As more money flows from historic treaty settlements, Indigenous communities focus on financial literacy education

Sophie Pheasant fondly recalls carrying pails of water from a well to the log house where she grew up in Wiikwemikoong. She hadn’t expected she would still need to be hauling water for her family decades later as an adult.

Ms. Pheasant, a 48-year old mother of three and member of Wiikwemikoong Unceded Territory, lives on a rural property just outside Little Current, Ont., on Manitoulin Island.

Her home sits just outside municipal services, and while her house does have running water, the filtering system that was supposed to ensure the well water was safe to drink hadn’t been working since 2010. Anxious about the cost, she wasn’t able to replace it – and so for 14 years she filled up jugs of clean drinking water at the local arena.

Then, this past September, on a full moon night, Ms. Pheasant hosted her friends for an Anishinaabe ceremony, and sang a traditional song to honour water and celebrate the new water system she finally had installed.

She was able to afford the new system because of money she received as part of a settlement reached in 2023 between the federal and Ontario governments and 21 First Nations who are part of the Robinson Huron Treaty. The First Nations successfully argued that the two levels of government had breached treaty obligations from 170 years ago by failing to adjust the amount of annuity payments based on the land’s increasing value.

Duke Peltier, one of the plaintiffs in the case who is also part of the litigation management committee, told The Globe and Mail the compensation payouts of the $10-billion Robinson Huron settlement agreement – ranging in the low six figures per individual – were life-changing for recipients, significantly changing some people’s circumstances.

“Each individual now had an opportunity to make some decisions that somehow, previously, those kinds of decisions were very stressful for them,” Mr. Peltier said. For some, that means paying down their mortgage, making long-needed home improvements, or providing daily comforts like being able to go to the grocery store and get their kids something they want, instead of only what they need to survive until the next payment.

Over the last couple decades, Indigenous communities across Canada have won a number of cases against the federal government, and the provinces, for treaty violations, land claims, and abusive policies that have devastated their people and culture.

These victories have come with large compensation packages – and while those can be life-altering in a positive way, the sudden inflow of money also poses challenges for the people and communities that receive them. Many Indigenous peoples historically have not practised estate planning or created wills, which might go against their traditions, and individual recipients are also a target for fraud, or exploitative borrowing.

To help prepare people who are soon receiving a settlement, or those who already have, Indigenous leaders are bringing financial literacy education into their communities.

The federal Indian Residential School Settlement Agreement in 2007, then the largest class-action settlement in Canadian history, was a landmark victory that set a precedent for others – including compensation for the Sixties Scoop, treaty land entitlements and flooding claims for losses caused by the construction of dams.

More recently, money dubbed “cows and plows” was distributed to Indigenous groups on the Prairies for broken promises, dating back to 1874, to provide equipment and livestock to First Nations transitioning from a nomadic lifestyle. And late last year, the Federal Court approved a $23-billion settlement with Ottawa to compensate First Nations children and family members affected by chronic underfunding of on-reserve child-welfare services.

Often, a portion of settlement money is set aside for collective needs – community programming, economic development and infrastructure – but the majority is spread between individuals. The size of individual payments can be substantial.

In 2019, for example, the federal government agreed to compensate Indian Day School survivors; more than 200,000 Indigenous children attended 700 day schools in Canada starting in the 1920s, many of whom endured traumatic experiences including physical and sexual abuse. In that settlement, individuals received between $10,000 to $200,000 each, depending on the severity of their experiences.

But when individual claimants receive their cheques, the new-found wealth doesn’t always translate into long-term benefits.

Ms. Pheasant, who sits on a financial sustainability advisory group, said traditional Anishinaabek value systems were not built around money, but instead around hard work, purpose and relationship building. Indigenous trading, she added, uses items that connects them to the land, like shells and leathers. “We don’t realize the spirit of money, and we don’t realize the value of money because it is still relatively new to Anishinaabek,” she said.

Nicole Richmond, an Anishinaabe estate and will planning lawyer, says Indigenous people didn’t traditionally have access to wealth and need more support when they come into money, including help gaining financial literacy. “Money is an energy … it’s an exchange. It’s the best way we have right now to compensate people. And for people who are so vulnerable, that financial windfall can be devastating,” she said. “If you’re an addict and you’re in the closet, you don’t know how to manage, and you get an extra $70,000, you’re going to abuse that.”

Since her husband’s death in 2019 (he died without a will), Ms. Richmond has specialized in estate planning and wills for Indigenous communities and people.

Knowledge of estate planning is sparse in some Indigenous communities, as Anishinaabek people historically had no need for wills, instead following traditional customs and protocols related to belongings after death. As a result, meeting with First Nations clients to discuss their assets, money and bank accounts can be awkward, she said, because it’s a type of conversation they haven’t traditionally had. Talking about estate planning can also conflict with cultural beliefs related to death – some believe planning for death invites it – and is often considered taboo.

Settlement recipients are also a target of scams and exploitation, including from contractors who disappear before projects begin, lenders charging exorbitant interest rates, cybercriminals, and even the lawyers who worked on their cases.

Sara Mainville, a lawyer with JFK Law in Toronto, whose pro-bono clients have included Indigenous settlement recipients that have been victims of fraud, said there should be clearer ethical guidelines for lawyers, judges and others involved in sprawling class-action lawsuits brought by First Nations. She said lawyers should be required at the beginning of a case to work out details such as legal contingency fees, the portions of financial settlements that are collected as payments by law firms. (The federal government has said it won’t legislate on legal fees in these cases, because doing so could put it in a conflict of interest.)

Ms. Mainville said other businesses and professional groups, including car dealerships and contractors, need to ensure settlement recipients are not taken advantage of. “They all need to rethink what the ethics around marketing and serving this very vulnerable group of people requires.”

To support their communities, First Nations leaders are setting up financial literacy sessions for recipients of settlement payouts, so that they can be prepared.

Scott Flamand, a housing, business and financial management consultant from Wiikwemigkoong Unceded Territory, runs a workshop called “How to Manage Your Settlement” for Indigenous communities and people receiving substantial settlements, including the Robinson Huron treaty annuity compensation.

He said large settlements like the RHT payments are an opportunity for people to start over and repair their credit practically overnight, a process that can otherwise take years.

“This is the reset button for you. Now live within your means,” he said he tells his workshop participants.

The rewards of following that advice, he says, can also contribute to a person’s physical and mental well-being. “If you’re living within your means, you know what, you’re not up at night worrying, how am I gonna pay rent?”

He said he finds financial literacy is generally non-existent in his community, and Indigenous people often get burned by high-interest lenders like First Nations auto financers with rates as high as 49 per cent on vehicles.

Mr. Flamand said he discourages settlement recipients from buying new vehicles, particularly trucks that will eat up most if not all of their payouts in high monthly payments and fuel costs. Instead he encourages young people to invest their money in tax–free savings accounts until they are ready to purchase or build a home.

That said, he added that not everyone receiving compensation should rush out to build a house, depending on where they live. Home ownership can be difficult in remote Indigenous communities further north because of the lack of infrastructure to support new houses and the high cost of getting materials in by plane. And that’s not something many Indigenous settlement recipients who never considered they’d be able to own a home would know to take into account.

“They think, I want to build out in the field with no neighbors, but hydro lines, septic, they don’t think about those,” Mr. Flamand said.

But not all the money needs to be invested for the long term, Mr. Flamand says. He also encourages his workshop participants to get some shorter-term joy out of their settlement, advising clients to put aside $10,000 for family vacations.

“It’s not a waste of money. Kids are only young once,” he said, adding he only suggests people to fly out of airports that offer less expensive flights.

Indigenous leadership, too, must walk a careful line between ensuring individual members benefit from settlement money, but also that enough is set aside to help the entire community for future generations.

Chief Linda McVicar, of the Animakee Wa Zhing 37 First Nation, said her community received a considerable payout from a flood-claim settlement reached in 2022, compensation for a series of dams built beginning in 1887 that inundated parts of the reserve lands of 12 First Nations around Lake of the Woods in Northwestern Ontario.

Although she declined to reveal the amount, Ms. McVicar said the money has allowed the community to provide individual residents with large payouts.

“We did our best to try to explain to them the significance of it. Like, it wasn’t just the windfall. It wasn’t like you won the lottery. People suffered for you to have this money today,” she said.

Community leaders worked with the local bank to hold sessions on financial literacy, and to ensure that recipients had proper identification, and that the payments were going into their bank accounts. And then the band used some of the money to create a trust for the community to draw upon in the future for communal needs.

“As chief and council, we were satisfied that, okay, we’re doing our duty. There’s something for today, there’s something for tomorrow,” Ms. McVicar said. “We’re not blowing it all today, we’re making sure that the future generations are going to benefit from it.”

She believes banks should be playing a larger roles in working with First Nations that are recipients of large settlements, noting that most Indigenous communities in her region don’t have local bank branches.

“You’re more than happy to have our huge trusts. You’re more than happy to take our money and have it invested and make your commissions or whatever, but you have no presence here.”

Ms. McVicar said her First Nation plans to offer leased space to banks as it pursues economic development projects, such as gas stations, restaurants and possibly a motel. The community’s leadership is also completing infrastructure projects, including housing and two new water treatment plants.

After installing the new water system for her home, Ms. Pheasant said she’s continuing to use the RHT payout to chip away at her home improvement list, including renovating her office. She’s also been able to eliminate her monthly vehicle payments.

As she makes these changes, she encourages her kids to appreciate what they have. “I always remind my children, in the nicest way, how fortunate we are, that we have this home, that we have a vehicle, like all these things that there’s a lot of moms that are working really hard towards,” she said.

Ms. Pheasant sat in on some of the RHT court hearings and was moved by the testimonies of the witnesses and plaintiffs who shared the history and stories of her home territory while other leaders wore traditional Anishinaabe headwear. Listening gave her a deeper sense of the harms that the compensation is meant to repair.

“I feel like we still have an obligation to be responsible and act responsibly and not just take. I’m extremely grateful,” Ms. Pheasant said.

Personal finance basics: More from The Globe and Mail

Stress Test podcast

Rob Carrick on personal finance

TFSAs are an investing success story for women more than men

Bait-and-switch mortgage rates are everywhere – here’s how to cut through the hype

People are being preyed upon on social media and losing money

Holding lots of cash is a fake security blanket, but you won’t know it until you retire