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Confronting Generations of Racial Economic Injustice in Charlotte

Digging deeper to understand why racial disparities in procurement persist, and what to do about them.

The Spectrum Center in downtown Charlotte, site of the NBA All-Star Game this weekend and also the 2020 Republican National Convention. (AP Photo/Chuck Burton)

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For professionally certified meeting and event planner Karen Lawrence, it’s an exciting time to be a small business owner in Charlotte, North Carolina, where she’s lived since she was three years old. The NBA All-Star Game is coming up this weekend — and that’s just the tip of the iceberg.

“I’ve watched Charlotte grow from being a small town to being this large city with a lot of movers and shakers here,” says Lawrence. “It’s been exciting to see it grow to where it is and I’m excited to see what it can become because a lot of things are happening for the city now.”

Lawrence might be on her way to being one of those movers and shakers, if she’s not one already. She founded her own event planning firm, It’s My Affair, in 2002, after being laid off from a corporate event planning job. For the first few years, she split her time, also working part-time as a legal secretary and a fill-in for other event planners while she built up her client base. As part of activities around the NBA All-Star Game, the league contracted with It’s My Affair to host a breakfast and workshop this week for more than 100 minority- and women-owned businesses interested in doing business with the NBA, in Charlotte and beyond.

Lawrence got that contract thanks in part to her firm’s track record of planning and running events for clients in every region of the country, and thanks in part to an increase in investments from Charlotte — and in other cities across the United States — that intend to correct for the generations of racial injustice that remain built in to the U.S. economy, from the local level on up.

Without such investment, rapid growth such as Charlotte has experienced risks exacerbating already stark racial disparities. Larger, more connected and more established businesses are better positioned to soak up the new spending from local government, hospitals, universities, stadiums and convention centers, and other big-spending clients. In the Charlotte metropolitan area, white-owned businesses average an estimated $494,369 in annual revenues, while black-owned businesses average just $60,495, according to the most recent U.S. Census Bureau Survey of Business Owners.

That disparity is no accident. One of the many ways that racial discrimination and injustice manifested in previous generations was in the lists and databases of suppliers and contractors utilized by government and other large, established entities in any given city. These lists have been passed down from procurement officer to procurement officer. Many contracts never go through an open request for proposals at all, especially for smaller contracts for office supplies or other mundane needs; the procurement officer simply contacts the relevant vendors on those lists. Even when there is an open solicitation for bids from competing suppliers, one of the strongest factors in anyone’s favor is previous experience doing business with that potential client.

Much as a result, even if there is no prejudice or racism among procurement officers today, the legacy of racial discrimination remains baked into local economies, creating an uneven playing field for minority-owned businesses such as It’s My Affair. In addition to the pressures of meeting the needs of her existing clients, she feels the additional pressure to put in the extra work of making new connections to new and higher-profile clients.

“Some of my barriers would be making the right connections and getting more business in the pipeline,” Lawrence says.

As part of a new program run by the City of Charlotte that focused on business owners of color, Lawrence got an introduction and some face time with the NBA’s supplier diversity team, which eventually led to the contract for this week’s breakfast and workshop. According to NBA Chief Diversity Officer Oris Stuart, in conjunction with its All-Star Weekend 2019 in Charlotte, the league has commitments with more than 25 minority- and women-owned businesses totaling approximately $1.5 million spent as of Monday this week, and the league expects that amount to increase as it progresses through NBA All-Star Weekend 2019.

“Our current commitments are similar to what we have seen in previous years, and we are excited that our work this year with the City of Charlotte and local certifying agencies has created a template for future cities,” Stuart says, via email.

The NBA first launched its supplier diversity initiatives in 2001, Stuart says. Other sports bodies such as the NCAA also have supplier diversity initiatives attached to major annual events. More than half the vendors lined up for the upcoming 2019 Men’s College Basketball Final Four in Minneapolis are minority-owned businesses, the Minneapolis/St. Paul Business Journal reported last year.

“One of the things I’m feeling good about with the City of Charlotte is they are now being more intentional about making sure that people of color are getting awarded some of the contracts that are coming through,” Lawrence adds. “They’re making a strong effort to shorten that gap, at least from what I’ve seen.”

Recognizing its own history of discrimination in awarding city contracts, Charlotte originally launched a Minority and Women Business Development program in 1981, but had to scuttle that program in 2002 after a lawsuit challenging its constitutionality. Since these kinds of local programs started becoming more popular in the 1980s, many similar lawsuits from across the country have put the kibosh on them. The landmark Supreme Court case known as Richmond v. Croson set a major precedent in 1989. In order to provide legal cover, cities periodically commission disparity studies in order to justify programs or policies requiring or setting aside a percentage of contracts for minority and women-owned businesses. These studies are sometimes labeled “Croson Studies.”

Disparity studies helped clear the path for race-based procurement programs in Charlotte starting in 2013. The city now has a range of programs meant to increase its public procurement from minority- and women-owned businesses. Charlotte’s most recent disparity study examined $1.8 billion in city contracts awarded from 2011 through 2016, finding that 14.8 percent, or $267.6 million, of city contracts went to minority- or women-owned businesses during that period — but those numbers would have been 20.9 percent, or $377.7 million, if the city had awarded contracts in line with the number of minority- and women-owned businesses available in the city to fulfill those contracts. In other words, minority- and women-owned businesses won only 71 percent of the contracts they might have won if not for the uneven playing field that those businesses face when competing for city contracts.

The Charlotte disparity study also broke down the numbers by race, with uneven results. White-women owned businesses won 80 percent of the contracts they would have won on a level playing field, while black-owned and Native American-owned businesses respectively won just 53 and 21 percent of the contracts they would have won on a level playing field.

Part of the continuing challenge is helping existing minority-owned businesses get to the next level of growth, according to Jerriane Jackson, senior economic development specialist at Charlotte’s Department of Economic Development. She believes investing in minority-owned businesses to get to that level will help them compete for all kinds of contracts, from the city or other large clients such as the NBA, Bank of America, the Charlotte Convention Center, or the CIAA — the inter-collegiate athletic association of historically-black colleges and universities, whose headquarters is in Charlotte.

“We have a lot of organizations and resources that support start-ups, but there wasn’t a program that was for that middle business — kind of on the cusp, not a new business, they have the revenue but they need to grow,” says Jackson.

Lawrence, who says her business earned $400,000 in revenues in 2018, fit the bill for the city’s new program, called Amp Up Charlotte. She says she’s maintained that level for a few years now, and sees an opportunity to do more, but hasn’t found the right networks or knowledge base to help her break past that threshold — until now, perhaps.

“Other courses I’ve taken are more educational — this is how you plan something, or this is how you write a proposal, or this is how you negotiate a contract — but those courses did not have anything to do with growing a business,” says Lawrence. “It forced me to put things down on paper and to think about where do I go from here, how do I go from here, bringing in other professionals into certain situations.”

More than 60 businesses applied to be part of the Amp Up Charlotte’s first cohort, announced last year in an event that included representatives from the NBA. Funding limited the cohort to just 20 businesses — as a pilot initiative, the funding came through the City Accelerator Program, a partnership of Living Cities, the Citi Foundation, and Governing Magazine. Charlotte was one of five cities that received 18 months of financial and technical assistance from the City Accelerator Program, the other cities being Los Angeles, Chicago, Memphis and Milwaukee.

In Charlotte, the initial funding will support one more cohort this year, with a focus on the Charlotte/Douglas International Airport expansion. Jackson says her department plans to include funding for Amp Up Charlotte in its next annual budget request.

The curriculum for Amp Up Charlotte came from Interise, a national nonprofit that licenses its StreetWise MBA Curriculum to the Small Business Administration as well as local partners all across the country. More than 6,000 businesses and counting — in 70 cities across the U.S. — have participated in a StreetWise MBA Curriculum as of last year. Each local incarnation, such as Amp Up Charlotte, receives its own branded name, local adaptations for proper context, a local partner (in this case, Charlotte’s Department of Economic Development), and usually a local facilitator. The course involves meeting for 3-hour class sessions every other week for seven months, and in the off-weeks meeting a smaller group of other cohort-mates. Frequently, though not in every case, cities adapt the StreetWise MBA Curriculum as part of a program to boost the success of minority- and women-owned businesses as suppliers to government, anchor institutions or larger corporations.

Interise tracks the businesses that go through its curriculum for at least three years afterward, and they share the data with their local partners. Jackson is eager to see the results.

“What’s different with this program than [what] we’ve done before is we’ve never tracked businesses, we’ve never looked back at their success and asked did you really hire employees, did you grow your revenue,” she says.

In 2017, businesses tracked by Interise across the country also received $862,780,000 in contracts, including both public and private sector clients, at an average contract size of $2,338,000.

Some of the deeper patterns are only now becoming apparent to Interise. For example, according to Director of Research Nancy Lee, among businesses in Interise’s network, anchor institutions such as hospitals and universities make up 21 percent of the average white-owned business’s portfolio of clients, while black-owned businesses are only seeing 10 percent of their clients coming from anchor institutions. It’s another way to measure how white-owned businesses are more likely to have an anchor institution as a solid, dependable client.

“A business owner of color might say ‘they’ll never want to talk to me, these large institutions they have their contractors, we’re too small,’” says Lee.

Jackson realizes that there may come a time when there’s no need to correct for the generations of racial injustice baked into the economy. But that doesn’t necessarily mean the job of building an equitable economy is complete.

“Programs like this exist because of institutionalized racism, because of issues within our systems, but wouldn’t it be great if programs like this did not exist? Eventually, it would be great if we get to a point not just as a city, but as a nation, where we shift the equity focus somewhere else because of strides made with these programs,” she says.

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: jobscharlotteprocurement

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