No Summer Fling (Gwen Moritz Editor’s Note)

Last summer in this space, I described a phone call from a prominent white Arkansas business owner who was seeking opportunities to sell more of his product to Black consumers. I recommended a couple of marketing companies that specialize in multicultural messaging. (See Seizing a Moment for Multicultural Marketing.)

Race was a hot topic in America in July 2019 — it has been since the beginning, of course — but I obviously had no idea what 2020 would bring. In addition to violence that no one can justify, the spring and summer have brought more expansive ideas about what diversity in the marketplace means. Instead of simply asking what white-owned businesses can do to promote diversity in their workforce or in their customer base, Americans of goodwill are asking how they can make minority-owned businesses more stable and profitable.

Encouraging support of local businesses is nothing new, of course. Eschewing chain restaurants in favor of local restaurateurs has long been a mantra for folks who can afford it (forgetting that many chain locations are actually owned by local franchisees and they all employ local cooks and servers). There’s been a relatively successful movement toward local food sourcing. “Small Business Saturday,” the brainchild of American Express, has been a holiday shopping promotion for a decade.

But this year, the importance of focusing on minority-owned — especially Black-owned — business has been driven home by the unforeseeable combination of Black Lives Matter protests and COVID-19. In June, an analysis of government data by researcher Robert Fairlie of the University of California, Santa Cruz, found that the pandemic had left 40% of Black business owners out of work, compared with 17% of white small-business owners.

And the Paycheck Protection Program, the $659 billion lifeline of forgivable Small Business Administration loans that Congress threw out back in April, seems to have helped fewer Black-owned businesses — in part, it seems, because they tend to be so small that they weren’t armed with required documents like business plans.

(How small? Arkansas Business sent surveys to nearly 500 minority-owned businesses for inclusion in this week’s list of the state’s largest minority-owned companies. Of 90 responses, a third had either one or two employees.)

The African American business owners we talked to for this week’s cover story said they hadn’t felt any appreciable uptick in revenue from “buy Black” initiatives, and our state government routinely falls short of its goal of spending 15% of budgeted purchases with minority- and woman-owned businesses. (See Protests Fail to Boost Black-owned Businesses.)

If business success benefits society — and, please, Lord, let that be something we can all agree on — then it may take more than diversifying workforces, markets and vendors to get the virtuous cycle going. What form could that take?

Robert F. Smith, the private equity billionaire and the nation’s richest Black person, suggested in June (in an address at the Forbes 400 Summit on Philanthropy) that large corporations should commit to using 2% of net income for the next 10 years to empower minority communities. He also called on the nation’s largest banks to help capitalize the financial institutions that serve Black-owned businesses.

Sharing profits to repair centuries of neglect? Now he’s gone to meddling.

But consider the numbers: Only 21 of 4,700 banks in the U.S. are Black-owned or led, and the combined assets of those 21 banks — $5 billion — represent less than 1% of commercial bank assets nationwide. (Fun fact: $5 billion would not be enough to crack the top five banks headquartered in Arkansas.)

Last week, PayPal, the publicly traded electronic payment system, announced that it has deposited $50 million in Optus Bank, a Black-owned bank in Columbia, South Carolina. Many Arkansas Business readers may remember Optus’ president, Dominik Mjartan, formerly of Southern Bancorp Community Partners. “They’ve stepped up and they’re real about it,” Mjartan told the Charleston Post & Courier. “They know where their money is going to have an impact.”

The Optus deposit is part of a $530 million pledge by PayPal to invest in racial justice and economic opportunity. And it underscores the most important thing about supporting minority businesses: It has to be more than a summer fling. It has to be a commitment.

If you wonder why Arkansas Business started capitalizing Black (but not white) in describing race, it is because we are complying with a change in the Associated Press stylebook. Arkansas Business is a member of The AP and decades ago adopted AP style, with only a handful of exceptions specific to our market and our business audience.

Gwen Moritz is the editor of Arkansas Business.