A venture capital firm has ended its grant program for Black women entrepreneurs as part of an agreement to resolve a lawsuit brought by a conservative advocacy group. The Fearless Fund, based in Atlanta, announced the closure of its Strivers Grant Contest, which had provided $20,000 awards to businesses majority-owned by Black women.
The settlement comes two months after a federal appeals court panel ordered the suspension of the grant program. In a 2-1 decision, the court ruled that the American Alliance for Equal Rights, led by conservative activist Ed Blum, was likely to succeed in its claim that the program unlawfully discriminated based on race.
This case has been closely watched as a potential indicator in the growing legal battle against corporate diversity initiatives. Conservative groups, emboldened by the Supreme Court’s decision to end affirmative action in college admissions, have targeted numerous companies and institutions, challenging a wide range of diversity, equity, and inclusion (DEI) policies.
Blum, who also spearheaded the case that led to the affirmative action ruling, reiterated his stance that “race-exclusive programs like the one the Fearless Fund promoted are divisive and illegal.” He expressed hope that similar programs would be opened to all races in the future.
Arian Simone, CEO and co-founder of the Fearless Fund, stated she was glad to put the lawsuit behind her and continue the firm’s mission of “helping and empowering women of color entrepreneurs in need.” The Fearless Fund, which has supported popular companies like beauty retailer Thirteen Lune and restaurant chain Slutty Vegan, announced a new $200 million debt fund offering loans between $5,000 to $250,000 to “under-resourced founders.”
Civil rights attorney Ben Crump, who represented the Fearless Fund, emphasized that the settlement avoided a Supreme Court ruling that could have eliminated race-based funding opportunities. He stated, “By strategically avoiding a Supreme Court ruling that could have eliminated race-based funding, we protected vital opportunities for the entire Black and brown community.”
The lawsuit against the Fearless Fund is part of a broader trend that has seen an increasing number of companies altering or discontinuing DEI programs in response to legal challenges and conservative pressure. Recent examples include Lowe’s and John Deere.
The case has highlighted deep divisions within the country’s judiciary on DEI issues. Two judges appointed by former President Donald Trump sided with Blum’s argument that the grant program violated the 1866 Civil Rights Act, which prohibits racial discrimination in contract enforcement. In contrast, Judge Robin Rosenbaum, an Obama appointee, strongly dissented, arguing that the plaintiffs had not demonstrated any genuine intention to apply for the grants.
Legal experts note that the decision to settle is not surprising given the current composition of the Supreme Court. David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion, and Belonging at New York University’s School of Law, commented, “People are certainly seeing the writing on the wall on how the six-justice conservative super majority in the Supreme Court would rule in DEI-related cases.”
The Fearless Fund case and similar lawsuits have yet to result in a precedent-setting ruling comparable to the Supreme Court’s decision on affirmative action. However, they continue to shape the landscape of diversity initiatives in the corporate world, with many companies reassessing their approach to DEI programs in light of the ongoing legal challenges.