White Paper: North Carolina Black-Owned Business Participation in Justice40 Program Initiatives

Key Takeaways:

Introduction

The Justice40 Initiative, introduced by the Biden administration, seeks to ensure that 40% of the overall benefits from certain federal investments reach disadvantaged communities. This initiative aims to address systemic inequalities by investing in areas such as clean energy, environmental remediation, affordable housing, and community infrastructure, with a specific focus on communities that have historically borne the brunt of environmental and economic injustices.

In North Carolina, Black communities and Black-owned businesses have long faced barriers to accessing resources and federal funding. This white paper assesses whether Black-owned businesses in North Carolina are benefiting from Justice40 funding. Additionally, it explores barriers preventing full participation and proposes actionable recommendations to improve equity in the distribution of Justice40 resources.

Defining “Benefits” in Justice40

Within the Justice40 framework, "benefits" encompass a wide array of environmental, economic, and community investments. These include:

• Financial resources such as grants, loans, and federal contracts.

• Environmental cleanup efforts and resilience projects that directly improve health and living conditions in affected communities.

• Economic opportunities, such as job creation, infrastructure development, and capacity building, targeted at historically underserved communities.

The goal is for these benefits to uplift marginalized communities. However, measuring whether Black-owned businesses receive their fair share of these benefits is challenging, given gaps in data reporting and transparency.

Historical Context: Environmental Injustices in Black Communities

For decades, Black communities across the U.S.—including North Carolina—have been disproportionately affected by environmental injustices. According to findings from the Clean Air Task Force and the NAACP, Black Americans are 75% more likely than their White counterparts to live in "fence-line" communities—those located near commercial facilities that produce pollution, such as industrial sites and hazardous waste facilities. These communities suffer from higher rates of negative health outcomes like asthma and other respiratory issues due to exposure to harmful pollutants​ (National League of Cities, Housing Matters).

Additionally, Black Americans face increased risks from living near Superfund sites—areas contaminated with toxic waste. Many households in these communities are also lower-income, amplifying the vulnerability of residents to health risks​ (Housing Matters). These findings highlight the kinds of systemic environmental inequities faced by Black communities, which the Justice40 initiative aims to address.

These communities are also more likely to suffer from the consequences of poor environmental quality, such as increased exposure to air pollution, toxic waste, and contaminated water.

For instance:

Asthma prevalence is notably higher in predominantly Black counties in NC (Figure 1).

Data provided through NC’s newly released Environmental Justice Hub indicate that adult asthma rates in North Carolina's Black Belt counties, such as Edgecombe, Halifax, and Bertie, are significantly higher than the state average. These counties are predominantly rural, with limited access to healthcare and higher exposure to environmental pollutants. The combination of poor air quality, especially near industrial or agricultural operations, and socioeconomic factors contributes to elevated asthma rates among the adult Black population in this region. Addressing these disparities is crucial for improving public health outcomes in these historically marginalized communities.

Heat-related illnesses are also disproportionately prevalent in North Carolina's predominantly Black counties (Figure 2).

Counties in Northeastern North Carolina are also experiencing higher rates of heat-related illnesses compared to other counties. These elevated rates are directly linked to climate change, as increased heat exposure disproportionately impacts vulnerable populations with limited access to cooling resources and healthcare. The combination of rising temperatures, old infrastructure, and pre-existing health disparities contributes to these higher instances of heat-related health issues in these regions.

The Justice40 Initiative is designed to address these disparities by directing federal investments to communities that have faced these environmental injustices. This includes funding for environmental remediation, green infrastructure, and public health projects to mitigate the long-standing impacts of pollution and poor air quality.

Current Federal Spending with Black-Owned Businesses

Historically, Black-owned businesses have faced structural barriers to accessing federal contracts and funding. Justice40 was envisioned as a solution to this disparity, yet data suggests that significant gaps remain in reaching Black-owned businesses. The federal government’s own reports show that the share of contracts awarded to minority-owned businesses remains below 5%, with even smaller percentages reaching Black-owned firms. According to data from the White House and the Small Business Administration (SBA), in Fiscal Year 2020, approximately 1.7% of federal contracts were awarded to Black-owned businesses. The data also shows that Small Disadvantaged Businesses (SDBs), a broader category that includes Black-owned businesses, received around 10% of total federal contracting dollars. The Biden administration has set a goal of increasing SDB contracts to 15% by 2025​ (The White House).

Barriers to Accessing Justice40 Funding

Several barriers may be preventing Black-owned businesses in North Carolina from fully accessing Justice40 funds:

1. Limited Awareness: Many Black-owned businesses may be unaware of Justice40 funding opportunities, due to limited outreach and communication from government agencies.

2. Complexity of the Application Process: The federal contracting and grant application processes can be complicated, particularly for small businesses with limited resources. Lengthy paperwork, technical requirements, and compliance obligations often deter minority-owned businesses from applying.

3. Insufficient Technical Assistance: Many Black-owned businesses may lack the technical expertise needed to successfully apply for and manage federal contracts. Although some agencies offer technical assistance, more targeted support is needed to ensure that these businesses can navigate pre-award and post-award processes.

Method

USASpending.gov was queried with filters for the state of North Carolina for fiscal years 2021, 2022, 2023, and quarter 2 of 2024. We also filtered the Recipient Type field for “Minority Owned Business” and further filtered for “Black American Owned Business”. Four files, described below, were returned.

Contracts-Prime Analysis

Black owned businesses registered in NC were awarded $2.67 billion in Prime Contracts from 31 government agencies between 2021-2024. The value of these contracts ranged from hundreds of dollars to a $16 million Homeland Security contract.  

We analyzed over 2,700 "transaction descriptions" to assess whether the contracts could involve Justice40 Initiative programs. Approximately 40% of the transactions were administrative, another ~40% were related to maintenance/construction, and the remaining 20% were categorized as either IT, Products, Health, or Technical services (Figure 3). We could not identify any transaction that was covered by a Justice40 Initiative program.

Contracts-Subawards Analysis

Data for only 6 black-owned NC-registered companies was returned in the Contracts-Subawards file. The Agencies funding these subawards included NASA, GSA, DOD, and DOI. Although these companies received approximately $7.4 million from 2021 through Q1 of 2024 (Figure 4), none of the subawards were for Justice40 programs.

Assistance-Subawards Analysis

The resulting file contained no data for the time period of interest.

Assistance-Prime Transactions

Two records were returned for federal financial assistance programs. One loan from HUD was given to a Charlotte-based financial services company. The other was awarded by the SBA to a Union County, NC based trucking company. Neither of the financial assistance programs were related to the Justice40 program.

Analysis

An analysis of the dataset revealed multiple key issues:

Limited Inclusion of Justice40 Programs:

Despite extensive data on contracts and subawards awarded to Black-owned businesses, none of the transactions could be directly identified as being related to Justice40 programs. Most of the contracts awarded, particularly in the Contracts-Prime analysis, were for administrative, maintenance, construction, IT, health, or technical services. This highlights a significant gap in the alignment of federal contracts with Justice40’s goals of supporting disadvantaged communities, specifically Black-owned businesses.

Funding Concentration in Non-Justice40 Sectors:

Black-owned businesses in North Carolina received over $2 billion in Prime Contracts from 31 government agencies between 2021-Q2 2024. However, 40% of these transactions were for administrative purposes, and another 40% were for maintenance or construction projects, with no clear indication that any were linked to Justice40 programs. This suggests that federal contracts benefiting Black-owned businesses are concentrated in non-Justice40 sectors.

Sparse Subaward Data:

The Contracts-Subawards analysis revealed that only six Black-owned companies in North Carolina received subawards. The limited number of subawards and the absence of any related to Justice40 highlight a critical gap in the equitable distribution of funds to Black-owned businesses.

Discussion

The analysis of federal funding under the Justice40 Initiative for Black-owned businesses in North Carolina reveals a significant gap in direct contract awards. However, this does not necessarily indicate that Black-owned businesses will continue to be excluded from future opportunities. Money moves slowly, particularly in large federal initiatives like Justice40, which are designed to disburse funds over several years through a variety of channels. Although Black-owned businesses have not yet captured any significant share of Justice40 funding, there are reasons to believe that these funds may still be forthcoming.

One key mechanism through which Black-owned businesses may benefit from Justice40 is the role of Community Development Financial Institutions (CDFIs). CDFIs, which focus on providing financial services to underserved communities, are well-positioned to support Black-owned businesses as they seek to access funding for clean energy, infrastructure, and community development projects. As federal money is increasingly allocated to these institutions, Black-owned businesses may be better able to secure loans, grants, or technical assistance that aligns with Justice40’s goals of supporting disadvantaged communities.

Another factor to consider is the competitive nature of federal funding. Much of the Justice40 money is distributed through grants, which are often awarded to nonprofits, state, and local governments rather than directly to for-profit businesses. Black-owned businesses, like other for-profit entities, must competitively bid for contracts issued by these larger organizations. This creates both challenges and opportunities.

On one hand, this indirect funding model means that Black-owned businesses are dependent on these large entities—such as state agencies and nonprofit organizations—to issue subawards and contracts. On the other hand, if these large entities follow equitable practices and intentionally create opportunities for Black-owned businesses, there is potential for these businesses to access more Justice40-related funding in the near future.

Our hope is that these larger entities will begin issuing subawards for services related to Justice40-targeted activities. Black-owned businesses should be well-positioned to compete for these contracts, provided that the opportunities are made widely available and that barriers to entry, such as complex bidding processes and insufficient technical assistance, are addressed.

However, simply waiting for subawards to trickle down is not enough. Ensuring that Black-owned businesses have a fair chance at securing these opportunities will require proactive efforts. This includes:

Transparent procurement practices by large entities receiving Justice40 funding, including clear and accessible announcements of contract opportunities.

Technical assistance and capacity-building support for Black-owned businesses, ensuring that they are well-equipped to respond to requests for proposals (RFPs) and navigate the often complex federal procurement landscape.

Accountability measures that track not only how Justice40 funds are distributed at the top level, but also how they are funneled down to smaller, disadvantaged businesses, ensuring that the 40% benefit target is truly being met.

Building on Prior Recommendations: Ensuring Black-Owned Businesses Capture Justice40 Funding

Last year, our company published a series of recommendations aimed at leveling the playing field for Socially Disadvantaged Businesses (SDBs) in federal contracting and procurement. These recommendations were designed to address structural barriers that prevent SDBs, including Black-owned businesses, from accessing the resources and opportunities they need to thrive. Now, as the Justice40 Initiative has taken shape, we are building upon these prior recommendations in the hopes that Black-owned businesses will not continue to be left behind.

The economic benefits tied to Justice40 programs present a critical opportunity for Black-owned businesses to grow and support the communities they serve. However, our concern is that without targeted efforts, these businesses—who often play a vital role in hiring diverse talent and promoting equity and inclusion—will miss out on the substantial economic opportunities emerging from the Justice40 initiative.

To ensure Black-owned businesses capture more of the opportunities under Justice40, the following actions are critical:

1. Increase Small Business Set-Asides in Justice40 Programs:

   • The federal government should prioritize small business set-asides within Justice40 programs, particularly targeting Black-owned businesses. This would help level the competitive landscape, preventing larger corporations from dominating the opportunities intended to benefit disadvantaged businesses.

2. Expand Technical Assistance for Socially Disadvantaged Businesses (SDBs):

   • Many small businesses, especially Black-owned ones, face significant challenges navigating the federal procurement system. Additional technical assistance is necessary to help these businesses master the processes involved in applying for contracts, ensuring compliance, and improving their competitiveness.

3. Focus on Capabilities, Not Size and Past Performance:

   • Justice40 programs should prioritize evaluating businesses based on their core capabilities and specific strengths, rather than placing too much emphasis on business size or past federal performance. This approach would give newer and smaller businesses, which often include Black-owned firms, a more fair shot at competing.

4. Reduce Contract Bundling:

   • Large, bundled contracts often prevent smaller businesses, particularly Disadvantaged Business Enterprises (DBEs), from competing. By reducing contract bundling, the government can ensure that opportunities are more accessible to Black-owned businesses that may lack the resources to bid on larger, bundled projects.

5. Improve Data Collection and Transparency:

   • Federal agencies should collect and report demographic data on recipients of Justice40 funding to accurately track how funds are distributed and whether they are reaching Black-owned businesses. This would improve transparency and allow for more focused efforts in reaching underserved communities.

6. Expand Outreach and Capacity-Building Efforts:

   • Targeted outreach campaigns should be designed to reach Black-owned businesses. These campaigns can include workshops, virtual briefings, and partnerships with community organizations to ensure businesses are aware of Justice40 opportunities and equipped to apply for contracts and grants.

7. Simplify the Application Process:

   • The application process for federal contracts and grants should be streamlined to reduce the administrative burden on Black-owned businesses. Simplified application guides, reduced paperwork, and step-by-step assistance can help these businesses navigate the process more easily.

Next Steps: Analyzing the Distribution and Impact of Justice40 Spending

Now that our analysis has revealed that Black-owned businesses registered in North Carolina have not received Justice40 Initiative contracts, the next phase of our work will focus on understanding who is receiving the money and where it is going within the state of North Carolina. This phase will include a detailed assessment of:

1. Who Is Receiving the Funding: We will analyze the recipients of Justice40 funding, focusing on the types of entities benefiting from the initiative. This will include private companies, nonprofits, government bodies, and other organizations to determine whether the funds are flowing primarily to well-established entities or if smaller, more vulnerable businesses are being included.  To better understand the recipients, we will categorize these entities by type, size, and leadership. This will help to identify whether the Justice40 funds are disproportionately awarded to large corporations or if there is meaningful inclusion of diverse organizations and businesses.

2. Geographic Distribution: We will conduct a geographic analysis to map out which parts of North Carolina are receiving the most Justice40 funding. This analysis will help highlight any regional disparities and determine whether certain areas of the state, particularly those in historically disadvantaged or rural regions, are being neglected.

3. Assessing Alignment with Justice40 IRA Disadvantaged Communities: A critical part of our next steps will be to evaluate whether the funds are reaching Justice40 IRA-designated disadvantaged communities. We will compare funding recipients with these geographic zones to assess whether the program is truly targeting the communities most in need, as intended. This analysis will help uncover whether funding distribution aligns with the goals of environmental justice, community uplift, and climate resilience.

Summary

The Justice40 Initiative presents a unique opportunity to address the historical disparities in federal funding and investment that have long affected Black-owned businesses and disadvantaged communities. However, as this analysis reveals, significant gaps remain in ensuring that Black-owned businesses in North Carolina fully benefit from these federal resources. While some funding has reached Black-owned businesses through prime contracts, there is little evidence that these are linked to Justice40 programs, and subawards for these businesses remain limited.

Addressing these gaps requires more than financial resources. It calls for targeted outreach, technical assistance, and a commitment to transparency and accountability. Community Development Financial Institutions (CDFIs) will likely play a key role in channeling future Justice40 funds to Black-owned businesses, and we must ensure that these businesses are well-positioned to compete for contracts and subawards from larger entities, such as nonprofits and local governments.

By implementing the recommendations outlined in this report—such as increasing small business set-asides, improving technical assistance, and ensuring transparent procurement practices—government officials can help ensure that Justice40 lives up to its promise of delivering both environmental and economic benefits to North Carolina’s disadvantaged communities, particularly Black-owned businesses. Proactive steps are needed now to ensure that these businesses are not left behind in this critical federal initiative.

References Cited

"Clean Air Task Force: Fumes Across the Fence-Line." Clean Air Task Force and NAACP, November 14, 2017, https://www.catf.us/work/power-sector/fumes-across-the-fence-line

Environmental Protection Agency. Justice40: Delivering on the Promise of Justice40. U.S. Government, January 15, 2022, https://www.epa.gov/environmentaljustice/justice40-initiative.

North Carolina Department of Environmental Quality, Environmental Justice Mapping Tool. North Carolina Environmental Justice Hub, August, 2024.

"Small Business Participation in Federal Contracting." Small Business Administration, July 15, 2020, https://www.sba.gov/document/report-small-business-procurement-scorecard-overview.

"Superfund and Waste Site Data." National Environmental Justice Advisory Council (NEJAC), September 15, 2017, https://www.epa.gov.

White House. "Increasing Opportunities for Minority-Owned Businesses in Federal Procurement." White House Office of Government Contracting, December 15, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021.