Village corporations: hopeful experiment still in progress.

• Author: Richardson, Jeffrey
• Position: Alaska natives

Village Corporations: Hopeful Experiment Still In Progress

Alaska's Native village corporations continue to defy odds and confound skeptics. Not only are they still here - a remarkable feat in itself, say some observers - but a number have become highly profitable. Many more are measurably successful according to other, equally valid yardsticks used by their shareholders.

In the nearly 20 years since congressional passage of the Alaska Native Claims Settlement Act (ANCSA), more than 200 of these unique, miniature economic machines have adopted a variety of survival strategies. Along with their more powerful counterparts, the 13 regional corporations, they have returned to Congress seeking corrective measures to make implementation of the complex settlement act work the way it was supposed to - providing Native people with a vehicle for protecting their land entitlement and guiding their own economic destiny.

By all accounts, this experiment has been heartbreaking and almost incalculably costly, in both financial and human terms. Village corporations spent collective millions just trying to secure title to their land, and most communities have paid dearly for their corporation's survival with high burn-out rates among their leaders and other social difficulties.

But there are indications that this unprecedented experiment in economic self-determination is beginning to fulfill some of the expectations of its intended benefactors on a broader scale than many skeptics had thought possible. Stories of dramatic comebacks from the brink of bankruptcy are not yet commonplace, but a few shining examples, along with the passage of time and shareholder perseverance, bode well for the future of village corporations.

Getting Started. Many aspects of the whole Native claims settlement have been widely misunderstood and often mischaracterized, including village corporations. The land settlement of more than 40 million acres, called a giveaway by some, constitutes the land Congress allowed Natives to keep; they claimed and traditionally used far more. The financial settlement, often incorrectly thought of as a payoff to terminate the special federal responsibility for protecting the cultural and economic viability of Native life, was in fact compensation for lands taken.

As it turned out, precious little of the nearly $1 billion cash settlement reached the individual village corporations as a source of capitalization to launch business activities. Over a 10-year period, most village corporations received a total of less than $200,000. Yet at one time, annual corporate costs were estimated to be more than $70,000, thanks in part to some of the special obligations imposed by ANCSA.

But insufficient startup funds, an arduous land selection process, hostile litigation and sometimes uneasy relationships with regional corporations were not the only early obstacles to village corporation progress.

Bruce Oskolkoff, president of Ninilchik Natives Inc., has helped his corporation along the difficult path of recovery from a disastrous start. "We've come a long ways, to say the least. We had a rather long learning curve early on," Oskolkoff says.

Although the regional corporations did not escape their own difficulties, the villages were especially easy prey to unscrupulous deal-makers and advisers.

"It was an opportunity for outside interests to come in and use what financial capital the villages did have to more easily influence investments in what turned out to be bad deals. It was widespread throughout Alaska, and not just in villages," says Oskolkoff, who also has worked with the Alaska Native Foundation, an organization providing technical assistance to the fledgling corporations and monitoring their problems and progress.

Survival Strategies. The survival of Ninilchik Natives ultimately hinged on the sweat and smarts of a working board of directors - and time to heal the early financial wounds. Notes Oskolkoff, "We spent a lot of long hard hours, working evenings, just to determine where the problems were. It took us several years. Probably the largest financial problems we had came from reliance on outside advisors."

Finally, in 1989, Ninilchik posted gross revenues of $1 million, with net earnings of $600,000. From 1988 to 1989, liabilities were reduced from $1.2 million to $200,000. Shareholder...