How Black business development programs came to be

Harry C. Alford | 6/6/2013, 6 a.m.

We have these programs from the blood, sweat and tears of Dr. Martin Luther King and the other giants of the Civil Rights Movement. They saw the vision of having a new and improved Civil Rights Act. They envisioned one that would be more comprehensive than the Civil Rights Act of 1866 and 1957. They demanded and bargained until President Lyndon Baines Johnson capitulated. President Johnson had to convince many Democratic senators to go along with this. He would refer to it as “The Nr Bill” when encouraging the southern Democrats. Thus, was the birth of the Civil Rights Act of 1964. Finally, Blacks (on paper) became full-fledged American citizens.

There was even a business component to it. Title VI of the act says that the federal government and anyone receiving federal funding or benefiting from the federal government or being regulated by the federal government must not discriminate in their business practice. By the late 1970s, the law began to be implemented. All levels of government (federal, state, county and local) had to show formal programs in their procurement activity. Most major corporations do some kind of business with the federal government and they, too must comply. This gave birth to the Minority Supplier Development Council, which shows the federal government that its members have a program. It also gave birth to the Minority Business Development Agency. Nonprofits benefit from the IRS Code and have to have a program if they have a procurement program.

By the mid-1980s, every state, large city, all agencies of the federal government and most major corporations had a formal program. At first, these programs would count the amount of business they were doing with Blacks, Hispanics, Asians and Native Americans. These groups received the collective name of minorities. The early years would show the federal government doing about 4 percent with Black business and less with each of the other groups. Resistance from White business groups started to emerge.

The adversaries came up with a strategy: put as many groups into these programs to dilute the potential for Black-owned firms. By 1987, White women-owned businesses entered into the federal programs. Then came veterans, disabled veterans, people with disabilities and Alaska Native corporations.

Of late, HUB Zone firms, which was designed to help small businesses in urban and rural communities gain preferential access to federal procurement opportunities, had a very harmful effect on the development of Black business.

Today, Blacks do no more than 1.5 percent with the federal government and 2 percent with major corporations. Some cities do less than that, with a rare exception like Atlanta, Houston and a few others.

Even though our numbers were low, White business representatives started suing cities and state for “reverse discrimination.” Finally, the U.S. Supreme Court stepped in via the Croson Decision, which referred to municipalities, and the Adarand Decision, which covered states. Many thought this would be the end of development programs. Quite the contrary, these decisions explained how to do the programs properly.