The state of Massachusetts made an unusual admission last month: When it announces its annual figures in contracting with minority-owned businesses, the majority of that spending does not actually go to “businesses” — or, in fact, any entity “owned” by anybody.
According to GBH News, many states that set goals to increase their rate of spending with minority-owned businesses specifically exclude nonprofit organizations from that process, only counting for-profit enterprises owned by Blacks, Hispanics, Asians, and other racial and ethnic minorities.
But Massachusetts is an outlier, certifying minority-led nonprofits as minority business enterprises and then crediting expenditures with these organizations in its own targets for contracting with minority suppliers.
Linda Bilmes, a senior lecturer in public policy and public finance at Harvard’s Kennedy School of Government, spoke to GNH News investigative reporter Chris Burrell. She said the criteria used in Massachusetts is unusual and creates “misleading” data.
“If they are looking at the data that says the amount of state contracting to minority-owned businesses is ‘X,’ it would be a reasonable assumption to think that those are for-profit businesses,” she said. “And if they are not, then really as a decisionmaker, you’re not getting the right data.”
Learn more about why Bilmes is skeptical about the correlation between nonprofit spending and wealth creation by reading GBH News’ full report by Chris Burrell, “Critics Fault Massachusetts For Counting Nonprofits In Minority Business Spending Goals” by clicking on the hyperlink.
Massachusetts agencies spent $4.8 billion in 2020, but Black-owned businesses were awarded only $11 million in state contracts and Hispanic-owned businesses got only $12 million, according to a new state report obtained by GBH News.