The first issue poses the question why the Federal government, state governments, and corporations define minority ownership as owning or holding a fifty-one percent equity ownership in a company; and the second issue asks is there a compelling national interest for helping minority business and what are its limitations?
In his testimony, Johnson stated, “Without question, the lack of access to capital and capital formation are the principal factors holding back opportunities for minority businesses and as a consequence wealth and job creation in the minority community. The fifty-one percent ownership provision is a true contradiction. Placing a fifty-one percent equity requirement on minority companies fail to recognize that minority Americans are significantly and disproportionately under-represented in access to capital to start and fund entrepreneurial enterprises.”
Johnson further stated that “a recent Supreme Court decision ruled that any government preferences for minority companies must be narrowly tailored to prevent reverse discrimination; however, if minority companies can’t compete on capital formation, on experience or scale without capital, they are therefore unlikely to win competitive bids where there are no advantages or preferences given to a minority enterprise.” He went on to say, “If this Court precedent dictates our approach to minority business development it will, in my opinion, restrict access to government sponsored business opportunities.”
He concluded his testimony stating, “I hope that I have provided some framework for a debate and I know I am committed to work with this Committee to achieve a viable consensus on how to grow and expand minority business ownership and opportunities in America.”
Editors Note: Mr. Johnson’s oral testimony “Assessing Access: Obstacles and Opportunities for Minority Small Business Owners in Today’s Capital Markets” will be available online at www.rljcompanies.com/news.