from activities to outputs to outcomes for the current iteration of Change Labs program.

As grant activities are implemented, we expect them to generate various outputs, such as mentors, business skills, access to credit, and increased ability to navigate business activities. As these outputs increase and accumulate, the theory of change guides our understanding of how these activities lead to specific outcomes and how they contribute to the intended overall impact.

Current:  41
One Year from now:  75
In 5 years:  358

Tuba City or To’Nanees’Dizi (“tangled water” in the Navajo Language) refers to the underground natural springs in the area. It is the largest community on the Navajo Nation and is the only Native American community that is split between two tribes: the Navajo and Hopi Nations. It is an intertribal community on the “tourism trail” because of its proximity to the Grand Canyon.

The To'Nanees'Dizi Local Navajo Government is one of 110 local chapter governments of the Navajo Nation and serves ~9,400 Navajos and is the most populous chapter in the Navajo Nation.

Our stakeholders include internal stakeholders (i.e. our staff and governing board of directors) who serve as key decision-makers and are responsible for influencing organizational strategy because of their lived experiences as community members and Native American entrepreneurs.

Kinship Lending is the epitome of a place-based solution because Change Labs is a grassroots organization deeply rooted in our community through our identities (as Native Americans) and lived experiences (as Native American entrepreneurs). We spent years surveying and listening to Native entrepreneurs describe the frustrating daily barriers and challenges they experience attempting to operate a business on our reservation and for our communities but only having tools, resources, and funding options that were developed by and for the non-Native business world. 

The majority of the communities on our reservation (the Navajo Nation) are rural, and some are extremely remote, per our traditional ways of living. They also largely lack reliable internet access, and physical addresses and 30-40% of homes lack running water and/or electricity. In order to serve our communities, it’s imperative that our organization is composed of leaders who are in close proximity to the issues and barriers Change Labs is aiming to help Native American small business owners overcome. 

Change Labs is not an outside organization parachuting into the Navajo and Hopi Nations to do this work. We live, work, raise families, and are active members in the communities we serve. For example, our Finance Director serves as Vice President of her local Navajo Chapter government; our Director of Kinship Lending serves on the Board of our local community college; our Director of Business Incubation is an instructor at a Navajo tribal college (Diné College.) 

Our experience in business incubation has shown us that change occurs through multi-dimensional approaches and strong entrepreneurial ecosystems necessitating our five core programs designed to create pathways to off-reservation markets, source lending and financing options that work on Native American reservations, strengthen our workforce and peer network of entrepreneurs, affect positive change at the government level, and ultimately to help contribute to a positive view about what it means to be a Native American entrepreneur.

We understand trust is paramount when working within Native communities and employ strategies to build and maintain the trust of our stakeholders. Prior to the pandemic, the majority of our work was carried out from our physical location in Tuba City, AZ. Having a physical location on reservation signals that we are a permanent part of the community that is here to serve every day of the week and that we are not going anywhere. 

Because of the pandemic, we have shifted our outreach, communication, and engagement to digital strategies utilizing social media and YouTube. Through these platforms, we provide information, resources, news, and stories about other Native entrepreneurs as well as webinars, and roundtable discussions.

Moving forward, we will return to largely relying on our physical locations to help bridge the digital divide but will also continue to employ our digital strategies to increase our reach.

Since the launch of the alpha pilot in 2020, Change Labs has developed the capacity and operations infrastructure for Kinship Lending to prepare for this year’s beta pilot. Based on our learnings from 2020, we reduced the number of borrowers, organized the borrowers into a peer cohort, and developed a financial education curriculum for all approved borrowers. 

Simultaneously, we are collaborating with the Navajo Nation government and Navajo CDFI to implement an equity pilot in 2024 or 2025 and increase our lending amounts to $50,000, using Navajo SSBCI funds. In preparation for the equity pilot, we are collaborating with impact investing partners to deliver a six-month fund manager training program for Change Labs staff. Additionally, for our existing debt product, we are seeking new lending partners so that we can accept 60 new borrowers per year with direct loan amounts of up to $10,000 and purchased loans up to $2.5 million. 

Within the next five years, in collaboration with partners, we anticipate deploying $7 million in secured capital to Navajo entrepreneurs and providing training and coaching services to 300 entrepreneurs.

With these iterations in development, Change Labs is in the early stages of collaborating with its partners at Native Community Capital, New Mexico Community Capital, and Co-op Capital to develop a model for collective impact as it relates to creating financial solutions for Native American entrepreneurs across the Southwest.

As members of our Native communities with the shared experience of making change in our communities, we are especially suited to support and foster the change that is needed so that Native entrepreneurs can access culturally relevant financial products.

We have a unique perspective on the persistent challenges faced by Native American entrepreneurs and change-makers. We have watched our grandparents, friends, and relatives create beautiful art in their homes and build businesses on the roadsides for decades. We have also watched as resources widely accessible in border towns – such as reliable internet, business incubators, and home delivery services – overlook entrepreneurs on Native lands. Similarly, we’ve participated in non-Native-led business development programs that can’t and don’t appreciate, or even comprehend, the unique challenges Native American entrepreneurs face when operating on sovereign lands. 

One of the primary challenges we face at Change Labs is internal capacity. Native lands do not have the benefit of generational entrepreneurs. With a total of 400 firms operating on a land mass the size of West Virginia, we have a severe deficit of professionals and experienced entrepreneurs. Recruiting for business coaches, for example, is nearly a year-long process. Candidates require extensive training in their technical skills as well as their coaching skills. We seek partners who can support the professional development of our coaching team by exposing them to peers, problem solving skills, management skills, and entrepreneurship development. 

Policy change, Capital campaigns

As the only staffed entrepreneurship support organization operating on the Navajo Nation, there are many needs and opportunities for partners to strengthen our work. For example, Kinship Lending is the direct result of a partnership with a local credit union. The credit union services the loans while Change Labs focus on underwriting, coaching, and training. The partnership is mutually beneficial. 

In order to achieve the ‘access to capital’ goals we have set with the Navajo Nation government, we will need more financial institutional partners willing to explore new ways of funding startups and growth entrepreneurs based on Native land. 

Change Labs has existing partners as part of the Indigenous Economic Wellbeing Coalition; four Native-led organizations (Native Community Capital; New Mexico Community Capital; Native Women Lead) that combine our strengths and raise our voices together rather than competing for resources. 

As a coalition spanning New Mexico and Arizona, we represent more than 20% of Native tribes in the United States. We are ecosystem connectors, collaborators, and creators differentiated by lived experience in reservation communities.

Each group in our coalition pushes back against colonialist approaches to rebuilding Native America. We are continuously navigating diverse systems such as Native relationship-based economies and mainstream profit-based economies.

Our coalition will build the capacity of emerging Native-led enterprises by unifying our goals, strengthening our operations, and filling service gaps. The innovative programs to be made available through our coalition will include:

kinship-based lending models; cloud-based technology training; a Native American online marketplace; community-led convening and research; and business incubation services tailored to the needs of Native entrepreneurs.

Change Labs is open to partnering with organizations with similar scopes of work that allows us to continue to build models that will serve Native Americans in communities beyond the Southwest.