Innovating Tribal Funds Distributions

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By Convenient Cards

March 28, 2022

Financial assistance that tribal organizations provide to their members is critically important now more than ever because of hardships brought on by the COVID-19 pandemic. Social services programs that provide financial assistance to tribal members such as clothing grants, technology grants, academic achievement awards, TANF programs and per capita distributions are important benefits to the health and well-being of many Native American families. The challenge for every tribal office is providing timely delivery of financial assistance in an efficient and cost-effective way while at the same time assuring that the funds are spent in accordance with the programs’ social services intent, (e.g., clothing grant funds are spent on clothing). 

Traditional methods of making direct distribution of funds to tribal members such as issuing checks present challenges, particularly at scale. For tribal offices issuing checks is costly, prone to fraud, and becomes difficult to control how the funds are spent.  According to the Aberdeen Group, the average cost of issuing checks is $7.78¹.  Lost and stolen checks are also common with these kinds of social services programs and there is rarely any recourse for the tribal offices who end up reissuing checks.  The only way to control how funds are spent is to require receipts after the fact.  Reviewing receipts is costly and does not preempt bad behavior. Checks are also less than ideal for many tribal members.  Members who receive temporary assistance often do not have bank accounts and are forced to pay egregious fees to cash their checks.  Living with cash only also limits where and how money can be spent.  Often only leaving the most expensive alternatives and always requires face to face transactions which means travel and the inability to social distance. 

Enter Prepaid Debit Cards.  As compared to issuing checks using Prepaid Debit cards saves money is more secure and provides control over how the funds are spent.  For annual or infrequent social services programs like clothing grants, single load cards are used.  For programs with recurring payments such as TANF, reloadable cards are used.  Cards require secure activation using personal information only known to the intended recipient dramatically reducing fraud.  Cards can also be setup for restricted use; for example, cards with funds intended for clothing can only be used at clothing stores.

Convenient Cards first began assisting Native American Tribes in distributing social services funds to tribal members in 2014 when the company was approached by a bank client seeking an alternative to issuing checks. As it turns out, the bank was owned by a Native American Tribe looking for a better way to distribute social services funds to tribal members.  At the time Convenient Cards was servicing over 450 community banks nationwide with turn key prepaid card programs. Since then, Convenient Cards has been developing fully customized payment distribution solutions for Tribal Governments that save money, improve efficiency, maximize security, and provide the best user experience for tribal members.

At no other time was there a greater need for a customized, secure, & efficient tribal card program than during the Covid-19 pandemic.  In 2020 and 2021 the COVID-19 pandemic disproportionately affected tribal communities impacting daily life for nearly every tribal citizen. First, the Cares Act provided nearly $8 billion of relief funds to Native American Tribes² and later The American Rescue Plan Act appropriated an additional $20 billion to Tribal governments. Many tribes allocated a portion of the relief funds to be disbursed directly to tribal members. Convenient Cards assisted many tribes by setting up custom programs that enabled them to distribute much needed relief quickly and securely to tribal members.  With many tribal offices closed during the pandemic and the practice of social distancing imperative to avoid the further spread of Covid-19 issuing funds on cards proved to be a big success with many cards being used primarily for online purchases during the pandemic. 

Tribal cards have also proven to be better secured with the ability to track card activity, block and reissue cards when needed. Lost cards and cards never received were easily blocked allowing funds to be retrieved and loaded onto replacement cards, something not so easy to do if a check goes missing. 

To learn more about distributing funds on Prepaid Debit cards click here. 

¹ [https://epaypolicy.com/the-hidden-costs-of-paper-checks-for-your-agency/]

2 [https://home.treasury.gov/system/files/136/Allocations-to-Tribal-Governments-April-30-2021.pdf]