For Immediate Release

March 10, 2021

SAN DIEGO, CA – March 10, 2021- On March 6, the California Office of the Small Business Advocate (CalOSBA) published a new set of guidelines for its Covid-19 Relief Grant Program, in which the agency removed race- and sex-based preferences from its eligibility criteria. Californians for Equal Rights Foundation (CFER) applauds CalOSBA’s policy change to strictly observe California’s constitutional ban on preferential treatment, as a result of CFER’s positive engagement with important stakeholders.

“I sincerely welcome CalOSBA’s decision to remove racial and sex-based preferences from its grant-making process,” commented Frank Xu, President of CFER, “We are encouraged that the public office respects our constitutional right to equal treatment and urge all other agencies to treat all Californians equally without regard to race, ethnicity or sex.”

“Small business owners have been devastated by Governor Newsom’s business closure orders regardless of the race and sex of their owner. California added insult to injury by discriminating against businesses based on these immutable characteristics,” said Daniel M. Ortner, Attorney at Pacific Legal Foundation, “The State’s decision to treat Californians equally regardless of race and sex is not only the morally right thing to do, but also a constitutional imperative.”

Since late January, CFER with advice from Pacific Legal Foundation (PLF) launched an advocacy campaign regarding CalOSBA’s COVID-19 Relief Grant. Upon receiving initial evidence on the program’s prioritization of minority and women-owned businesses (MWBEs), CFER published a press release and sent formal letters to 235 local chambers of commerce in California. In good faith and a collaborative spirit, CFER implored CalOSBA to uphold the state constitution and refrain from unconstitutional preferences. We also urged all small businesses that were impacted by the pandemic to apply to the grant program and demand equal treatment.

Our robust engagement has resulted in CalOSBA’s transition from prioritizing MWBEs to assisting businesses in “disadvantaged communities tracked by socioeconomic indicators”. This important change responds to our argument that “(n)eed-based consideration is legal but race- and sex- preferences are strictly prohibited”. The Covid-19 pandemic has considerably hurt California’s 4.1 million small businesses, and their recovery is vital to the well-being of the state economy. Small business owners, regardless of race or sex, should have equal access to public assistance, while those who have been impacted disproportionately should be given a reasonable priority status.

We wholeheartedly commend CalOSBA’s willingness to strictly observe the California Constitution in its distribution of much-needed grants to small businesses. CalOSBA has set up a virtuous model of focusing on merit and need in determining public assistance and public benefits, that should be emulated by other public agencies throughout California.