Some of the biggest corporate power players in the D.C. region are pledging billions of dollars to benefit minority-owned businesses in the area — a move that Vice President Harris on Wednesday touted as a model for metro areas nationwide.
“The role modeling you are doing will benefit people around the country,” she told partnership members and local business leaders Wednesday. “Our collective goal is to create an economy in which every person, wherever they live, has the opportunity to succeed and to thrive.”
As part of the pledge, 25 local heavyweights including Capital One, Dominion Energy, Inova Health and the Washington Commanders have committed to boost spending on deals with minority-owned suppliers, invest in affordable-housing efforts and give money to lending organizations that focus on underrepresented populations.
Of the country’s 53 largest metro areas, Washington ranked 51st over the past decade in “racial inclusion,” a measure of income and employment disparities between non-Hispanic White people and people of color, according to figures from the Brookings Institution.
The Greater Washington Partnership, an association of CEOs whose footprint stretches from Baltimore to Richmond, was formed a little over five years ago, during the District’s failed bid to host the 2024 Olympics. The group then redirected its efforts toward growing and promoting the regional economy, focusing on matters such as transportation and job training.
But following the police murder of George Floyd, and as the coronavirus pandemic heightened economic disparities, partnership leaders determined that more needed to be done in the name of racial equity, said Francesca Ioffreda, the partnership’s vice president for inclusive growth.
“We took a really rigorous approach to do an audit to understand the challenges in our region,” she said in an interview, “and in particular where the business community was uniquely positioned” to effect change.
The companies and organizations themselves will administer the pledged money. Ioffreda said the partnership serves to bring together the business leaders fronting the money, encouraging them to share best practices and in some cases pushing for additional dollars.
The partnership will also track specific pledges from each company, although the individual amounts within the $4.7 billion total have not been publicly disclosed.
More than half the pledge — $2.6 billion — consists of promises from the companies to boost how much they spend on procurement deals with “diverse suppliers,” including minority-owned businesses.
How that is defined varies from one company to the next, Ioffreda said. It may consist of a broader pool of possible suppliers that includes those owned by veterans or women. Corporations with more granular data are specifically prioritizing suppliers owned by Black and Latino entrepreneurs.
Another $1.5 billion will go toward a loosely defined category of “wealth-building opportunities” for underrepresented communities, including investments in affordable housing and local community organizations.
Some of those commitments, such as a fund set up by Amazon to create and preserve affordable housing in the D.C. area, have already been announced independently. (The company, which stands to receive up to $773 million in state and local incentives for the headquarters it is building in Arlington, was founded by Jeff Bezos, who also owns The Washington Post.)
The smallest pool of money in the partnership pledge, $619 million, will be passed on to community-oriented lending organizations, which provide capital to small businesses that might otherwise face barriers in getting loans from traditional banks.
Harris said such institutions can help address the obstacle constantly faced by underserved entrepreneurs: Being told they are “unbankable.”
“Community lenders can often see the potential that others might overlook,” Harris said.
Also at the event Wednesday, federal officials announced they would be extending and expanding the Community Advantage loan program, a pilot launched by the Small Business Administration that seeks to commit money to such lending organizations.
“The private sector is on the right path to continue to try to really think of how they can support small businesses,” SBA chief Isabella Guzman, another speaker at the event, said in an interview. “Access to capital is always, first and foremost, the biggest challenge.”
The partnership’s pledge nonetheless may face the same limits highlighted by previous commitments from corporate America to confront systemic racism.
Of nearly $50 billion pledged by the country’s 50 biggest public companies as of last August, just $4.2 billion took the form of outright grants, a Washington Post analysis found. The rest was committed through loans or investments the companies could stand to profit from.
And while plenty of that money went toward promoting upward economic mobility for Black people, only about $70 million went to groups centered on criminal justice reform, the cause that prompted mass demonstrations after Floyd’s killing.
Before the small crowd of business leaders Wednesday, Commerce Secretary Gina Raimondo seemed concerned about a different obstacle for the pledge: Putting more dollars behind it to begin with.
“I do think we can get over $5 billion, maybe $6 billion,” she said, to a few laughs from the audience. “There’s still time!”