US agency that caters to Black and minority businesses ordered to prioritize white businesses too

BY Nii Ntreh March 8, 2024 6:33 AM EDT
A minority-focused federal agency under the Department of Commerce has been ordered by a federal judge to prioritize white businesses too. Photo Credit: Department of Commerce

An agency under the United States Department of Commerce has been ordered by a judge in Texas to diversify its mandate and to preclude racial profiling in its services to business owners. Judge Mark Pittman of the US District Court of the Northern District, Texas said the agency’s mandate relies on an “unconstitutional presumption” even if the agency was established to “alleviate opportunity gaps”.

The Minority Business Development Agency (MBDA), was first constituted during the Nixon administration to focus on racial discrimination in the American business landscape. However, under President Joe Biden the MBDA has attained a wider mandate and improved funding of more than $500 million to be spent over five years, through the Infrastructure Investment and Jobs Act in 2021. It is also now a permanent agency.

But the conservative Wisconsin Institute for Law & Liberty, the plaintiffs in the case against the MBDA, argued that the agency was constituted and works in a fundamentally discriminatory manner. Judge Pittman agreed, saying the MBDA works with a only a list of “preferred races”.

Fears are growing across the United States about the rise in political and legal challenges to efforts that aim to rectify America’s economic legal and social inequalities. Although America has historically functioned to privilege its white majority ethnic groups, conservatives have called into question diversity, equity and inclusion strategies by state and corporate actors.

At the end of February, the National Urban League reported that the economic, social and political progress made by Black America since the apogee of the civil rights era have come under threat more than ever before in the last six decades. This was contained in the 2024 The State of Black America report.

“Notwithstanding the effort to move forward, there’s always been a movement of resistance to that progress and that resistance has played a role in decelerating the progress that we need to make on the journey to parity. We see it being played out right now,” said Marc Morial, president of the National Urban League after the launch of the report.

Last year, the Fearless Fund, a venture capital firm that invests in female entrepreneurs of color, was sued by the conservative group American Alliance for Equal Rights. With venture capital being the second largest source of of business funding in the U.S., Black entrepreneurs’ access to capital is at stake for what is clearly a landmark case.

The Alliance particularly objected to The Fearless Foundation’s Strivers Grant that exclusively awards grants of up to $20,000 to Black women entrepreneurs. It argued that the grant is in violation of Section 1981 of the U.S. Code, which guarantees equal contractual rights without favor or discrimination based on race. The 11th Circuit Court of Appeals granted the group’s request for an injunction, temporarily halting the grant and overturning a lower court’s ruling that found that the funding was protected by the First Amendment.