Structuring First Nations Economic Development
The trend around the world has been for governments to get out of the business of doing business. The last twenty years has seen this trend continue and grow, from the privatization of airlines, railways and other transportation ventures, to include what have historically been considered common government services, such as the delivery of mail and other communication services. Moving opposite this worldwide trend are aboriginal governments.
In addition to providing increasing levels of government services to their members, more and more aboriginal governments are investing, and are directly involved, in for profit business ventures. This increasing involvement has many reasons, such as a desire to provide employment opportunities for members, alternate sources of cash flow as government equalization transfers decline, a desire to share in the wealth of the natural resources taken daily from their traditional territories or the desire to access the capital wealth of their reserve or treaty lands.
Whatever the reason, when First Nation governments participate in the world of mainstream economic development, they should keep in mind the following three primary considerations:
1. reducing liability exposure;
2. maximizing profits (by minimizing taxes and avoiding own source revenue claw backs by Canada); and
3. separating political considerations from business decisions.
Our economic development structuring addresses the above three primary considerations through the following two components:
1. a corporate structure (creating the legal entities and relationships owned by the First Nation to carry out its economic development); and
2. a governance structure (establishing the processes, roles and responsibilities of the key stakeholders in the First Nation’s economic development).
Each of these components will be discussed in this paper.