A federal appeals court has ruled that the Fearless Fund grant program for Black women business owners is discriminatory.
“The judges ruled that the Fearless Fund’s Fearless Strivers Grant Contest is ‘substantially likely to violate’ the provisions of Title 42 of the US Code, which ensures equal rights under the law and prohibits the use of race when awarding and enforcing contracts,” CNN reports.
The case against the Atlanta-based venture capital fund began last year with a lawsuit by the American Alliance for Equal Rights. The lawsuit, led by Edward Blum, who is known for challenging affirmative action in college admissions, alleged that the fund, which specifically caters to Black women, is racially discriminatory.
However, a significant racial gap exists in venture capital funding, with Black women businesses receiving less than 1% of the $288 billion invested by venture capital firms in 2022.
Monday’s 2-1 decision was a reversal from last year’s ruling by a federal judge, which ruled that the contest should be able to continue because, in their opinion, the lawsuit was expected to fail. But, since October this program has been suspended after a different, “separate panel of the federal appeals court swiftly granted Blum’s request for an emergency injunction while he challenged the federal judge’s original order.”
The message these judges sent today is that diversity in Corporate America, education, or anywhere else should not exist,” said Fearless Fund Founder and CEO Arian Simone in a statement. “These judges bought what a small group of white men were selling.”
“In this fearless moment, we should all be motivated to fight after today’s decision. This is devastating for the Fearless Fund and Foundation and for the women in which we have invested,” Simone added. “I am shattered for every girl of color who has a dream but will grow up in a nation determined not to give her a shot to live it. On their behalf, we will turn the pain into purpose and fight with all our might.”
The court’s decision marks the latest victory in the war the GOP is waging against DEI and diversity programs. As ESSENCE has previously reported, this lawsuit is emblematic of a larger issue in this country “where seemingly politically motivated plaintiffs are challenging organizations that counter racial bias and advance equity, in this case, starting with underrepresented groups like Black women in the venture capital space.”
The appellate court also ordered a Georgia federal court “to enter a preliminary injunction blocking the fund from closing its grant application process while the case continues to be litigated.” This means that the Fund will not be allowed to award $20,000 grants to Black women-owned businesses under the Strivers Grant Contest. In addition, the 11th Circuit in Miami also wrote that this program is not likely to prevail based on First Amendment protections.
“The majority ruled that an 1866 law designed to provide economic freedom to newly-freed slaves actually prohibits the Fearless Foundation from providing grants to Black women. We disagree. As the dissenting judge pointed out, the discrimination in access to funding that Fearless Foundation seeks to address is long-standing and irrefutable,” said Alphonso David, President & CEO of the Global Black Economic Forum and counsel to the Fearless Fund and Fearless Foundation.
“This is the first court decision in the 150+ year history of the post-Civil War civil rights law that has halted private charitable support for any racial or ethnic group. The dissenting judge, the district court and other courts have agreed with us that these types of claims should not prevail. This is not the final outcome in this case; it is a preliminary ruling without a full factual record. We are evaluating all of our options,” David continued.