Best Practices and Lessons for Financing Tribal Projects: Capital Stacking
Click to read Best Practices and Lessons for Financing Tribal Projects: Capital Stacking
Published March 2026
Large projects, such as the construction of a health care center or development of a roadway, typically require funding beyond that provided by a single grant. Because of this, tribes often seek to combine, or layer, funding from more than one source for such projects, a practice known as capital stacking.
This brief by the Urban Institute introduces the concept of capital stacking and discusses the benefits and challenges associated with using this project financing model to fund tribal community economic development activities based on the lessons learned from three projects funded from multiple sources: the Shoalwater Bay Indian Tribe’s (Washington) planning and implementation of community relocation, Pawnee Nation of Oklahoma’s behavioral health center, and Lac Courte Oreilles Band of Lake Superior Ojibwe’s (Wisconsin) community health center.
Why This Matters
Capital stacking requires knowledge of potential funding sources, their eligible uses, and whether they can be combined or stacked. It can greatly benefit tribes by enabling them to undertake larger projects than otherwise would be possible and mitigate risk by spreading it across multiple funding layers. In addition, the process of working with different funders and types of financing instruments contributes to a tribe’s capacity and self-sufficiency and can attract private investment to unique projects. But not all tribes have experience with capital stacking. Drawing on interviews and other available sources, this brief explains capital stacking and shares models and lessons for putting together a capital stack.
Key Takeaways
From our interviews, we drew a number of lessons for tribes and their financial partners related to building and managing a capital stack.
Key lessons for tribes involve planning and preparation, building the capital stack, and managing the process from financing to implementation for projects that have multiple funding sources, reporting requirements, and partner relationships:
Tribes should first develop an economic development plan and a project business plan, if such plans do not yet exist. With input from key stakeholders and community residents, the economic development plan will ensure the project is a priority for the community, set out the vision to guide the effort, and establish the community buy-in that will allow the economic development plan to survive subsequent election cycles, which is critical for larger, longer projects. The business plan, including projected revenues and expenses during and after project development, will guide efforts to secure funding and be useful for developing strong funding proposals.
Begin efforts to develop the capital stack as early as possible. It takes time to estimate costs and build trust with potential funders. Be flexible as financing may not move on a fast timeline and there may be pauses in project implementation owing to funding considerations. Do not hesitate to think big—consider multiple sources of funding.
Enlist support from knowledgeable sources. Speak with tribes that have implemented similar projects to learn about their experiences. Conferences, networking opportunities, and regional tribal organizations are good places to start if you do not know of tribes with experience relevant to your project. If your tribe does not have a finance team aware of potential sources of project financing, how and when to develop proposals for those funding sources, and how to manage a capital stack, consider hiring a consultant that has at least some experience working with tribal nations.
Begin building a capital stack with grants. Identify grant options first to build on funding that involves less risk for your tribe and other investors. Engage tribal liaisons from federal and state grant programs to discuss funding opportunities and how to develop strong proposals for those sources. If grant proposals are denied, request feedback and apply again. Consider inviting potential funders to visit the proposed project site.
Designate a project manager with experience, fortitude, and communication skills, including the ability to communicate the tribe’s values to partners and help them act with cultural awareness, to see the project through. Keep tribal leaders, key tribal stakeholders, and all project partners informed.
Lessons for both financial partners and tribes concern several components of relationship building:
Good working relationships take time to build and require open communication and trust. A tribe needs to have a well-articulated vision for its project that is supported by its tribal government and community, and financial partners need to understand and respect the cultural values that underlie that vision.
Tribes and individuals developing projects at the tribal level should have conversations with their counterparts at financial institutions to ensure the institutions’ interests align with those of the tribe. Questions to ask such institutions include, “What do you do or have you done for the Native community? What do you think of sovereign immunity?” Working with Native financial institutions can be an advantage as they are more likely to be familiar with the process of waiving sovereign immunity and may be better able to understand and navigate a tribe’s specific concerns on that topic.
Financial partners need to be confident in the viability of the project and the tribe’s ability to meet its financial obligations. Establishing this confidence requires the tribe to provide documentation, which may take considerable time if certain information is not readily available. It also may require a tribe to seek technical assistance with pulling together required materials.
How We Did It
To present relevant experiences and lessons for tribes considering accessing and combining multiple funding sources, we selected three projects and examined their capital stacking processes. The population sizes, land bases, and locations of the tribes leading these projects are diverse, as are the projects’ purposes, scales, and funding sources. Across the three projects, we interviewed six people involved with the projects and supplemented those interviews with documents shared by interviewees and publicly available descriptions and news articles about the projects. Interviewees included tribal leaders, tribal staff, financial consultants, and bankers.