A federal judge in Atlanta has ruled that the venture capital firm Fearless Fund can continue offering grants exclusively to Black women entrepreneurs. The judge denied a preliminary injunction sought by the American Alliance for Equal Rights, a nonprofit led by anti-affirmative action activist Edward Blum. The alliance argued that the Fearless Fund’s Fearless Strivers Grant Contest, which awards $20,000 to Black women who run businesses, violated a section of the Civil Rights Act of 1866 that prohibits racial discrimination in contracts.
The judge, Senior U.S. Judge Thomas Thrash, ruled against the injunction, stating that the grants were “charitable donations” intended to address discrimination against Black women business owners. He argued that donating money for this purpose was a form of “expressive conduct” protected by the First Amendment. Thrash accused the alliance of seeking to convey a different message through the fund, which he said was not how the First Amendment worked.
The Fearless Fund, a small player in the global venture capital market, was established to address barriers that women of color face in accessing venture capital funding. Less than 1% of venture capital funding goes to businesses owned by Black and Hispanic women. The Fearless Fund’s grant program is open to businesses that are at least 51% owned by Black women.
The ruling in favor of the Fearless Fund is seen as a significant victory for the firm and a test case for the battle over corporate diversity policies, particularly in the wake of the U.S. Supreme Court’s decision to end affirmative action in college admissions.
The American Alliance for Equal Rights plans to appeal the decision, arguing that the grant program’s exclusivity based on race violates civil rights laws.
