The ruling has reverberated across the country, even if its impact is not yet clear.
Last week, a federal district court judge in Texas ruled that a federal agency created to help minority business owners cannot use race as a factor in deciding who to serve. , effectively forcing the institution to open to white entrepreneurs.
The Minority Business Development Authority (MBDA), created in 1969 and with offices across the country including Atlanta, must now abide by the judge's ruling unless it appeals. Resources such as assistance in obtaining federal contracts, business consulting services, and access to grants and loans to address opportunity gaps for minority businesses should be available to businesses regardless of race..
Many see the MBDA legal battle as part of a larger wave of lawsuits by conservative activists seeking to dismantle affirmative action in education and business. This is at least the second federal agency in nine months to be ordered by a judge to change how it administers minority business programs.
MBDA The agency is still exploring its options in this case, but in the meantime, the agency is committed to supporting businesses run by socially or economically disadvantaged people “in a manner consistent with the court's decision.” said Eric Morissette, acting assistant secretary of commerce for minority business development. said in his emailed statement.
A spokesperson did not respond to further questions.
It is unclear how programs and subsidies will be affected. Leaders of the institute that houses Georgia's MBDA said the organization will continue to work to support business owners.
Development of the incident
In March 2023, Jeffrey Nuziar, Christian Bruckner, and Matthew Piper accused Joe Joe of state agencies in Texas, Florida, and Illinois of refusing to assist him because he was white. He sued President Biden, administration officials, and the MBDA.
In the 93-page judgment, March 5th In commemoration of the MBDA's 55th anniversary, Judge Mark Pittman acknowledged that the MBDA benefits non-minorities “because an economy is only as strong as its weakest link.” But “that was little consolation to the plaintiffs, whose government agencies failed to help them because of the color of their skin,” he wrote.
MBDA was established by President Richard Nixon by executive order in 1969 as an organization under the Department of Commerce. It has since been renewed by every president until 2021, when Congress and Biden enacted it into law. The president is proposing $80 million for the agency in the fiscal year 2025 budget.
The agency serves individuals who are “socially or economically disadvantaged,” but U.S. law defines those individuals as “vulnerable to racial or ethnic prejudice or cultural bias because of their group membership identity.” It is partially defined as a person who is “exposed to prejudice.”
In determining who is socially or economically disadvantaged, the MBDA had previously considered blacks, African Americans, Latinos, American Indians, Alaska Natives, Asians, Native Hawaiians, Pacific Islanders and Hasidic Jews were presumed to be at a disadvantage.
But Pittman, a Trump appointee, said this violated his Fifth Amendment right to equal protection. He issued a permanent injunction against the entire agency for using presumptions in determining who could receive assistance from the business center program, opening the program to virtually all races and ethnicities.
local influence
The Georgia MBDA Business Center is located within the Georgia Tech Institute for Enterprise Innovation, the university's economic development arm, and has been providing support for 20 years.
Donna Ennis, Institute The director of community engagement and program development said the Georgia office has always been there to help everyone.
“We have a lot of businesses of all races coming in…call us and we will always serve them, even if it’s just to make sure we have the right resources.” We try to provide that,” Ennis said.
Georgia MBDA's budget this year is approximately $530,000. But for now, it's unclear how local resources and programs will be directed.
A day after last week's ruling, Georgia MBDA officials had not received any guidance or information from the federal agency on how to proceed in light of the injunction. A Commerce Department spokesperson did not respond to additional questions from the Atlanta Journal-Constitution about the guidance subsequently given to regional offices.
MBDA also provides grants to universities and nonprofit organizations across the country for entrepreneurial support and training programs. In 2022, Savannah State University received a two-year grant of $900,000 to revamp its entrepreneurship minor. A school spokesperson said last week that the university had not received any notification of funding changes.
The agency also partners with financial literacy nonprofit Operation HOPE to help run the Enterprising Women of Color program in five cities, including Atlanta, which has served 375 women. Is receiving.
John Hope Bryant, CEO and founder of Operation HOPE, told the AJC that while he doesn't believe the ruling will change the organization's work, he believes it will have an impact that goes deeper than resources. .
“I think this is damaging to the soul of the country,” Bryant said.
Credit: Bita Honarvar
Credit: Bita Honarvar
legal victory or defeat
MBDA's decision follows last summer's amendment to the U.S. Small Business Administration's (SBA) Minority Contracting Program, known as 8(a), in which the agency presumes that certain racial or ethnic groups are socially disadvantaged. This follows a similar ruling that prohibited
As a result of this ruling, the SBA now requires business owners to fill out a questionnaire or write a statement about their social disadvantage status. In the weeks since the new requirements were implemented, the SBA has reviewed or recertified thousands of current 8(a) participants, but “it appears we are still operating as usual,” Georgia MBDA Business Center said Jennifer Pasley, project director. .
Credit: Bita Honarvar
Credit: Bita Honarvar
Fearless Fund, an Atlanta-based venture capital firm, is among the legal battlegrounds opposing affirmative action. The company was sued last summer over a $20,000 grant program for Black small business women, just weeks after the Supreme Court struck down race-based admissions practices at colleges and universities.
“Nearly every day, new challenges emerge that undermine our attempts to close the economic disparities that exist for people of color,” Ariane Simone, CEO and co-founder of the Fearless Fund, said in a statement. It appears that a legal ruling has been issued.”
But Alphonso David, president and CEO of the Global Black Economic Forum and one of Fearless' lead lawyers, says not all recent rulings are victories for conservative activists. He said no. He pointed to the Second and Eleventh Circuit's decisions as victories for diversity program advocates.
For Ennis and the Georgia MBDA team, this ruling does not mean we will stop working to help revitalize communities through economic development.
“We're not going to stand still in any way in terms of being able to help companies grow, because when we help companies grow, they become employers, they create jobs, they build communities. '' Ennis said.
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