On Thursday, the Chicago Mayor Rahm Emanuel announced the Minority and Women-owned Businesses Graduation Phase-Out Program.
Small businesses are the No. 1 employer in the city and the backbone of our economy. Chicago’s minority- and women-owned business program (MWBE) helps small businesses gain a foothold in the market, with the goal of growing into larger companies that are self-sustaining, but less than 1 percent of the City’s 2500 MWBE-qualified businesses have graduated from the program in the last five years.
Based on outreach by the City’s Department of Procurement and feedback from the Supplier Diversity Taskforce, many of these firms fear that business will dry up and opportunities will disappear once they graduate from M/WBE qualification. As evidenced by graduated businesses reapplying for certification within only a few years, many businesses may still be too small to sustain the first crucial years of growth without additional support.
In order to combat the poor graduation rate and the re-entry of stagnant graduated firms back into the MWBE program, the city will establish a new “phase-out graduation” ordinance to provide companies with additional support as they outgrow the MWBE program. The policy will allow all graduating businesses to receive a portion of the credit they would have received if they remained MWBE-qualified. In its first year out of the program, a business will receive 75 percent credit for participation in City contracts; in the second year, it will receive 50 percent credit; and in the third and final year, the business will receive 25 percent credit. This graduated decline will help businesses maintain a competitive advantage as they enter the market place.