Minority Business Development Agency Listening Session

MBDA Listening Session. September 20, 2023.

On Wednesday the 20th of September, Under Secretary Donald Cravins of the US Department of Commerce Minority Business Development Agency (MBDA) hosted a crucial listening session at the department's library. This gathering provided a valuable platform for minority business owners, impact investors, and researchers to engage in a dialogue concerning the challenges confronting Minority Business Enterprises (MBEs). Recent legal developments have underscored the urgency of this conversation.

The Role of MBDA

Minority Business Enterprises (MBEs) are commercial or non-profit organizations in which 51% or more of the common stock or other ownership stakes are held by members of the following groups: Asian-Americans, African-Americans, Hispanic or Latino Americans, Native Americans, women or combinations of persons from these groups. These firms and non-profits are pivotal contributors to the US economy, adding billions of dollars to US GDP and generating hundreds of thousands of jobs. However, MBEs often encounter formidable legal obstacles, data deficiencies, and limited access to capital. MBDA stands as the sole federal agency offering comprehensive support to MBEs. The agency offers a wide spectrum of services, including business counseling, training, and facilitating access to capital. Additionally, MBDA serves as an advocate for MBEs at the federal level. Under Secretary Cravins aptly described the agency as a "central hub for addressing all issues pertinent to minority enterprises."

Legal Challenges

Burgeoning legal hurdles confronting MBDA, and, by extension, MBEs, stem from a June Supreme Court ruling. In a 6-3 decision, the Court determined that portions of the admissions programs employed by the University of North Carolina and Harvard University breached the Constitution's equal protection clause, which prohibits racial discrimination by government entities. This ruling has ignited a legal maelstrom for many institutions striving to promote racial equity through race-conscious policies. Notably, in the past week, Students for Fair Admissions (SFFA), a conservative group, filed a lawsuit against the U.S. Military Academy at West Point, alleging "discriminatory practices."

Further complicating matters, on July 19th, the Small Business Administration (SBA) suspended the 8(a) business development program, which offers contracting opportunities to MBEs. Numerous participants at the listening session emphasized the program's significance in sustaining, expanding, and fostering success for their businesses. Recent contracting data underscores this, revealing that the program awarded $19.96 billion in federal contracts to 8(a) certified businesses in 2021 (SOURCE: https://crsreports.congress.gov/product/pdf/R/R44844).

Now, MBDA grapples with questions concerning the legality and constitutionality of its programs. The response of the agency and the executive branch of the government to these challenges remains uncertain, but one thing is unmistakable: "equity is under siege" (Cravins, 2023).

Data and Research

Henry Bridgers speaking at the MBDA Listening Session.

Another pivotal challenge facing MBEs is the dearth of data on minority firms. Data serves as the bedrock for comprehending challenges and devising effective solutions, yet MBEs encounter significant barriers in accessing reliable, decision-relevant data. Collecting and managing MBE-specific data is both costly and time-intensive, and minority firms often contend with limited resources.

During the listening session, minority business owners passionately underscored the necessity for financial support to generate research focused on the issues facing Black and minority businesses. They also called for active engagement with Fortune 500 companies to encourage the disclosure of their minority contracting data, particularly related to Environmental, Social, and Governance (ESG) metrics.

Impact Investing Perspective

From the vantage point of impact investing, MBDA plays a pivotal role in nurturing the growth and advancement of MBEs. MBEs frequently find themselves underrepresented in venture capital and private equity markets, hampering their access to vital capital for business expansion. MBDA offers MBEs insights into accessing capital, facilitates the provision of business counseling, and provides other resources crucial for their success.

Impact investors can champion MBEs by investing in funds tailored to MBEs or by directly injecting capital into these businesses. Furthermore, impact investors can advocate for policies that foster the growth and development of MBEs. By supporting MBEs, investors contribute to forging a more robust, equitable, and inclusive economy.

Undersecretary Cravins with Mr. Bridgers at the MBDA Listening Session.

To learn more about the MBDA and explore avenues for support, please visit https://www.mbda.gov/. Consider direct support for MBEs by investing in their enterprises or advocating for policies that promote their advancement. Through collaborative efforts, we can forge a more equitable and inclusive economic landscape where all businesses can thrive on a level playing field.

EDITOR: William Michael Cunningham