Many Indigenous communities are in a position to better their community through new wealth as a result of land claim settlements, resource-sharing opportunities, gaming revenues, economic development and other revenue-generating sources. Managed well, new wealth can create immense positive change, both immediate and lasting.
Regardless of the source of new monies, funds are often placed in a Trust. Trusts are an effective and efficient way to govern, protect and grow wealth – particularly new wealth. Trusts are intended to last a long time. They serve as protection against creditors in the event that the community encounters financial difficulties. They guide the management and use of funds as established by leadership, and provide an effective framework for the on-going reporting and accountability to membership.
It’s important that community leaders understand how to oversee the Trust properly, as well as the benefits of community engagement in order to gain greater buy-in by membership towards the Trust’s long-term goals and objectives. By doing so, the Trust will be better positioned to achieve excellent outcomes over time. For that reason, working with advisors who understand the culture, connect with the community and play key roles in supporting leadership is crucial.
Gaining community readiness for shaping and guiding a Trust is a delicate and complicated process. To provide a better understanding of how this process works, we’ve prepared a summary of key steps for building and launching the most efficient and cost-effective solution both for present and future goals.
Set a Strategic Vision with Guiding Principles
The needs of communities can be numerous and, in the short-term, well beyond the affordability of a Trust. The list of funding priorities including housing, education, business development, health care, culture, language programs, infrastructure, and land purchases is extensive. However, striking a balance between the distribution of trust income and preserving capital is important.
The Strategic Vision presents the ideal but also achievable outcomes based on the needs of the community, the size of the Trust and the amount of the disbursements from the Trust. It answers the question of what can be achieved in the short, mid and long-term. For the Strategic Vision to be successful, it must align fully with community values and culture.
Guiding Principles, or values that establish a framework for decision-making and behaviour, can include:
- protecting and enhancing the community’s current culture
- ensuring all actions are sensitive to and respectful of the environment
- improving or maintaining the safety and well-being of all members
- opposing inequality and colonization through education and being leaders in chosen fields of study
The Guiding Principles are designed to keep the intention of the Trust and its Trustees aligned over time.
Ensure Effective Member Communication, Consultation and Education
Communicating leadership’s position regarding the Trust, including what the upper limit for potential payouts are, as well as other pertinent information is a must when it comes to engaging the entire community. Explaining the reasoning behind this position is mandatory to ensure complete understanding and transparency.
Communication can take many forms and often depends on the number of members residing in the community. Age, gender, health, personal values, level of education, cultural views, and on reserve/off reserve residency will dictate whether electronic polls, world cafes (interactive member discussion/feedback), focus groups, websites or newsletters are chosen. If possible, personal consultations should be an option at all times.
Education can be as simple as educational workshops or as intensive as one-on-one training. Again, specific needs guide the method of choice.
Greater wealth comes with greater fiduciary responsibility and greater accountability. Independent community Trustees are identified who, in many cases, have never taken on a role with such immense duty of care to their community. For this reason, there’s often a need for governance advice, training and support. This is also important when the community is looking to develop business opportunities, as potential partners will request evidence of stability and good governance.
Ideally, at the end of this stage the community is ready for the change and in agreement with what will happen and how it will happen, and Trustees are ready to take on the mantle of responsible trusteeship.
Develop a Trust Agreement
Once the community priorities have been developed and communication strategies are in place, the Trust Agreement can be developed. This tool ensures the protection, future growth and sustainability of the community’s funds. The Trust Agreement covers the overriding principles that will guide the Trust over time.
Trusts can be designed with a limited life or for specific purposes. However, the majority of Trusts are intended for long-term community benefit, generating a stable income stream well into the future. This concept is simple, yet critical, to the longevity of any fund. If income and/or capital is drawn at an annual rate that remains within the financial affordability or expected earnings of the Trust (net of fees and expenses), the Trust capital will grow.
The greater the growth of the Trust, the greater the amount of income and funding that can be made available, not only for the needs of today, but for future generations. Conversely, if the funds drawn exceed the earning potential of the Trust then, over time, the level of annual income and the capital itself will be depleted.
Stewardship of a Trust is complicated and challenging, but with proper oversight and management – and the right road map on hand – decisions become much easier to make. The benefits to the community can be enormous and lasting.
These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.