Women-Owned Business Certification

In 1996, California voters approved Proposition 209, which became Article 1, Section 31 of the state’s constitution. Prop. 209 declares that the state, including its political subdivisions, “shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”

That being said, Prop. 209 did not outlaw providing some preferential treatment to companies owned by women. The California Supreme Court “held out the possibility that the federal equal protection clause might sometimes require race-conscious remedies to remedy intentional discrimination,” according to Coral v San Francisco (2010) 50 Cal. 4th 315.

In light of both the state and the federal constitutions, there are programs and funding in place to remedy prior discrimination. Many of these programs require certification by an outside third party. This certification establishes that a particular business satisfies the requirements of being women-owned.

Some of the third-party organizations that provide certifications include Women’s Business Enterprise National Council and National Women Business Owners Corporation. Assistance in the certification process is also available from both the Small Business Administration and National Women’s Business Council.

Some people labor under the misconception that being a woman-owned business is simple. For instance, a man who owns and operates a corporation may assume all he has to do is say his wife owns 51 percent to qualify as woman-owned.

Such an individual will be quickly disabused of this notion once he begins the certification process.

To be certified as woman-owned requires different factors for different organizations and governments. But what is essentially true for all is to be woman-owned the company must actually be woman-owned. Huh? In other words, just saying a majority of the stock is owned by women is not sufficient. Merely giving someone a title without the actual responsibility and authority also will not work.

Being certified as woman-owned is an arduous task. The certification organizations that are recognized as being legitimate require a lot of work to get the certification. These organizations will scrutinize the corporation’s by-laws and Articles of Incorporation. They will examine the corporation’s financial records, usually also wanting to see tax returns.

Some of these organizations will come onsite to observe how the company is being run. They may interview employees and study the company’s promotional literature and public image.

They will be naturally skeptical of companies that had been owned and operated by men magically now being woman-owned. The process can take several weeks and prompt some changes to the corporation to achieve the certification.

Grants and jobs are available for woman-owned businesses, to be sure. Just don’t go into it on a lark since you’ll be disappointed. Be sure to get some good help and be prepared for the often-intensive process. ©

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