ANC leader touts groups' economic impacts

Posted: Monday, October 11, 2010

Alaska Native regional corporations are making strong impacts in rural communities and throughout the state in increased revenues and higher dividend payments, according to a regional corporation president.

Among the 12 regional corporations that represent Alaska Native people living in the state, revenues grew by 17.5 percent from 2007 to 2008, totaling $6.9 billion in 2008, according to a report from the ANCSA Regional Association.

Net profits, however, fell in that same time period from $474 million to $260 million, but this didn't diminish overall dividends paid to the corporations' Alaska Native shareholders, the report stated. Overall dividend payments increased from $125 million to $171 million, according to the report.

Will Anderson Jr., president and CEO of Koniag Inc. and president of the association, presented the results before an audience of local business leaders Oct. 4. During the presentation, he answered questions from the audience, including some that addressed criticisms brought by a series of Washington Post articles regarding Native corporations' participation in the Small Business Administration's 8(a) program.

The program allows certain small, economically disadvantaged businesses to obtain federal contracts without the typical bidding competition they might normally face from larger, more experienced firms.

The newspaper alleged that Alaska Native corporations, which have been allowed to utilize the program since 1986, have not used the revenue gained from federal contracts that sometimes reach $1 billion or more to significantly increase dividend payments to shareholders.

Most minority owned disadvantaged businesses certified under 8(a) have a contract limit of $3 million to $5 million. Alaska Native and American Indian companies or their subsidiaries - so long as the minority group owns the majority of the company - are not bound by any monetary limit. They can receive contracts of any amount.

Anderson was thankful that the reporters had actually traveled to Alaska to see conditions in rural villages for themselves, but disagreed with the characterization of the way Alaska Native corporations use revenue gained from these contracts.

"Even though the Post sent someone out here, I think it's still frustrating that the real facts and story behind what we're doing didn't come out very well," he said. "We're criticized for being fronts for big business, but I think everyone in the room knows that we are successful, and sophisticated and professional organizations that are very capable of doing our own work."

Following the rules under the SBA, the subsidiaries tend to partner with larger corporations, which ideally serve to mentor the smaller upstart company.

He said the true dividend benefits are "tenfold or more" higher than they were represented as being in the articles.

"We always struggle with misinformation, a lack of understanding and we really need to be diligent and work hard to make sure we counter these kinds of stories with really good, strong facts," he said.

Last month, Arctic Slope Regional Corp., Cook Inlet Region Inc. and Doyon Ltd. suggested changes to the SBA program to increase the accountability of Native corporations that utilize it and impose a $100 million cap on sole-source 8(a) contract awards.

The 12 regional corporations paid a total of 66 percent of their net profits in dividend payments, according to the report.

And beyond paying out dividends, the Native corporations benefit charities by donating millions of dollars, the report stated. In 2008, charitable donations amounted to $24.3 million, more than 9 percent of net profits, according to the report.

And from 2005 to 2008, the corporations donated $70.5 million to a vast array of nonprofits and community organizations, the report stated.

The report said 35,430 jobs worldwide were attributed to the business activities of the 12 regional corporations, paying $1.68 billion in total in total worldwide payroll, providing an average compensation of $47,000 per employee.

Of those jobs, 13,848 were in Alaska, with payroll in the state totaling $774 million, or $56,000 per employee according to the report.

More than 10 percent, or 3,577 employees, of the total employment base was comprised of Alaska Native people, the report stated.

The corporations also contributed $11.1 million to more than 3,200 scholarship recipients in 2008, as well as endowments, the report stated.

The Alaska Native Claims Settlement Act created the 12 regional corporations discussed in the report in 1971 to settle indigenous land claims and make way for the construction of the trans-Alaska oil pipeline. The act also created more than 200 local village corporations.

The report presented a number of statistics reinforcing the positive impact ANCSA has had on Alaska Native peoples.

From 1970 to 2007, the Alaska Native population has grown by 140 percent from 50,801 to 122,158, according to census figures presented in the report. In the same time period, inflation-adjusted household income rose from $28,516 to $42,703. The proportion of Alaska Natives living below the poverty line dropped from 47 percent to 22 percent.

"Certainly, not all of the advances made can be attributed to ANCSA," the report stated. "However, the upward social mobility of Alaska Native people has definitely been facilitated by dividends, jobs and scholarships made available through ANCSA corporations."

• Sean Manget can be reached at sean.manget@alaskajournal.com.



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