Prioritizing fiscal transparency and superior customer service, Michael E. Roberts (Tlingit), President and CEO of First Nations Development Institute, runs the 38-year-old nonprofit like a for-profit business.
His approach has paid off. First Nations has once again received the highest rating of four stars from charity watchdog agency Charity Navigator. This marks First Nations’ seventh year in a row to achieve this distinction. Only 4 percent of the charities rated by Charity Navigator can claim the honor of receiving this top rating for seven consecutive years.
Prior to re-joining First Nations in 2002, Roberts spent five years in private equity. He advised angel investors, worked for a $500 million telecommunications fund and for an early-stage Midwest venture capital firm. Roberts previously served as First Nations’ chief operating officer from 1992-1997.
First Nations helps Natives regain stewardship of their assets—such as land, human potential, cultural heritage, or natural resources. To do so, First Nations employs a three-pronged strategy of educating grassroots practitioners, advocating for systematic change, and capitalizing Indian communities.
Native Business Magazine spoke with Roberts about his unique approach to leading a nonprofit.
How do you run First Nations like a for-profit business?
I have an MBA in finance [from the University of Washington], which makes me look at running a not-for-profit business probably differently than some do in the not-for-profit sector.
At First Nations, we have two primary customer bases.
One is the foundation community and the donors who give us money. We have a certain obligation to them to spend their money wisely, keep them informed, and give them the respect and dignity that they deserve for investing with us.
We have this other very large customer base, and that’s Indian Country. In many ways, it’s our most important customer. We look at how we might serve them best.
How does FNDI practice fiscal responsibility?
I always tell people, the not-for-profit sector is a business sector. We’re very good at employing the best practices of for-profit businesses at First Nations.
We practice high customer service. We stay in touch with our customers—both in Indian Country and the foundation community—frequently and try to offer the best customer service that we can possibly give them.
We are very good at controlling expenses, so we don’t ever overspend our revenue for the year.
As an organization, we practice open books management. Everyone at my organization gets to sit down once a month, and we go through our revenues and expenses on a project-by-project basis, so everyone understands where our money comes from and how we spend it.
My goal at First Nations has always been to be best-in-world business first, best-in-world not-for-profit secondly, and best-in-world not-for-profit in Indian Country thirdly. If we’re not keeping our eye on the prize: being best-in-world business, we’re probably not going to do well.
How does First Nations approach investment?
When I was in venture capital, we made bets two ways.
We either said: The market is great, and we’re going to bet that this company can capture that big market segment.
The other way you invest in venture capital is you find dynamic entrepreneurs, and you invest in their big ideas. You work really hard with them to put the pieces they need in place to be successful.
I would say here at First Nations, we are more tilted toward the latter.
We have a lot of faith in the genius of Indian Country, and we invest in grassroots, early stage, community, social entrepreneurs. We make small and sometimes large-size investments in them, with the full knowledge that they can change the world.
How do you educate and capitalize ‘grassroots practitioners’ across Indian Country?
We invest in genius and hard work in Indian communities throughout the U.S. We recognize that a lot of these folks have never had access to grant capital before. But we also believe that they’re fully in control. They have the best ideas for how to change and make their communities better.
We understand that our job is to provide a little bit of capital — if we could, a lot of capital — and a little bit of technical assistance. The education part involves one-on-one technical assistance and small group and large convening technical assistance.
Our education and reports empower organizations and individuals, so that they continue to thrive even when we’re not present.
The other piece is the capitalization piece. We recognize that resources are scarce. You’ll see from some of our recent publications that the foundation community has horribly under-invested in Indian Country.
[A recent report released by First Nations shows foundation giving to Native groups declined by nearly a third over an eight-year period, 2006–2014. It is estimated that the top 1,000 foundations gave roughly $9.6 billion more in 2012 than they did in 2006 (a 19 percent increase from 2006 to 2012). But grant dollars to Native American organizations and causes during this same period of time declined by $27.1 million or by 23 percent.]
When you look at foundation investment to Indian-controlled organizations, it’s a pretty paltry number. We understand that part of the work that we do is try to wrest some of that money from foundations and owners and get it to Indian Country, so that we can capitalize some of those great projects.
Twenty years ago, First Nations also created a wholly owned subsidiary called First Nations Oweesta Corporation. That subsidiary looks at the other part of the financial equation – access to debt capital in First Nations communities.
First Nations Oweesta is just under 20 years old and has worked with Indian communities to create more than 72 Native Community Development Financial Institutions (CDFIs) over the last 20 years. [Roberts also serves as Chairman of the Board of First Nations Oweesta Corporation.]
Oweesta is modeled much like First Nations – an apple doesn’t fall far from the tree. Oweesta provides technical assistance and training, while working to find capital in the form of debt capital to these Native CDFIs, who in turn provide debt capital to the individual borrowers.
Lastly, part of this bigger equation is advocating for systematic change.
We spend a lot of time educating the tribal communities themselves to advocate for systematic change – laws, regulations, practices that could make their lives and institutes better.