Dear TriState Council Community:
This article shares important developments that may affect the structure and execution of Diversity, Equity, and Inclusion (DEI) programs within our respective business community. On July 29, 2025, the U.S. Department of Justice (DOJ) issued a memorandum that outlines specific compliance expectations for all recipients of federal funding to nondiscrimination laws, including guidance on DEI practices.
This guidance comes amid an ongoing effort by the Trump Administration to curtail what it deems “unlawful discrimination” in DEI programming. As a result, this memorandum provides a clearer—though still evolving—framework of what is permissible and what may now place federally funded entities, including corporate partners and MBEs doing business with public agencies, at the risk of enforcement under civil rights statutes and the False Claims Act.
What This Means for You:
The DOJ memorandum outlines prohibited practices such as:
- Preferential hiring, internships, or scholarships based on race or sex
- Diversity quotas or demographic benchmarks
- Mandatory diversity statements or lived experience narratives used as hiring filters
- Training or affinity groups that separate or stereotype individuals based on race, sex, or other protected characteristics
- Focus on skills and qualifications relevant to performance and business outcomes
- Document the rationale for any hiring, promotion, or selection criteria
- Ensure inclusivity in all programming and training, without exclusion or ideological coercion
- Screen third-party contractors and vendors for compliance with federal civil rights obligations
The Economic Value of Minority Business Enterprises (MBEs):
- In this climate of heightened scrutiny, it is more important than ever to recognize that inclusive economic participation is not only a matter of justice, it is a matter of national economic strength.
- According to a 2021 report by the Minority Business Development Agency, there are over 9.3 million minority-owned businesses in the United States, generating more than $1.8 trillion in economic output annually.
- MBEs support over 8.9 million jobs across the economy and contribute significantly to federal, state, and local tax bases.
According to a 2023 Billion Dollar Roundtable report, every $1 spent with a diverse supplier generates $2.60 in economic impact, creating ripple effects across industries and regions. - A study by McKinsey & Company found that companies with ethnically diverse executive teams are 36% more likely to outperform their peers on profitability.
- Additionally, inclusive procurement practices deliver 8.5% year-over-year savings—a rate that exceeds traditional sourcing approaches, according to The Hackett Group.
MBEs are not peripheral to the economy—they are integral drivers of innovation, resilience, and sustained growth. Supplier diversity isn’t just a social good; it’s a business imperative. Preserving pathways for their full participation ensures a more competitive, more agile, and more representative economy for all.
Our Commitment:
As your partner and advocate in inclusive economic growth, TSMSDC remains committed to advancing opportunities for small and minority-owned businesses while ensuring full compliance with the law. We recognize that many of our MBEs and corporate partners operate in complex regulatory environments and may be navigating increased scrutiny.
We will continue to strengthen our resolve to:
- Monitor federal guidance and enforcement actions
- Provide resources, briefings, and technical assistance as new developments unfold
- Advocate for DEI programs that are both legally sustainable and economically vital
- Lead the change in creating a more equitable and inclusive society
Call to Action: Engage Policymakers Now
Now is the time to be heard.
We encourage all MBEs and corporate partners to proactively engage with your federal, state, and local elected officials to ensure that they understand the value of inclusive economic policies and the risk of backlash.
In particular, the August Congressional Recess (July 29 – September 6, 2025) presents a unique opportunity to schedule in-district meetings with Members of Congress. This is your chance to:
- Share how your business creates jobs and drives economic impact in your district.
- Describe how supplier diversity programs have opened pathways to opportunity and innovation.
- Push back on efforts to dismantle DEI under the guise of compliance, and make the case that inclusive growth benefits all Americans.
We encourage you to:
- Confront the challenge with courage, strategy, and transparency.
- Reach out to educate your Member of Congress and request a meeting during the recess.
- Join TSMSDC’s coordinated outreach efforts during recess and we will provide talking points and scheduling support.
- Join us as we meet with our legislators locally (July 29 – September 6, 2025)
- Join us on Tuesday, September 23, 2025 as our 23 Affiliate Councils embark upon Capitol Hill during our 2025 Annual Day on the Hill.
Democracy does not end in the ballot box—it continues in conference rooms, roundtables, district offices, and communities. Let’s make sure our voices are at the table when the future of inclusive commerce is being decided.
We understand the future ahead may seem unclear, but rest assured that we remain a trusted ally in the fight for fair opportunity. We must embrace the moment to redefine the unknown, to help us move through uncertainty with confidence. Our collective progress depends on our shared community of inclusivity, compliance, and resilience.
With gratitude and resolve,
Cheri Henderson, President & CEO
TriState Minority Supplier Development Council