Sometimes it takes a bold move.
And Fred McKinney certainly made that.
In a state with large income, educational and employment disparities between urban and suburban, haves and have-nots, whites and minorities, McKinney is calling on Connecticut to change the way it thinks and the way it does business.
As an example with what’s wrong with the state’s minority business policies, McKinney picked an easy target: The Connecticut Lottery Corp. The quasi-public agency has large sales in the minority community yet has no minorities in its leadership and spends little of its $50 million operating budget each year on contracts with minority businesses.
Even though Connecticut has laws requiring its departments and quasi-state agencies to spend a portion of their contract monies with minorities businesses, the lottery isn’t violating the law. In fact, it’s a shining example of fulfilling the state law, regularly exceeding its minority contract requirements.
The problem is with the law, and that’s what McKinney exposed in the first week of January. The Greater New England Minority Supplier Development Council, where he is president and CEO, erected billboards around Capitol Square in Hartford outing the lottery for its lack of minority business contracts.
The Connecticut set-aside law calls for 25 percent of department and quasi-public agency money to be spent with small businesses. And 25 percent of that money — or 6.25 percent of the total — must go to minority-owned businesses. However, the minority-owned business portion can go to women-owned businesses, even if they are owned by white women.
“The language clearly reasons that state agencies can meet their 6.25 percent set-aside goals with any combination of women-owned or minority-owned businesses,” McKinney said. “That leaves the possibility for nothing going to minority businesses.”
The lottery rakes in nearly $1 billion in gambling sales annually, and last year sent $285 million to the state General Fund. The lottery also keeps 5 percent of its sales for administrative and operating expenses, much going to marketing and advertising.
For its set-aside goals in 2010, the lottery paid $217,000 to businesses owned by white women, $15,000 to Hispanic-owned businesses and $4,400 to businesses owned by African Americans. The lottery exceeded its 6.25 percent minority business requirement, even though 90 percent of the contracts went to white-owned businesses.
“That is an unacceptable performance,” McKinney said.
What makes the lottery an easy target is the fact minority and poor communities make up a disproportionate proportion of customers for lotteries. Although a study has not been done of the Connecticut lottery customers, studies of other lotteries show minorities use the lottery more frequently and spend more money than whites. A visit to the lottery winner’s page on its Web site reveals more winners tend to be minorities than the 27 percent minority portion of the state’s overall population.
The lottery declined to be interviewed for this story, but its director released a statement about the billboards, noting its strong track record of fulfilling the state requirement.
“We are proud of our record of support for the local business community and will continue our long-established practice to purchase from small and minority-owned businesses whenever possible,” said Anne M. Noble, lottery president and CEO. “Statements that assert otherwise are a gross misrepresentation of the CT Lottery’s commitment to diversity, purchasing practices, and support for the local business communities.”
McKinney said the Greater New England Minority Supplier Development Council normally doesn’t take such drastic, brazen action against state government agencies and policies. The 35-year-old agency — of which McKinney has been the president and CEO for 10 years — helps its corporate members find and contract with minority-owned firms.
Its 210 corporate members — including Pratt & Whitney, Day Pitney and Northeast Utilities — have 450 minority suppliers to choose from. The program is entirely voluntary and usually corporations are happy to work with an agency that can certify a supplier is minority owned.
But McKinney — who earned a Ph.D. from Yale University — believes the situation in Connecticut calls for drastic action. Calling out a Connecticut agency on a billboard in downtown Hartford might not be the most diplomatic approach, but it certainly is getting attention, McKinney said.
McKinney relates the story of how Martin Luther King, Jr. was criticized for using children in his civil rights protests, alienating even some of the black clergy that had supported him. King responded to their criticisms by saying it was necessary to call attention to the unjust civil rights situation.
“Sometimes you have to do strong things to get the attention of people who aren’t listening,” McKinney said.
The billboards were erected just as a new governor; new legislature and a new administration took office. Some new people have a role in selecting the board of directors for the Connecticut Lottery.
But far more important than changing the lottery is changing the set-aside law, McKinney said. Massachusetts has a good set-aside model with separate goals for minority-owned businesses and women-owned businesses.
“Women-owned and minority-owned businesses should not be pitied against each other,” McKinney said.
The Greater New England Minority Supplier Development Council is working with the Connecticut General Assembly’s minority caucus to craft a new set-aside law that offers different goals for women-owned and minority-owned businesses. McKinney, who sits on several state boards and is well-known around the Capitol, hopes to have the legislation pass this year.
McKinney even wants to take it one step further than the Massachusetts law and remove some of the small business requirements from the set-aside law so minority businesses are not penalized for expanding.
“If the state is interested in economic development … the state should use incentives for large minority-owned businesses,” McKinney said.
Set-aside goals are designed to give minority business chances to grow and compete.
“They might talk to me because I am a minority. That might get my foot in the door, but that’s all,” said Mark Jacobs, owner of Sir Speedy Printing and Marketing in Bloomfield. “I still have to work hard to get the job done for them and keep them coming back to me.”
Minority-owned businesses are more apt to hire minorities than non-minority businesses; and strengthening the state’s relationship with minority-owned businesses helps out the minority community, McKinney said. Unemployment among minorities is twice the statewide unemployment rate, and the average length of unemployment is longer for minorities.
In a state with some of the biggest disparities in the nation between the rich and the poor, something has to change, he said.
“This is the type of discussion we need — a civil discussion — about the future of this state and the residents,” McKinney said.
