|
Getting your Trinity Audio player ready...
|
A U.S. federal court of appeals panel dealt a devastating blow to Black women-owned businesses on June 14 when it suspended a venture capital firm’s grant program. It ruled that a conservative group is likely to prevail in its lawsuit, claiming that the program is discriminatory.
The ruling against the Atlanta-based Fearless Fund is the latest in a growing trend of conservative groups waging legal battles against corporate diversity programs.
Edward Blum, an activist who heads the conservative American Alliance for Equal Rights, and brought the lawsuit against Fearless Fund, is also behind the Supreme Court case that ended affirmative action in college admissions.
Blum told the Associated Press “Programs that exclude certain individuals because of their race such as the ones the Fearless Fund has designed and implemented are unjust and polarizing.”
Fearless Fund CEO and Founder Arian Simone called the ruling “devastating” for Black women and the organizations that support them.
“The message these judges sent today is that diversity in Corporate America, education, or anywhere else should not exist,” she said in a statement. “These judges bought what a small group of white men were selling.”
The court ordered the Fearless Fund to suspend its Strivers Grant Contest, which provides $20,000 to businesses that are majority-owned by Black women. The ruling reversed a federal judge’s ruling last year that allowed the grant program to continue.
The appeals court panel, consisting of two judges appointed by former President Donald Trump and one appointed by former President Barack Obama, rejected the Fearless Fund’s arguments that the grants are not contracts but charitable donations protected by the First Amendment right to free speech.
“The fact remains, though, that Fearless simply —and flatly — refuses to entertain applications from business owners who aren’t ‘black females,’” the court’s majority opinion said.
The lawsuit was filed on behalf of three anonymous women who claimed to have suffered by not being allowed to apply for the grant due to their race.
Obama appointee, Judge Robin Rosenbaum argued against the claim, saying none of the plaintiffs demonstrated that they had any real intention to apply for the grants in what she called “cookie-cutter declarations” that were ”threadbare and devoid of substance.”
The Strivers Grant Fund is one of several programs run by the foundation arm of the Fearless Fund, which was founded to address the wide racial disparity in funding for businesses owned by women of color. Less than 1% of venture capital funding goes to businesses owned by Black and Hispanic women, according to the nonprofit advocacy group digitalundivided.
Black women only comprised 2% of investment professionals and venture capital firms in 2022, according to a study by Deloitte and Venture Forward. Additionally, just 1% of investment partners were Black women, according to study, which surveyed 315 firms with 5,700 employees representing $594.5 billion in assets under management.
Alphonso David, Fearless Fund’s legal counsel who serves as president and CEO of The Global Black Economic Forum, said all options were being evaluated to continue fighting the lawsuit.
