Massachusetts spent $4.5 billion with small and diverse businesses in fiscal year 2025, a more than 20% increase over the year before, according to a report released this week by the state’s Supplier Diversity Office.
Despite the growth, the state continues to fall short of its goals for LGBTQ+- and veteran-owned businesses, the report said.
Part of the equation is a still-small number of businesses enrolled with the state as LGBTQ+- or veteran-owned. The number of LGBTQ+ businesses increased by 4% but still didn’t meet a benchmark set in 2023 by Gov. Maura Healey. The number of veteran-owned businesses dropped by 12%, according to the report.
Bonnie Borch-Rote, executive director at the Supplier Diversity Office, says part of the reason the state hasn’t reached its goals for the LGBTQ+-owned businesses is due to the political landscape. Companies have to enroll with the state as LGBTQ+-owned in order to count toward the state’s diversity benchmarks.
“We do feel that that may discourage some individuals, especially those members of our LGBT community, from wanting to join public diversity programs,” Borch-Rote said.
At the same time, Borch-Rote said the agency is looking to continue improving to meet its goals.
“We are moving in the right direction, and we’re going to lean in more,” she said.
The Supplier Diversity Office, created in 2021, sets benchmarks for the amount of discretionary spending in state funding. The benchmark for veteran spending is 3% of the state’s discretionary budget. During fiscal year 2025, it reached just less than 1%.
Lisa Ducharme, executive director of the Massachusetts Veterans Chamber of Commerce, says she believes the state will eventually meet its benchmark — but that it’ll take some time.
She says she would like to see accelerator programs to help veteran-owned businesses better prepare for certification.
“If we can get more veteran businesses certified, which they are trying to do, then we put a bigger pot in the system. And I think it will go from optional to mandatory to required,'' she said.
In 2023, Healey set a new benchmark — 0.3% of the discretionary budget — for LGBTQ+ businesses. The change followed the publication of a GBH News investigation finding that minority-owned businesses were getting less money than other contractors. In fiscal year 2025, the state reached about 40% of its goal.
Paulette Piñero, founder of the Springfield marketing agency Unstoppable Latina, told GBH News that challenges for companies like hers are often around unattainable insurance premiums and competing with larger scale companies.
“While a microenterprise has the capacity to send a proposal for a bid and execute on that project, it’s impossible to compete with a medium- or large-sized corporation,” Piñero said.
Still, she said she’s seen a change in the way the state works with organizations like hers. Piñero been certified as a minority-, woman- and LGBTQ+-owned businesssince 2022.
“They went from a ‘certification-and-done’ agency to providing ongoing resources and support for certified businesses,” she said.
