A federal appeals court blocked a grant program Monday that is only open to black, female business owners.
The Eleventh Circuit ruled 2-1 that the Atlanta-based venture capital fund grant program likely violates a federal law that prohibits discriminating based on race when entering or enforcing contracts, stating that the public interest is well served by “ensuring racial equality in contracting.” The American Alliance for Equal Rights (AAER) sued the Fearless Fund in August to challenge its “Fearless Strivers Grant Contest,” which awards $20,000 quarterly grants to small businesses founded by black women.
“Although Fearless will presumably need to change its contest rules to bring itself into compliance with § 1981, that burden pales in comparison to the interest in rooting out race discrimination in all forms,” Judge Kevin Newsom, a Trump appointee, wrote for the majority.
The appeals court found that the Alliance had standing to bring the lawsuit. It also held that the Fearless Fund is “substantially unlikely to enjoy First Amendment protection” for its program.
AAER’s lawsuit came as corporate diversity policies began facing increased scrutiny after the Supreme Court’s decision last term to strike down affirmative action in college admissions. A district court judge declined to block the program in September.
“The American Alliance for Equal Rights is grateful that the court has ruled that the Fearless Fund’s racially exclusive grant competition is illegal,” AAER president Edward Blum, the conservative activist who is also behind the group that brought several cases challenging race-based university admissions, said in a statement. “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,” Blum continued.
The Fearless Fund did not immediately respond to a request for comment.
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