Grand Rapids Becomes the First City to Provide Preferences for Employee-Owned Businesses

Grand Rapids, MI, has become the first city to provide purchasing preferences for employee-owned businesses (PDF). Businesses can be employee-owned through an ESOP, an employee ownership trust, or a worker cooperative and must be certified by a recognized third party, such as Certified Employee-Owned or the NCEO.

The program is under the city’s equal business opportunities (EBO) policy. According to Roy Messing of the Michigan Employee Ownership Center, it will provide a discount for certified employee-owned businesses bidding on engineering or purchasing department contracts. Eligible discounts include:

• 1% for employee-owned businesses headquartered in Michigan
• 2% for employee-owned businesses headquartered in Kent County (the county Grand Rapids is in)

In 2024, North Carolina allowed businesses with ESOPs to qualify as historically underutilized businesses under its contracting preference program if 51% of the participants are “minority persons or socially and economically disadvantaged individuals.”

The NCEO has a new program to certify ESOP companies as diversely employee-owned. The certification is already being used by some ESOP companies to win contracts with private-sector companies that have contracting preference programs.