Pause for concern

The Minor’s Fund, held in an EBCI account for tax purposes (the tribe is exempt from capital gains), was originally heavily invested in the raging bull market of the mid-90s. With tech stocks soaring, the fund was growing by leaps and bounds. But when the market began to nose-dive about three years ago, the fund was dragged along. Those minors who turned 18 last year and withdrew their money received less money than they would have if their per capita had been protected, rather than invested. Some parents began to question the tribe’s management of the fund.

Michell Hicks, tribal financial officer, called for a public work session with tribal council March 20 to discuss the fund and address the concerns of tribal members. “When I go to these community clubs, I get grilled,” Hicks said, referring to the recent dip in performance of the fund.

“The reality is, we’ve never had money before. It’s a new animal for us. The question is how do we invest to first protect the principal and also earn reasonable interest,” Hicks said.

But some tribal members are not concerned about interest. “I get telephone calls from parents saying ‘we don’t want our money at risk, at all,’” said Tribal Council Chairman Bob Blankenship.

Wally Treadway is one of those parents. “I don’t know where along the line it was decided that we needed to turn a profit. I don’t think the stock market is a wise investment.”

Treadway said that the minors deserved to receive the total of their per capita payments and called it a “shame” that those who turned 18 last year and opted out of the fund lost money.

“The process in place is a good process,” Hicks said. “My recommendation to council is that we take a look at other investment vehicles.”

Financial consultant Grant Kalson of Kalson and Associates, of Newton, Penn., discussed options during the recent work session. He noted the complicated and involved logistics of trying to micro-manage different aspects of the account for different goals and warned of the “schizophrenic situation” of trying to protect capital and simultaneously invest for growth.

Hicks said he would recommend a less aggressive plan. He encourages something like 25 percent in stocks and 75 percent in bonds. “In my mind, that’s where we are headed,” Hicks said.

Council opinions

Teresa McCoy, Big Cove representative said she felt the number one priority was to guarantee that all per capita distribution was available to enrolled members when they were eligible to collect it.

“How do you create something that grows, but still protects the principal. I’m not sure we want to play this roller coaster thing. I’m leaning towards protecting the principal. That’s what I want to see for my kids,” Larry Blythe, vice chairman said.

Council member Albert Crowe said he would, personally, look to growth investment but as a council member he felt obligated to secure the minors’ principal. “We’re charged with taking care of this money until they turn 18, then it’s up to them,” Crowe said.

The council was in consensus about getting community input.

“We need to survey the parents,” Blankenship said, but noted that information needed to be presented to the community so they could understand it and make an informed decision.

Community outreach

The council decided on a multi-faceted approach to try to reach community members. Along with traditional community club meetings, the council charged Hicks and June Sterling of Qualla Financial Freedom to put together a program of community outreach. Sterling will write educational/informational columns in the Cherokee One Feather newspaper to help parents understand the relation between risk and return and outline some options for the fund and solicit input.

According to Hicks, the tribe will also present a televised program from council chambers to try and reach as many tribal members as possible. That program is tentatively scheduled for April 15.

Sterling said the idea is to get a majority opinion of how tribal members would like to see the fund managed. “Not everyone will agree on what the best option is, but we will try and educate them about the options so they can make informed decisions and not have regrets later.”

Need for education

Tribal officials, council members, parents and educators all agree that there is a dire need for money management skills and financial education. Hicks noted that, to date, approximately 98 percent of those eligible withdraw their money from the fund when they reach legal age. “Older kids need to be wise about that money. It’s less than $30,000. They need to look at $30,000 over a longer term. They should look at leaving that money in — at having basic family needs met. That’s more valuable than short- term gains. A lot of money is being spent on useless things, it’s here today, gone tomorrow. That’s not healthy,” he said.

Little’s commitment to those children vested in the minor’s fund is quite evident. He fairly bristles when he talks about the challenges these young people face. “There are people out there who want those kids’ money. It’s my job to give them the skills they need to protect themselves and their investment.”

Little said his class at Cherokee High School was still evolving. “It’s still in the experimental stage. We are working to get it where we want it. I hope that within two years we will have a course that is required for graduation.”

Sterling said the goal of Qualla Financial Freedom was to expand financial education to include everyone from kindergarteners to adults. According to its webpage, the mission of QFF is “to teach financial literacy to EBCI enrolled members on and off the Qualla Boundary.” Some of their upcoming programs include “Teach the Children to Save Day,” “Manage Your Money: Stop Laughing It’s Possible,” and “Financial Issues for Women.”

“Education is the best protection we can offer our children,” said Principal Chief Leon Jones. “We have to protect the children’s investment. We want them to have the opportunity to use that money to educate themselves and improve their life.”

Minor’s Fund impact

There are about 13,000 enrolled members of the EBCI. Approximately 4,200 of those are minors. “I had a banker figure for me, using today’s per capita, what every member born today could expect as a return on their investment, at a modest three to four percent interest compounded daily, if they didn’t touch their money for 25 years. They all could be millionaires,” Jones said.

“Can you imagine the socio-economic and political impact that 13,000 millionaires here on the boundary could have on North Carolina?”

Sterling agrees that the impact could be enormous. ‘When will you ever have $100,000?” she asked. “Most of us are lucky to have that by retirement age. Those kinds of assets could provide the engine for growth across the entire area. Or they could just be consumed.”