Last month, a federal appeals court blocked the Fearless Fund from making grants to black women entrepreneurs, the latest in a series of attacks on diversity, equity, and inclusion (DEI) programs, with worrying implications for all nonprofits, businesses, and individuals in the United States.
The Fearless Fund and Fearless Foundation were founded in 2018 to address the disparity in venture capital funding for companies founded by Black women and women of color: in 2022, just 0.1% of venture capital funding went to Black and Latinx female founders, and only 0.036% went to Black women.
When the Fearless Foundation launched a contest to award $20,000 in grants to four businesses owned by black women, it was sued by the American Equal Rights Union, a nonprofit group representing three anonymous nonblack women. The group argued that the contest was discriminatory and violated the Civil Rights Act of 1866, a law enacted after the Civil War that allowed black people to be parties to contracts.
The lawsuit was part of a concerted effort by conservative groups to undermine diversity programs, but when the 11th Circuit Court agreed with the plaintiffs and preliminarily blocked the Fearless Foundation’s grants, it went further: it succeeded in undermining the entire foundation of charitable giving in the United States.
Charities have long collected donations and made grants to support specific demographic groups, and for decades have contributed to the upliftment of people of different genders, ethnicities, and socio-economic backgrounds. If the Fearless decision passes and is expanded to other jurisdictions, it could make it virtually impossible for charities to ensure that their funds are aligned with their missions. It could also reverse the intentions of 60% of U.S. households to give to charity in a given year.
The impact of the Fearless decision reaches far beyond the nonprofit world. The court allowed these parties to remain anonymous, which has fostered a mini-industry of perpetual litigation, exposing companies to endless legal action with little recourse.
Worst of all, there’s the chilling effect this and similar decisions will have on corporate boards and executives across the country. As activist groups file more and more frivolous lawsuits, it’s important to recognize that their goal isn’t necessarily to win. Their goal is to make individuals and companies question whether supporting diversity efforts is even worth it.
Don’t get us wrong: A study we commissioned last year found widespread support for companies’ efforts to reflect the diversity of the American population across racial, generational, and ideological lines, including 67% of Republicans. And companies that prioritize diversity outperform those that don’t. But even with this certainty, the threat of litigation can weigh heavily on companies’ minds as they decide how seriously to invest in their DEI programs.
Where do we go from here? Fearless Fund is considering all options in response to the 11th Circuit decision and remains committed to our mission of investing in underrepresented groups, including Black women. We know this case is about much more than just our grant programs. This is a fight for equity, and those of us in this fight must be loud and unwavering in our commitment and resolve. Otherwise, extremists who abuse the legal system will win.
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