Court blocks grants to Black women entrepreneurs where it could limit DEI efforts by companies and charities

What is the Fearless Fund?

Ayana Parsons AND Arian Simonetwo experienced black entrepreneurs, began a company Fearless Fund in 2018 to provide financial and technical support to businesses led by other Black women.

Fearless Fund also runs the charity Fearless Foundation. He leads, among others Strivers Grant Competitionwhich provides 4 winners with $20,000 and mentoring to help them grow their businesses.

Awarded to the Fearless Foundation Revenue $332,000 and had just $141,560 in net assets in 2022, the most up-to-date yr for which this information is available. In other words, it is very small. Large American foundations do this multi-billion dollar donations.

What is the American Equal Rights Alliance?

The American Equal Rights Alliance says it filed the lawsuit because it believes denying non-blacks the opportunity to win a contract in the competition violates their civil rights.

The group, led by former stockbroker and activist Edward Blum, is best known for using lawsuits to block affirmative motion in higher education.

In June 2023, the majority Justices of the US Supreme Court ruled in two cases the alliance brought on behalf of Asian American students who wanted it study at Harvard University and University of North Carolina. The Court found that racially conscious admissions to higher education were in fact unconstitutional eliminating affirmative motion in college and university admissions.

Unlike in their education cases, none of the plaintiffs Blum’s group represents in this latest case actually competed for the Fearless Fund grant because they believed they might not receive funding. They are also anonymous.

American Equal Rights Alliance commented on the verdict stating that he is “grateful” for the court’s ruling in his favor, adding that “our nation’s civil rights laws do not allow for racial disparities because some groups are overrepresented in various endeavors, while others are underrepresented.”

What does the ruling suggest about the status of DEI efforts?

This case sets an vital precedent because it holds that the Fearless Foundation competition violates a federal statute enacted under the Civil Rights Act of 1866: 1981 USC Section 42. This statute prohibits discrimination in contracts based on race.

This law, passed immediately after the Civil War, was recently intended to protect liberated black people from discrimination.

In my opinion, shared by leading philanthropic organizationsalliance distorts the racial history of the United States by using this statute to argue that aid is unconstitutional Black businesswomen are overcoming lack of access to capital.

This legal motion is also problematic because it flies in the face of the traditional role that nonprofits play in the United States. By providing services that neither for-profit companies nor the government offer, nonprofits fill gaps. They have a long and wealthy history of helping those on the margins of society: immigrant communities, people with different physical and mental abilities, and people living in poverty.

And because this case could set the stage for a larger, more aggressive takedown effort corporate diversity, equity and inclusion effortsI consider this ruling has dealt a further blow to attempts to make the country’s economy and society more just, equitable and inclusive.

Why does this matter?

This is extremely difficult Black women with startups who want to build their companies. Among all Black-led startups, they have financial support has been declining steadily since rising in the summer of 2020.

They get businesses owned by black and Latina women lower than 1% of total enterprise capital funding.

Until recently, it seemed that this trend could be reversed.

In the wake of the outrage that followed the May 2020 murder of George Floyd by Minneapolis police officer Derek Chauvin. private sector and nonprofits have made efforts to increase their donations and provide other varieties of support for Black people. Although the Fearless Fund was established before Floyd’s murder, it too has seen greater interest and support – especially in 2021.

But as public attention and interest in justice for Black Americans has declined, so has the public they have these obligations.

This decreased engagement has coincided with a reduction or even outright ban on DEI efforts at public colleges and universities, including Florida AND Texas. At least seven other states have passed similar laws restricting DEI programs and racial justice instruction, in addition to bills proposed in one other 15 states.

This ruling may now make foundations reluctant to contribute nonprofit organizations that help women and people of color for fear of being sued.

Where do you think this is going?

I think the Supreme Court will ultimately hear this case.

If this happens, I hope judges will realize that opportunities for entrepreneurs of color remain limited. I consider they need to recognize the need for efforts like the Fearless Fund and its Strivers grant competition to level the playing field for black women.