Article
Building equitable entrepreneurial ecosystems
Sept. 8, 2023 · Authored by Jonathan McGee
How government can increase access to capital for minority-owned business enterprises, through technical assistance and community
As the focus on environmental, social, governance (ESG) increases across the nation, federal, state and local governments continue to increase minority business enterprise (MBE) goals on contracts, grants, tax incentives and loan opportunities. Many times, however, these self-imposed mandates are never realized. Why? Governments struggle to meet MBE goals due to a lack of awareness and preparedness around government economic programs — specifically amongst community stakeholders, MBEs and even within government agencies themselves.
What do MBE goals look like across the nation?
According to the Department of Labor [1], although minority-owned businesses represent 24% of eligible businesses for federal contract awards, they account for just 3% of all contract awards in fiscal year 2021 (a 21% point difference). As a result, the Biden-Harris administration set a 15% MBE goal by 2025, recognizing that the federal government spends more than $650 billion each year on purchasing goods and services.
Ohio
Cuyahoga County
Of the $1.1 billion in prime contractor spending from 2014 to 2018 [2], only $51.5 million — or 4.62% — was awarded to (MWBE) firms as prime contractors. Subsequently, the city of Cleveland passed a community benefits ordinance increasing MBE goals to 30% for development projects over $250,000.
Louisiana
Baton Rouge
A recent disparity study [3] showed that locally owned disadvantaged businesses could receive 21% of public spending, yet only 5% of those firms were ever awarded contracts. Shortly after this study, the East Baton Rouge Parish Metro Council unanimously voted to establish a Division for Supplier Diversity and it’s first MBE program, with a 25% MBE goal, on city contracts.
