How to Save the NMSDC

?

December 1, 2024?

It was about ten years ago, while I was President and CEO of the Greater New England Minority Supplier Development Council (GNEMSDC) that I drafted a business model for the National Minority Supplier Development Council (NMSDC) during the Joset Wright Lacy administration of the organization. I first presented what I highlight here at a NMSDC quarterly meeting. The problems the NMSDC are facing today are not very different from the problems the organization faced 10 years ago or 20 years ago. The problem is the organizational model of the NMSDC is not consistent with the best roles for the component parts of the organization.?

It is important to remember that before there was an NMSDC, there were local councils, beginning with the Chicago Minority Purchasing Council that started within the Chicago Urban League in 1968.? It was after the Chicago Council model spread to New York and other major metropolitan areas that the NMSDC was formed in 1972. The NMSDC was originally funded with federal dollars made available in a Nixon era Executive Order 11458.??

Section 2 of the order stated:?

“Promote the mobilization of activities and resources of State and local governments, businesses, and trade associations, universities, foundations professional? organizations and volunteer? and other groups towards the growth of minority business enterprises and facilitate the coordination of the efforts? of these groups with those of federal departments an agencies.”???

The first major transformation of the NMSDC was to switch funding from primarily a federal government funded organization to primarily a corporate funded organization under the leadership of Harriet Michel, who not incidentally came out of the Civil Rights struggle and the Urban League organization.?

Under Ms. Michel’s leadership, corporate membership, the number of MBEs grew dramatically, and the network of regional councils grew to over 40.? Currently there are 23 regional councils. Some of this reduction is the result of consolidations and mergers of councils.? As one example, I led the consolidation of the New England Minority Supplier Development Council and the Connecticut Minority Supplier Development Council in 2008-2009 to become the Greater New England Minority Supplier Development Council.??

There was always a struggle in the NMSDC network with the distribution of money because of its structure of national corporate members and local corporate members and to a lesser extent large MBEs labeled “Corporate Plus” MBEs and the other 99 percent of certified MBEs who made up the network. During most of the Michel and post-Michel era, the regional councils were supported by local corporate members’s dues, certification fees, events like trade shows, annual awards dinners and golf outings and some foundation support along with some distribution of national dues paid by national corporate members. National corporate dues were allocated based on whether or not the national corporate member had business activities in the regional council’s area and therefore, might need the support from that local council to identify certified MBEs from that local area. Importantly, national corporate dues were determined by the size of the national corporate member’s national business footprint.? Large corporations like Walmart (who recently announced it is getting out of the diversity business) paid more in national dues than a regional utility company. The larger national members had more funds to allocate to the regional council based on support received from the regional councils.??

The NMSDC received its support from national corporate dues that were not distributed to the regional councils, and events like the national trade show and the national awards dinner.

It is important to also note that up until the end of the Michel administration, the NMSDC and the hosting regional council shared in the risks and revenues from the national trade show.? Now that event is a NMSDC exclusive event with all or most of the revenues staying with the NMSDC.

This system is fundamentally flawed because it is the regional councils who engage with both national and local corporate members the most and with certified MBEs the most.?

The alternative structure I recommended over ten years ago called for a national office that was responsible for network strategy and policy, national communications, interactions with the Federal government, legal strategy and international strategy.? The national office in this model would be supported by the regional councils who would be the recipients of all corporate dues and all MBE fees.? There would no longer be a distinction between local and national corporate members. A NMSDC corporate member would be a NMSDC corporate member regardless of where they are headquartered.? And there would be no distinction between a local MBE and a national MBE. There would just be NMSDC certified MBEs.? The NMSDC board would be comprised of supporting corporations, MBEs, regional council leaders, and community advocates.? Surprisingly, today there is no role for community advocates on the NMSDC board or the boards of the regional councils. This lack of community connection is a serious oversight and puts the entire network in a vulnerable position.?

The regional councils would agree to a uniform fee structure for all corporate dues and MBE certification fees, eliminating incentives to “shop around” for membership and certification.?A system of taxation of regionals to support the national office would be established that is fair and transparent, and like Major League Baseball, a system of supporting the smaller councils by the larger councils would be established.

A further and important change I recommended is that the regional councils concentrate on large metropolitan areas and stop the charade of state and multi-state services. During my time as President and CEO of the Greater New England Minority Supplier Development Council, I visited Maine once in those 15 years. There are 40 Standard Metropolitan areas that have between 20 million residents (NYC) and 1.6 million residents (Milwaukee). The NMSDC should focus entirely on these SMSAs that have a combined population of over one half of the entire U.S. population of 330,000,000 people. Those SMSAs should define the regions.?

A focus on SMSAs also makes possible to focus on local and community economic development. The organization has a legitimate goal of serving corporations supply chain needs, but the bigger goal should be community development through minority entrepreneurial development. Corporate minority supply chain development without community development is part of the problem the organization has now with its lack of community relevance and recognition. I challenge anyone reading this to walk down any urban street in America and randomly ask someone do they know who or what the NMSDC does and their answer would be “no”.? We cannot have long-term minority corporate supply chain development without community development.?

The focus on community economic development also provides a counter weight to corporations like Walmart who are withdrawing their support for DEI and supplier diversity. An organization with community support and engagement would be in a much better position to bargain, and if necessary boycott companies that are not fully committed to the development of urban communities with large Black populations. My focus on Black is not a mistake. For too long, Black communities who created these programs have been laggards as beneficiaries. Most large corporations with even strong supplier diversity results are still using less than three percent of their total spending with Black-owned firms, and these results are even more starkly depressing when you take out the handful of the largest Black-owned certified firms.

The regional councils would allocate a percentage of their annual revenues to support the national office instead of the current system of the NMSDC supporting the regionals. In this model the pressure is on the national office to provide the national services that make the delivery of services more efficient and more productive.??

My proposal was not supported by the NMSDC when I presented this 10 years ago and it is understandable why. (The NMSDC board contracted with one of the large corporate consulting firms, that produced a costly and beautiful but totally ineffective report and road map.) Power does not like to cede power, even when it is in the interest of the overall organization.? I do not believe what I am calling for represents a reduction in power for the NMSDC. Quite the contrary, this would result in organizational alignment and greater power for the network. A them versus us mentality eventually is unstable, unsustainable, and unproductive.?

If the NMSDC made these changes, it would have a chance of surviving and thriving into the next few decades. But I am afraid that without these fundamental structural changes, the NMSDC will not survive. The suggestions here could be the start of a serious conversation about the direction and possibly redefinition of the NMSDC. That conversation also includes defining what types of leaders the organization needs at the local and national offices.?

In closing, I want to say without equivocation that I make these recommendations not as someone who is looking for a job. I am too old for this work, but the role of the grey hairs is to provide the wisdom that only comes with age.? I hope that wisdom is reflected here.?

In your service,?

Dr. Fred?

?

?

??

?