HUGE: The Minority Business Development Agency Must Open to ALL Races

Explicitly race-exclusive programs and policies are on their way out, starved of taxpayer funding or businesses wary of legal liability.

After the U.S. Supreme Court ruled in 2023 that the use of racial preferences in college admissions is unconstitutional, government agencies and businesses that explicitly discriminate against individuals based on skin color are under heavy scrutiny — including the Minority Business Development Agency (MBDA).

President Richard Nixon in 1969 issued an executive order establishing the Office of Minority Business Enterprise, later renamed the MBDA. This was a post-civil rights attempt to help black-owned businesses, considered inherently disadvantaged and in need of a federal leg-up to access capital and contracts.

The problem then and as now is the explicit racial favoritism inherent in all racial preference policies.

President Donald Trump cut MBDA’s budget but restored it the next fiscal year. President Joe Biden made the MBDA a permanent agency in 2021.

The Wisconsin Institute for Law & Liberty (WILL) filed a lawsuit on behalf of clients in three states who alleged that the agency violated their right to equal protection under the U.S. Constitution. As the clients are not considered racial or ethnic minorities, they could not even apply for help. One of the plaintiffs grew up in poverty in America and another grew up in Communist Romania.

The agency keeps a list of “preferred” minorities assumed to be “socially or economically disadvantaged.” The MBDA got away with this for more than half a century.

“The MBDA advertises services exclusively for some races but not others,” the court wrote (PDF). “While not widely advertised, applicants not on the Agency’s list of preferred races can attempt to ‘adequately show’ their “social or economic disadvantage’…To do so, they must overcome the Agency’s presumption that they are not disadvantaged because their race is not listed. That racial presumption fails strict scrutiny and thus violates the Fifth Amendment’s equal protection guarantees.”

According to WILL, the MBDA can still operate its business centers but cannot discriminate based on an applicant’s race.

“This is a historic victory for equality in America, said WILL deputy counsel Dan Lennington. “No longer can a federal agency cater only to certain races and not others. The MBDA is now open to all Americans.”

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