Office of Minority Business Enterprise (OMBE)
The Office of Minority Business Enterprise (OMBE) was established in 1969 under President Richard Nixon as part of an effort to promote equal opportunities for minority businesses in the United States. It aimed to encourage federal agencies to provide loans, grants, and contracts specifically to minority-owned companies, responding to the economic disparities highlighted by the riots of the 1960s. Although it was not the first federal initiative focused on supporting minority entrepreneurs, OMBE represented a significant commitment to fostering minority business development.
Despite its intentions, the OMBE faced challenges, including a lack of authority to mandate assistance and difficulties in securing funding, which limited its immediate impact. Over time, however, financial support for minority businesses grew significantly, reflecting a broader bipartisan consensus on the importance of minority enterprise. The OMBE eventually evolved into the Minority Business Development Administration, but it faced scrutiny for its effectiveness and issues of accountability, particularly concerning the actual beneficiaries of its programs.
The legacy of the OMBE highlights both the potential for governmental support to advance minority entrepreneurship and the complexities of ensuring that such initiatives genuinely empower the targeted communities.
Office of Minority Business Enterprise (OMBE)
A federal agency charged with coordinating the government’s efforts at promoting minority business enterprise. The OMBE embodied President Richard M. Nixon’s commitment to “black capitalism.”
Origins and History
During the 1960’s, riots erupted in a number of cities in the United States, prompting politicians to develop policies to stabilize conditions in the inner city. Many observers blamed the riots on a growing sense of frustration with the slow pace of economic progress being made by African Americans. Although inner-city residents were predominantly black, most of the businesses were owned by whites. Advocates of minority business argued that the creation of a African American middle class would provide role models for inner-city youth and thus help to soothe their discontent.
In April, 1968, Republican presidential candidate Richard M. Nixon delivered a radio address promising African Americans a “piece of the action” in business. On March 5, 1969, Nixon issued an executive order establishing the Office of Minority Business Enterprise (OMBE) within the department of commerce. The OMBE’s goal was to create “equal opportunity at the top of the ladder” by urging other federal agencies to provide loans, grants, and government contracts to minority businesses.
The OMBE was not the first federal agency to get involved in promoting minority business enterprise. In 1963, the Small Business Administration (SBA) launched a pilot program to assist African American entrepreneurs in Philadelphia. One year later, Congress authorized the SBA to make “economic opportunity loans” to ghetto entrepreneurs. By 1968, SBA Administrator Howard Samuels was aggressively pursuing a policy of “compensatory capitalism,” a form of affirmative action for African American businesses. By pledging to support “black capitalism,” Nixon co-opted an idea that already had wide appeal.
Activities
Nixon directed the OMBE to mobilize existing resources within the federal government, but the office lacked the authority to order agencies to provide assistance to minority-owned companies. The OMBE’s relations with the SBA soured as the two agencies bickered over jurisdictional issues. The OMBE was also hindered by economic realities; a tight money supply discouraged banks from making loans to minority businesses.
Impact
The OMBE got off to a painfully slow start, leading critics to charge that the Nixon administration was not really serious about its commitment to minority enterprise. Although its short-term impact was limited, the OMBE embodied a bipartisan consensus that the federal government should grant preferential treatment to minority businesses. Between 1969 and 1991, federal financial assistance to minority businesses increased thirty-five-fold and federal procurement dollars awarded to minority firms increased two hundred-fold.
Subsequent Events
The OMBE was later renamed the Minority Business Development Administration. During the 1970’s, the minority enterprise programs became embroiled in scandals, and congressional investigations revealed that many of the beneficiaries were minority members who fronted for white business owners. Very few of the companies participating in OMBE-or SBA-sponsored programs were ever able to wean themselves from government assistance. Those companies that prospered did so by serving markets that were far removed from the inner city.
Additional Information
Arthur Blaustein and Geoffrey Faux examine the early years of the OMBE in The Star-Spangled Hustle (1972), a highly critical account of the Nixon administration’s “black capitalism” programs.