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Microsoft Commits $73 Million To Support Black and African American-Owned Partners

As part of a broad racial justice initiative involving several hundred million dollars, Microsoft is committing $73 million to support Black and African American-owned partners in the United States.

Microsoft CEO Satya Nadella shared details of the initiative this week in a blog entry called "Addressing Racial Injustice," and said senior Microsoft executives and board members have been evaluating options over the last few weeks. The blog is Nadella's second on racial justice since the death of George Floyd in Minneapolis sparked mass protests against police violence.

"Today, we are making commitments to address racial injustice and inequity for the Black and African American community in the United States. We will additionally take important steps to address the needs of other communities, including the Hispanic and Latinx community, across the company in the next five years," Nadella wrote Tuesday.

For partners, Nadella committed to boosting the number of Black and African American-owned partner companies in the United States.

"We know how important partners are to the growth of our business. We look forward to investing to increase the number of Black- and African American-owned partners in our US partner community by 20 percent over the next three years," Nadella said.

Three pools of money are being set aside to accomplish that goal, Nadella said.

For startup partners, a new $50 million partner fund will be created to help provide access to capital. The loans will be provided through the startup phase and "be recovered over time as their business grows."

Existing and new partners will have access to $20 million in financing to support cash flow needs. Recent research across the economy has shown the fund to be addressing a need. A working paper from the Stanford Institute for Economic Policy Research found that African-American small businesses were the hardest-hit by coronavirus-related social distancing restrictions and demand shifts. While the study found a 22 percent drop in business owners from February to April 2020, the damage was much worse within the African-American community.

"African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent," report author Robert Fairlie wrote.

Although Nadella's post did not lay out details for the Latinx community, the same Stanford report noted that Latinx business owners fell by 32 percent.

Microsoft also committed to an additional $3 million "in training programs covering financial management, tech solutions, and go-to-market readiness," Nadella said.

The partner funding is a small part of Microsoft's overall program.

A very large bucket of money is going into an initiative that will help Microsoft partners who are also Microsoft suppliers. Microsoft plans to double the number of Black- and African American-owned approved suppliers over the next three years. The effort will be supported with an incremental $500 million in spending with those existing and new suppliers, Nadella said. "We will also encourage Black and African American representation progress in our top 100 suppliers, which account for over 50 percent of our indirect spend, by requesting annual disclosure of their diversity profile information (e.g., workforce diversity, goals) that we will incorporate into our RFP evaluations," he said.

The company is adding $150 million to its diversity and inclusion spending with a goal of doubling the number of Black and African American people managers, senior individual contributors and senior leaders in the United States by 2025. Microsoft and other tech giants have been getting criticism lately for slow progress on diversification despite high-profile PR announcements in recent years.

As part of an effort to support Black- and African American-owned financial institutions, Microsoft is also creating a $100 million program to invest with Minority Owned Depository Institutions (MDIs). The company also is creating a $50 million investment fund focused on supporting Black- and African American-owned small businesses across the economy, in addition to the partner-focused funding.

Posted by Scott Bekker on June 24, 2020 at 4:42 PM


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