Four Directions, a community development financial institution established by Maine’s four Native American tribes, is overcoming many traditional barriers to lending on tribal land.Community development - Maine ; American Indian ; Financial institutions - Maine ; Loans - Maine

John A. Moore

English

Research Papers in Economics

Communities & Banking    29
by John A. Moore
Bangor Savings Bank
Native American Lending in Maine
Four Directions
Artists for Humanity
Community Development Financial Institution 30    Summer 2009
Underserved  populations  in  rural  Maine 
communities  are  benefiting  economically 
from the vital role played by community 
development financial institutions. CDFIs 
typify Maine’s “can do” spirit—its focus on 
self-determination,  creativity,  enterprise, 
cooperation, and making the most of local 
resources.  One  CDFI  that  serves  Maine’s 
Native Americans, Four Directions Devel-
opment  Corporation,  is  a  good  example 
of how community development financial 
institutions can adapt themselves to unique 
circumstances.
Filling a Need
Maine’s  first  and  only  Native  American 
CDFI was founded in 2001 in accordance 
with  the  goal  of  the  Community  Devel-
opment  Banking  and  Institutions  Act  of 
1994 “to increase the capacity of financial 
institutions to provide capital, credit, and 
financial services to underserved markets.”1  
The CDFI Fund, which is part of the U.S. 
Department of the Treasury, provided the 
initial funding. 
Like other Maine CDFIs, Four Direc-
tions increases and leverages the flow of pri-
vate-sector capital and socially responsible 
investments for public purposes; it uses the 
financial  tools  and  management  methods 
of for-profit businesses to support nonprof-
its’ community mission and improve their 
effectiveness;  and  it  demonstrates  “values 
in  action”  through  community  develop-
ment  initiatives  that  are  inclusive,  rooted 
in social justice principles, and respectful of 
the rights and dignity of individuals.2 
The CDFI’s name derives from Native 
American  spirituality,  in  which  the  four 
directions  and  the  four  winds  are  drawn 
together in a circle representing the unity 
and wholeness of creation. Four Directions 
serves members of Maine’s four Wabanaki, 
or “People of the Dawn,” communities—
the Houlton Band of Maliseet (near Houl-
ton), the Aroostook Band of Micmac (near 
Presque  Isle),  the  Passamaquoddy  tribe 
(along the Canadian border near Eastport), 
and  the  Penobscot  Indian  Nation  (near 
Bangor). Together, the four tribal commu-
nities have more than 6,000 members, five 
reservations, and sovereignty over 260,000 
acres of Maine trust lands. 
From the beginning, Four Directions 
committed itself to the principles of tribal 
self-determination and cooperation. Among 
the board members were each tribe’s chief 
plus representatives of each tribal housing 
authority. Four Directions was able to lever-
age the shared cultural, environmental, and 
community values, while working to over-
come the barriers associated with the unique 
status of Indian reservation and trust land. 
Among  the  barriers  are  limitations 
on using property as collateral: land may 
be  held  in  common  by  the  tribe;  leasing 
or owning home sites may be restricted to 
tribal  members.  Hence  mortgage  lending 
is  often  confusing  to  conventional  finan-
cial companies, making them reluctant to 
engage with Native Americans. Their reluc-
tance, in turn, may exacerbate the sense of 
exclusion permeating isolated rural commu-
nities already struggling with poverty and 
unemployment.  Institutions  run  by  tribal 
members can be critical.3 
Four  Directions  started  out  with 
revolving  loan  fund  programs  supported 
by the CDFI Fund and other public-sector 
resources, which enabled the development 
of mortgage products and homeownership 
opportunities on reservations where mort-
gage financing was not previously available. 
Then in 2005, the CDFI launched the Giv-
ing Winds campaign, an outreach to faith-
based and philanthropic organizations.
The campaign helped those organiza-
tions understand why Maine’s Native Amer-
ican community faces unique challenges in 
housing and economic development. It also 
worked on a formal mechanism that could 
assist  potential  nonprofit  benefactors  to 
make grants and low-interest loans to sup-
port the revolving loan fund and financial 
literacy programs. By aggregating program-
related  investments  of  local  and  national 
philanthropic organizations, tribal govern-
ments, and socially responsible individual 
investors, Four Directions made its public 
sector grant funding go farther.
Housing and Beyond
Four Directions’ familiarity with tribal sov-
ereignty and its credibility with tribal board 
members has enabled it to offer financial 
services for individuals and technical sup-
port  for  tribal  governments.  By  showing 
the leaders how to adopt local resolutions 
and develop administrative agreements with 
federal agencies, the CDFI helped first-time 
homebuyers living on Maine reservations to 
access federally guaranteed affordable mort-
gage products from the U.S. Department 
of Housing and Urban Development, the 
Department of Agriculture, and beyond. 
Four  Directions  established  a  single-
purpose  subsidiary  to  assist  the  Pleasant 
Point  Passamaquoddy  Reservation  com-
munity in building 28 units of new, sub-
sidized  rental  family  housing  under  the 
Low-Income Housing Tax Credit program. 
The first LIHTC project on a Maine reser-
vation, this initiative tapped the resources of 
the Passamaquoddy tribal government, the 
Bureau of Indian Affairs, Indian Health Ser-
vice, HUD, USDA Rural Development, the 
Federal Home Loan Bank of Boston, and 
the Maine State Housing Authority. 
In  a  partnership  with  the  Penobscot 
Indian  Nation  tribal  housing  authority, 
Four  Directions  helped  develop  12  new 
LEED-certified affordable homeownership 
units  on  the  Indian  Island  Reservation.4  
The  CDFI  provided  construction  financ-
ing and will also offer affordable mortgage 
financing  for  individual  home  purchasers 
utilizing its own revolving loan fund pro-
grams as well as the HUD and USDA con-
ventional mortgage programs it has made 
available for the first time.  
In  addition  to  addressing  the  funda-
mental issues of affordable housing devel-
opment and financing, Four Directions has 
provided technical assistance and small busi-
ness training and lending to those working 
on economic development—both individu-
al tribal members and tribal governments. It 
has convened housing and economic devel-
opment conferences to bring together trib-
al leaders and officials from several levels of 
government.  Native  American  economic 
development professionals from across the 
country have joined these conferences and 
have helped to move forward the twin goals 
of attracting quality employment to Indian 
country and developing successful Native-
owned business.
At the first event, a summit called the 
Wabanaki  Business  Development  Insti-
tute,  the  conference  series  set  goals. The 
Four Directions gets its name 
from Native American spirituality, in which 
the four directions and the four winds are 
drawn together in a circle representing the 
unity and wholeness of creation. Communities & Banking    31
goals included identifying building blocks 
for economic and workforce development, 
utilizing  Indian  Country’s  best  practices 
and cultural values to make decisions and 
develop businesses, and encouraging part-
nerships among Maine’s tribal leaders. Part-
nerships  were  seen  as  critical  to  pursuing 
local,  national,  or  global  opportunities  in 
areas like renewable energy, Native Ameri-
can arts, cultural tourism, sustainable for-
estry, and government contracts. 
Looking Ahead
Four Directions plans to continue partner-
ing with other Maine CDFIs, regional com-
munity  development  corporations,  and 
private-sector banks to attract more capital 
for business investment.
It has entered into “pooled loan fund-
ing” facilities with financial institutions—to 
fund loans to tribal members that are then 
pledged as collateral to the lender. And it 
has signed other agreements with regional 
economic  development  corporations  for 
small  business  loan  underwriting  services 
and joint grant applications. More recent-
ly, Four Directions has entered into a coop-
erative origination agreement with Coastal 
Enterprises Inc., a community development 
financial corporation that is authorized by 
the  CDFI  Fund  to  access  below-market 
capital for business loans utilizing the New 
Markets Tax Credit program.5  
With such initiatives, Four Directions 
hopes to replicate its successes in affordable 
housing,  increase  employment  opportuni-
ties, and build a strong foundation for sus-
tainable economic development. Through it 
all, the CDFI will work on behalf of tribal 
communities to create a more prosperous 
future for Maine’s Native Americans. 
John A. Moore, a senior vice president at 
Bangor Savings Bank, is the primary insti-
tutional liaison for outreach and delivery of 
community development lending, investment, 
and  service  to  nonprofit  organizations  and 
governmental agencies in Maine. He is also 
a founding board member of Four Directions 
Development Corporation.
Endnotes
 The legislation states that “its long-term vision is an 
1 
America in which all people have access to affordable 
credit, capital, and financial services. Access to credit, 
investment capital, and financial services are essential 
ingredients for creating and retaining jobs, developing 
affordable  housing,  revitalizing  neighborhoods, 
unleashing the economic potential of small businesses, 
and empowering people.” See http://www.cdfifund.gov.
Four  Directions  Development  Corporation  is  a 
2 
Native-governed, independent, nonprofit community 
development corporation and community development 
finance corporation. Its mission is to improve the social 
and economic conditions of the tribal members of four 
Maine tribes by investing in affordable housing, tribal 
business ventures, and small and midsize businesses. 
It helps tribal members by increasing homeownership 
and the number of Native-owned businesses, raising 
the level of financial literacy among tribal members, 
and attracting capital to Indian Country. See http://
www.fourdirectionsmaine.org. 
See, for example, http://www.bos.frb.org/commdev/
3 
c&b/2008/summer/swan_Native_American_Bank.
pdf.
The  LEED  green-rating  acronym  stands  for 
4 
“Leadership in Energy and Environmental Design.”
The  NMTC  program  is  available  in  designated 
5 
distressed  communities,  including  Native  American 
reservations.
Four Directions’ familiarity with tribal  
sovereignty and its credibility with tribal board 
members have enabled it to offer financial  
services for individuals and technical support 
for tribal governments.
Artists for Humanity
This Communities & Banking article is copyrighted 
by the Federal Reserve Bank of Boston. The views 
expressed are not necessarily those of the Bank or 
the Federal Reserve System. Copies of articles may 
be  downloaded  without  cost  at  www.bos.frb.org/
commdev/c&b/index.htm.

Four directions: Native American lending in Maine

http://www.bostonfed.org/commdev/c&b/2009/summer/John_Moore_Maine_Indian_CDFI.pdf

Four directions: Native American lending in Maine

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