Do Minority Business Programs Really Work?

ImageMy buddy is a banker and is consistently asked to help fund a community based minority business program. In the past he always said yes without much question. He figured it was good PR and who knows; it might actually make a difference. This year, with tighter budgets, he decided to ask me the big question do these programs really work?  

Even to my own surprise, I struggled to answer the question. I wanted to say yes because of the work we do, but I couldn’t. Actually, I couldn’t say no either. The real answer is “it’s complicated.” Over the last 12 months our organization evaluated more than 60 programs designed to assist minority businesses. Every organization (especially non-profits funded with other people’s money) should periodically have an objective third party evaluation. I’m amazed more board members and funders don’t require it. What we found can serve as a type of checklist for anyone who funds, runs, leads or cares about the impact of such programs. Programs that “work” ALL have similar characteristics:

1. A very clear mission. You have to be able to answer the question of what you mean by “work”. Effective programs know who (or what) they want to impact and how they want to impact them.  Programs that work don’t attempt to boil oceans, but they ignite glass beakers to overflow their capacity. Doing less is more effective.

2. Meaningful metrics (and goals for each). Effective programs always count what matters to the mission and what matters to the mission always has to do with moving businesses forward. Of course, programs have to track the stuff the funders want tracked. Programs that work also track the stuff they know makes the difference. Meaningful metrics typically fall into two types of buckets. What the participant has that is new (money, financial statements, new contracting relationships, etc.) and what they have the capacity to do (make effective sales calls, get higher level of bonding, etc.) as a result of working with a program.

3. Mutual expectations. We found no program that worked without the presence of mutual expectations. Some people think you have to charge a fee to make something valuable. However, we found you only have to value something to make something valuable. Businesses can’t “use” your program without clear expectations for what they will do in their own behalf. It is a tough lesson, but it’s true, effective programs realize you cannot help someone if they will not help themselves.

4. Actual accountability. Meaningful metrics and mutual expectations are two legs to the three legged stool and accountability is the third. If we know what we want, have meaningful metrics to track it and expectations of everyone doing their part - the last step is taking action when they don’t. Effective minority business programs hold themselves and their participants accountable. If you say you have access to decision makers, you better have it. If firms are to regularly submit financials to your organization then they better. A minority firm should not want to be a part of a program with no accountability and a program should not want a firm involved that won’t be accountable. Effective programs understand this is the final and most important element to ensure a return on the investment of all parties.

 Of course other things matter too. The quality of the staff is another factor to consider. But the four factors above are the DNA of success. And before you ask, no it doesn’t matter what level of business you are seeking to serve or assist. We looked at all types. There are many practical reasons organizations believe they can’t do the things effective programs do. One of the leading reasons is a motivation to have more participants involved to show funders and others you are serving big numbers. Even corporate supplier diversity programs occasionally fall into the trap of believing more minority suppliers in their database is a good thing. I get the conflict you may face in this area. If you increase expectations and accountability too high it will likely drive participants out. Organizations that “work” have the same challenges and they simply figure it out. They work with their board, their boss or their funders to reach some type of balance. Some have decided to serve the “masses” with some level of service (because they have to) and reserve their best stuff for those firms who are more committed.



We also found those organizations that had given up on being effective a long time ago. They’re locked in a cycle of self justification for the simple sake of maintaining their position. The only thing I can say is make sure your leadership doesn’t call us. We are on a mission to be able to answer my buddy’s question with a smooth and confident, yes; as a matter of fact they do work. After this long answer, my buddy said he was sorry he asked. You may be too. All I could say was “I warned you it was complicated.” But at least now you know. That’s what I think.


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