MIAMI (AP) — In a case emblematic of growing legal backlash against corporate diversity programs, a small venture capital firm defended its grant program for Black women-owned businesses on Wednesday by conservative judges. faced tough questions.
The Fearless Fund, which provides early-stage funding to businesses owned by women of color, asked a three-judge panel of the U.S. Court of Appeals for one of its programs, the Strivers Grant Contest. is seeking the lifting of the injunction against. Businesses majority owned by Black women. The conservative group Equal Rights Alliance of America filed a lawsuit last fall claiming the program discriminates against people of other races.
A hearing in Miami on Wednesday is aimed at determining whether the subsidy suspension will continue for the duration of the lawsuit. The questioning by the conservative-leaning panel, which includes two judges appointed by former President Donald Trump and one appointed by President Barack Obama, suggests that the Fearless Fund will struggle.
Judge Kevin Newsom, a Trump appointee, disputed the Fearless Fund’s argument that the grants were protected by the First Amendment because they were charitable donations. He asked Fearless Fund’s lawyers whether similar protections applied to contests open to only white applicants. It’s a question frequently posed by Edward Blum, the conservative activist who heads the American Equal Rights Alliance and led the Supreme Court case that ended affirmative action in college admissions.
“I think it’s a very simple yes or no decision,” Newsom said, interrupting Fearless Fund attorney Jason Schwartz as he began to respond.
Mr. Schwartz responded that a whites-only contest set up under the same conditions would certainly be protected by the First Amendment.
“The First Amendment protects all speech, no matter how objectionable it may be,” Schwartz said.
Asked to explain how this case differs from businesses that exclude minorities, Schwartz argued that charitable donations aimed at furthering a cause are different from commercial transactions, such as jobs or housing.
The American Alliance argued that the Fearless Fund contest was not a charitable donation but a contract whose racial requirements violated its terms. Civil Rights Act of 1866 of 1981, prohibits discrimination based on race in enforcing contracts. It was originally intended to protect formally enslaved people from economic exclusion.
The Fearless Fund lawsuit has become a rallying point for civil rights activists who argue that a ruling eliminating the program would jeopardize other donations and programs designed to help disadvantaged groups. . The Fearless Fund was created to address significant racial disparities in funding for businesses owned by women of color. For example, less than 1% of venture capital money goes to businesses run by Black and Hispanic women, according to the nonprofit advocacy group Digital Undivided.
“Less than 1% of all venture capital funding goes to women of color. So we’re here fighting them and saying, can we get at least 1%? They’re… No, we’re saying we want the whole pie,” Ben Crump, a civil rights attorney who also represents the Fearless Fund, said at a news conference after the hearing.
“That’s why this case is so important and groundbreaking, because it has a chilling effect not just on women and women of color, but even on the diversity of America,” he said.
The Fearless Fund was created with support from prominent companies such as JPMorgan Chase, Bank of America, and Mastercard to fund the Strivers Grant Competition. But since the lawsuit was filed, Fearless Fund has struggled to secure new investment, co-founder Ariane Simone said.
“When people hear about lawsuits, they can get scared. Yes, we have been financially impacted by this litigation. We were expecting an eight-digit increase,” Simone said at a press conference.
Newsom said in court that given that Fearless Fund is a small player in the venture financing industry and that unqualified executives have many other means of accessing funds, its grants He expressed skepticism about the Fearless Fund’s claims that it is not discriminatory.
“What I don’t fully agree with or understand about this is that the underlying premise of your argument seems to be that no source of funding exists as long as there are many other sources of funding. “It is possible to discriminate on the basis of race,” Newsom said.
Schwartz argued that charities have the right to choose what to fund based on the problems they are trying to address.
“In the context of small donations, just because you’re not solving everyone’s problem doesn’t mean it’s not remedial,” Schwartz said. “Answers cannot be given to anyone, nor can they be given to anyone.”
Another panel of the same appeals court last fall temporarily suspended the Strivers Grant context, overturning a lower court’s decision that refused to block it.
Olson reported from New York.