MN minority business owners seek governor who understands their struggles


After eight years of the Pawlenty administration’s poor leadership and disregard for policies, creating a business climate in Minnesota that threatens the survival of minority-owned businesses, members of the Minnesota Black Chamber of Commerce (MBCC) and the Midwest Minority Supplier Development Council (MMSDC) are collaborating for the first time to ensure their voices are heard in the August and November elections.

UPDATE: MBCC President Lea Hargett and Steve Venable, president of the MMSDC want to let you know that MBCC and MMSDC has decided to postpone the GUBERNATORIAL CANDIDATE BUSINESS FORUM to a date after the primary in order to offer more value to our constituents and community members. The date and venue are to be announced. We both thank you for your understanding.

The two groups, whose membership totals more than 400 minority-owned businesses, are hosting the forum so its members and constituents can learn where the candidates stand on issues affecting their businesses and make better-informed decisions. They hope to end the cycle of electing a governor whose disregard for policies continues to cultivate a business climate that perpetuates the underutilization of minority-owned businesses.

Joe Richburg. Photo courtesy of Keystone Computer Solutions

Joe Richburg, vice president of Keystone Computer Solutions, Inc., an IT services and consulting firm in Maplewood, agrees: “The state hasn’t been as concerned about the survival of minority business owners, in general, as it should be.”

Richburg points to the $600 million in federal transportation dollars awarded in 2009 to the Minnesota Department of Transportation (Mn/DOT) from the American Reinvestment and Recovery Act (ARRA) that was intended to assist groups or communities experiencing high unemployment rates due to the recession.

Of the $600 million in ARRA funds given to Mn/DOT, a mere $400,000 was awarded to Minnesota MBEs in 2009, according to a report by the Springboard Economic Development Corporation, a 501(c)3 nonprofit headed by Lennie Chism dedicated to educating, developing and building the capacity of residents to support and grow businesses.  

In the same report, Mn/DOT allocated $116 million in funds from October 1, 2009, to March 31, 2010, for projects intended to assist these same groups or communities. Zero dollars were awarded to minority-owned businesses during this time period.

Lennie Chism. Photo courtesy of Springboard Development.

“Keep in mind,” says Chism, “ARRA guidelines state these dollars were intended for minority-owned businesses.”         

“The problem is there is no system of accountability or follow through to ensure that government and corporate contractors are held accountable to minority business enterprise (MBE) goals,” says Richburg.

Roger Banks, a researcher and policy analyst with the Council on Black Minnesotans, a state agency that educates policymakers and the community, says, “While there is no system of accountability or data collection for the reporting of contracts awarded to minority-owned businesses, what’s more significant is there is no punishment or punitive consequences for violating goals.”

“That’s why this forum is so important,” says Lea Hargett, president of the MBCC. “The decisions of our local politicians impact our businesses’ ability not only to compete in the marketplace, but to survive. Their decisions affect our ability to offer competitive compensation packages to attract and retain talent, to obtain loan capital to grow and expand, to enhance the quality of lives of employees and their families, as well as contribute to the communities in which our businesses reside. Engaging in local and national politics should be a part of our business strategy.”

Richburg, whose IT firm conducts business in the commercial sector and has reduced its government sector work, explains that Minnesota has a “targeted vendor list” for minority-owned firms. “Our firm is an African American-owned firm, yet we, along with other African American-owned IT service companies, have been removed from the targeted vendor list,” Richburg says.

“Once again,” confirms Banks, “there is no system of accountability for contracts awarded to minority-owned businesses, and there is no punishment for violations.”

The lack of government and corporate contracts is not the only constraint on minority businesses, which usually employ fewer than 50 employees; the continued lack of access to capital is equally deterimetal to their survival.

“The lack of access to capital is indeed a major constraint for minority-owned businesses,” says Barbara Jo Davis, president of Ken Davis Products, headquartered in Minneapolis. “Capital affords a small business the opportunity to move to the next level – to expand the business, increase a product line, purchase new equipment, or invest in new technology. Without capital, minority business owners often are unable to be competitive in the marketplace.”

“Minority business owners often fail to obtain needed capital because they lack collateral and credit,” says Grover Jones, executive director of the Northside Economic Opportunity Network (NEON), which trains North Minneapolis residents to be entrepreurs. “The economic downturn has made things worse because banks have tightened their lending policies, requiring collateral four to one.

“Often the only collateral minority business owners have is their home. Due to the number of home foreclosures, sometimes offering a home [as collateral] still is not enough,” says Jones.

“The Minnesota business climate for minority-owned businesses has long been one of struggle. Nothing has really changed,” Chism says. “What has changed is our level of awareness. The lucrative contracts awarded to Mn/DOT have heightened our awareness to the inequities across the board for minority-owned businesses.”    

“The Pawlenty adminstration hasn’t done anything different from previous administrations,” says Richburg.

“And that’s the problem!” says Hargett. “Nothing has changed. It’s time we elect a governor who understands the challenges minority business owners face, and who will work on our behalf to enact policy change.”

“If change is to occur, it will only happen through policy change and litigation,” says Banks. According to Chism, the best way to affect policy is by advocating and lobbying policymakers for change.

Michael Fondungallah. Photo courtesy of Fondungallah and Kigham, LLC.

Michael Fondungallah, a managing partner with Fondungallah and Kigham, LLC, a law firm in St. Paul, says policy change should be coupled with oversight. He suggests developing a council within the governor’s office that meets quarterly, monitors empirical data on government contracts, and collaborates with the MMSDC and other organizations offering certifications in order to track the progress of MBEs.

“I think the focus must be on parity,” says Richburg, “to create a more equitable, competitive marketplace.”   

MBCC and MMSDC members assert that our next governor should understand some of the key issues constraining minority-owned businesses and be willing to enact policy that will:  

  • Establish and enforce an effective process for awarding contracts to minority business enterprises (MBEs);
  • Increase the access to capital for minority-owned businesses so they can expand and enhance their technology;
  • Level the playing field to ensure minority-owned businesses have an opportunity to compete in the marketplace; and
  • Reduce the excessive tax burdens such as health insurance premiums and payroll taxes that can cripple a small business.

Steve Venable, president of the MMSDC, states: “Minority businesses represent a wealth of underutilized capacity in our economy – and that is not just an inequity issue, but it is also, when considered nationally, a GDP [Gross Domestic Product] issue. It is in everyone’s economic interest, regardless of race or political persuasion, that minority business growth is placed at the top of the societal agenda. 

“These businesses create jobs, support the tax base, and will be an ever-increasing economic and political force given current demographic trends,” says Venable. “We have an historic opportunity to act in everyone’s interest at one and the same time by supporting minority business growth and development.”  

UPDATE: MBCC President Lea Hargett and Steve Venable, president of the MMSDC want to let you know that MBCC and MMSDC has decided to postpone the GUBERNATORIAL CANDIDATE BUSINESS FORUM to a date after the primary in order to offer more value to our constituents and community members. The date and venue are to be announced. We both thank you for your understanding.

Lisa Bryant welcomes reader responses to