For the first time, the city of Minneapolis has created diversity goals for goods and services contracts under $50,000.

The Supplier Diversity Program set goals for the city to have 25 percent of its contracts with minority- and women-owned small business enterprises.

The program’s March report found all City departments spent about 1.5 percent of their total contracts on women-owned businesses and about 2.7 percent on minority male-owned businesses for goods and services under $50,000.

The city first started tracking diversity in its departments’ contracts under $50,000 after last August’s approval of the Supporting Equity in Employment in Minneapolis and the Region resolution.

After the Economic Policy Institute named Minneapolis as having the worst unemployment disparity between white and black citizens in 2010, the city began taking steps to remedy the problem.

“The Twin Cities has a very significant employment gap, especially for African-American and Native Americans,” said City Councilman Cam Gordon, who represents parts of the University of Minnesota’s campus.

Before now, tracking of diversity in the city’s spending for services under $50,000 didn’t happen and wasn’t considered, Gordon said. He said he’s been working on this issue since 2007 and is happy to see goals set.

Michael McHugh, assistant director for the City of Minneapolis’ Contract Compliance Division, said the high goals are attainable because there are a large number of women- and minority-owned businesses available to do smaller projects.

The City’s Small and Underutilized Business Program, which ensures diversity in the City’s spending of more than $50,000, meets their goals by reaching out to small businesses to get them certified to work with the government, McHugh said.

The current low utilization of women- and minority-owned businesses could be due to a department’s familiarity with large companies, McHugh said.

These goals will force departments to make a conscious decision about who they’re hiring, he said.

Chris Olsen, director of marketing and events at WomenVenture — a nonprofit organization that provides financial and educational support for women-owned businesses — said she’s optimistic about the city’s goals, but there could be potential challenges.

Small businesses may have to wait longer for payment from government contracts, as typical contracts could pay within 30 days of service, Olsen said.

Despite the longer wait time, Olsen said the new goals benefit the community.

“It makes it inclusive so everyone has the same opportunities,” she said.

Diversity contracts at the U

The University of Minnesota also recently increased its goals to hire women- and minority-owned businesses, as well business owners with disabilities, from 10 percent to 13 percent.

This is the first time the goals have been increased since they were implemented by the Board of Regents in 1999, said Craig Taylor, director of the University’s Office for Business and Community Economic Development.

“We’ve probably had a 97 percent success rate across our projects where those goals are being applied,” Taylor said.

The availability of these small-business owners helped increase the University’s goals, Taylor said.