Court halts organization’s grants to Black women entrepreneurs

Ines Zemelman, EA
Ines Zemelman, EA
• 26.06.24 • 2 mins read
Court halts organization’s grants to Black women entrepreneurs

Fearless Funds, an Atlanta-based venture capital firm's nonprofit grant program, was recently halted by a federal appeals court.

This program, aimed at supporting small businesses owned by Black women, came under scrutiny following a lawsuit led by Edward Blum, known for opposing affirmative action.

Grants program and lawsuit details

  • Program purpose: Fearless Funds was created to address the disparity in venture capital funding for Black women, who received less than 1% of such funding last year.
  • Lawsuit initiation: The American Alliance for Equal Rights, led by Blum, filed a lawsuit in August, alleging that the grants violated § 1981 of the 1866 Civil Rights Act, which bans racial discrimination in contracting.

Legal battle and court decisions

The legal journey of Fearless Funds has been marked by differing opinions between the district and appellate courts on whether the grant program’s focus on Black women entrepreneurs violates anti-discrimination laws.

Initial court ruling

In September, a Georgia federal district court denied the request to halt the grants, stating that Fearless Funds' actions were protected under the First Amendment as expressive conduct.

Appellate court reversal

However, a three-member panel of the U.S. Court of Appeals for the 11th Circuit ruled 2-1 to temporarily block the grants, citing potential discrimination against non-Black business owners.

Key Points:

  • The appellate court argued that awarding grants based on race might violate anti-discrimination laws.
  • The panel disagreed with the lower court's view on First Amendment protections.

Implications and reactions

Statements from Fearless Fund officials

Arian Simone, CEO of the Fearless Fund, expressed devastation over the ruling, stating it undermines diversity efforts in corporate America.

“The message these judges sent today is that diversity in Corporate America, education, or anywhere else should not exist,” Simone said.

Legal perspectives

Some legal experts argue the ruling is unprecedented, as it challenges the legality of private charitable donations aimed at supporting specific racial or ethnic groups.

  • Alphonso David: President of the Global Black Economic Forum and legal counsel for Fearless Fund, emphasized the historic nature of the ruling and the intent to fight the lawsuit.
  • Dar’shun Kendrick: A lawyer and Georgia state representative, noted that the ruling only halts the grant awards temporarily and does not address the merits of the case.

Broader impact and future outlook

Impact on DEI programs

The outcome of this lawsuit could significantly affect diversity, equity, and inclusion (DEI) initiatives across various sectors.

Affected areas:

  • Affirmative action programs
  • Philanthropic efforts by private and community foundations

Ongoing monitoring

Civil rights groups, philanthropic organizations, and other stakeholders are closely watching the case as it could set a precedent for future DEI-related legal battles.