A federal appeals court just suspended a grant program serving Black female business owners, saying that it likely violates the Civil Rights Act. This is the latest in a series of court battles surrounding minority business grants, though it’s unlikely to be the last ruling on the subject.
In this latest ruling, a federal court of appeals panel suspended the Fearless Strivers Grant Contest, a grant program for Black female business owners. Fearless Fund is the Atlanta-based, Black woman-owned venture capitalist firm that runs the contest.
The group that brought the lawsuit is the American Alliance for Equal Rights, founded by Edward Blum, the conservative activist who was also behind the recent Supreme Court case ending affirmative action in college admissions. The three judge panel ruled 2-1 that the grant program “is substantially likely to violate” section 1981 of the federal Civil Rights Act of 1866, which prohibits the use of race in making contracts.
Blum said in a statement following the ruling, “Our nation’s civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are under-represented. Programs that exclude certain individuals because of their race such as the ones the Fearless Fund has designed and implemented are unjust and polarizing. Significant majorities of all Americans believe that an individual’s race should not be a factor in our nation’s public policies.”
However, proponents of programs like those run by Fearless Fund argue that the use of race in these programs aims to limit existing disparities in the world of business capital. In fact, data from the Federal Reserve indicates that Black business owners still are less likely to receive business funding than White business owners. In the most recent study, 35 percent of White business owners received the funding they applied for, compared to just 16 percent of Black business owners.
The Fearless Fund CEO and founder Arian Simone said in a statement following the ruling, “We are committed more than ever to advocating for equity, pushing forward with resilience, and ensuring that women of color receive the opportunities they rightfully deserve.”
Fearless Fund has not officially appealed the decision. But representatives said they’re looking into their options. Additionally, another recent court decision ruled in favor of Progressive Insurance and Hello Alice, who hosted a similar grant contest for Black business owners.
So there are likely to be more rulings on this issue going forward. And in the meantime, small businesses are left waiting to hear about the validity of these funding options.
Image: Canva