Minority Owned Business Certifications Are A Sham! Right??

Earlier this week I was submitting paperwork to the accounting department for one of my companies new large corporate clients. There was a litany of instructions about how and what to submit as one would expect, but there was one particular instruction in particular that stood out to me. It was an instruction for how to submit an approved "minority-owned business certification" to prove that my company qualifies as a minority owned business.

In theory, I actually have no problem with submitting documentation to assure a client that my company is truly a minority-owned business. I assume the rationale is to prevent people from gaming the system and providing companies with a way to ensure a more diversified vendor list that includes smaller businesses that usually are overlooked. To be quite honest, I hadn't even thought of approaching the engagement from that perspective since that actually was not the route through which my company was brought into the fold.

However, regardless of my theoretical opinions, the execution of the "minority-owned business certification" seemed to be antithetical to the problem it is intended to solve. After seeing the instructions, I began investigating the costs and requirements to be certified as an "official" minority owned business....and well, it seemed to be one more potential obstacle for small, minority-owned businesses. Why? Because it would cost $2,500 to be certified (at least for the entity that was actually willing to list the price before you started completing the application - but that's a completely tangential rant). Honestly, it seemed like a rip off. In essence a third party asks for copies of documents like a drivers's license, articles of incorporation and/or a tax return to prove that you (the minority) truly owns said business. Pretty simple. So why is it that the client themselves couldn't just ask for that information and call it a day? Seems way more efficient and like a much more effective way to support small minority businesses.

Despite being fortunate enough to be able to afford such a ridiculous "certification," I still opted not to do the certification and in favor of just being a nondescript vendor in their vacuous vendor tracking system. At the end of the day the likely end result didn't justify the expenditure. Firstly, the invoice was for a small, quick turnaround project that was only paying $5,000 - so it definitely wasn't worth half the cost of the project. Secondly, in my experience on the other side of the table, I have yet to encounter a scenario where a small business was identified as a minority-owned business AND hired through a corporate vendor management database. Not to say that it doesn't or hasn't happened, just that in my experience it's unlikely. Finally, it seemed opportunistic and unnecessary - like a ploy to capitalize on the challenges of others while not offering any real solution to a problem.

What do you think? Obviously, I am not the all-knowing, end all, be all when it comes to these things, so I would love to hear what others think. There could be clear benefits that I may not be considering.

Are minority company certifications simply an opportunistic ploy and an additional obstacle making success more difficult for minority-owned small businesses? Or is it actually helping?