Federal Appeals Court Stops Grant Program for Black Female Entrepreneurs
OAN’s Stephanie Stahl
11:37 AM – Monday, October 2, 2023
The 11th Circuit Court of Appeals in Atlanta, Georgia, has issued an order to temporarily pause grant applications by the Fearless Fund, an Atlanta-based venture capital firm that specifically supports Black female entrepreneurs.
This ruling is considered a win for the American Alliance for Equal Rights, a conservative organization founded by Edward Blum, an activist known for his involvement in the challenge against affirmative action in college admissions.
In early August, the Alliance filed a lawsuit against the Fearless Fund, arguing that their $20,000 small business grant program was racially-biased since it exclusively supports Black women.
Additionally, Blum argued that the grant contest violates a section of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts.
The majority on the 3-judge panel labeled the Fearless Fund’s program as “racially exclusionary” and suggested that Blum’s group was likely to succeed.
The grant contest is among several programs run by the Atlanta-based Fearless Fund, which was established to bridge the gap in funding access for Black female entrepreneurs who receive less than 1% of venture capital funding, according to figures from Crunchbase.
In a statement on Sunday, Fearless Fund said that they would comply with the order, but still felt confident of ultimately prevailing in the lawsuit.
“We respectfully disagree with this court’s decision, appreciate the important points raised by the dissent, and look forward to further appellate review. We remain committed to defending the meaningful work of our clients,” said Alphonso David, president and CEO of the Global Black Economic Forum and one of the lead lawyers for Fearless.
The Fearless Fund has enlisted prominent civil rights lawyers, including Ben Crump, to defend against the lawsuit. According to the attorneys, the $20,000 in grants are not considered contracts, but rather, donations protected by the First Amendment.
However, in its majority opinion, the appellate panel disagreed, stating that the First Amendment “does not give the defendants the right to exclude persons from a contractual regime based on their race.”
The case has also become a test case, as the battle over racial considerations shifts to the workplace following the U.S. Supreme Court’s June ruling ending affirmative action in college admissions.
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What legal arguments have been presented by the Fearless Fund’s legal defense team, and how did the appellate panel respond to them
Title: Fearless Fund’s Grant Program Temporarily Paused Due to Racial Bias Controversy
Introduction:
The 11th Circuit Court of Appeals in Atlanta, Georgia has recently issued an order to temporarily halt grant applications from the Fearless Fund, an Atlanta-based venture capital firm that specifically supports Black female entrepreneurs. This ruling comes as a result of a lawsuit filed by the American Alliance for Equal Rights, a conservative organization founded by Edward Blum, challenging the racially-biased nature of the Fearless Fund’s grant program. The case highlights the ongoing struggle for equal access to funding for underrepresented entrepreneurs.
Background:
In early August, the American Alliance for Equal Rights filed a lawsuit against the Fearless Fund, arguing that their $20,000 small business grant program was racially-biased due to its exclusive support for Black women. Edward Blum, known for his involvement in challenges against affirmative action in college admissions, contended that the grant contest violated a section of the Civil Rights Act of 1866, which prohibits racial discrimination in contracts.
Court’s Decision:
The majority on the 3-judge panel labeled the Fearless Fund’s program as “racially exclusionary” and suggested that Blum’s group was likely to succeed in their argument. This temporary halt on grant applications is considered a win for the American Alliance for Equal Rights and raises important questions about equality and fairness in venture capital funding.
Fearless Fund’s Mission:
The Fearless Fund was established to bridge the gap in funding access for Black female entrepreneurs, who receive less than 1% of venture capital funding, according to figures from Crunchbase. The grant contest in question is one of several programs run by the Fund, aimed at empowering and supporting underrepresented business owners.
Response from Fearless Fund:
In a statement on Sunday, Fearless Fund expressed their disagreement with the court’s decision. However, they also stated their commitment to complying with the order while remaining confident of ultimately prevailing in the lawsuit. Alphonso David, president and CEO of the Global Black Economic Forum and one of the lead lawyers for Fearless, emphasized their dedication to defending the meaningful work of their clients.
Legal Defense:
Fearless Fund has enlisted prominent civil rights lawyers, including Ben Crump, to defend against the lawsuit. The attorneys argue that the $20,000 in grants are not considered contracts but rather donations protected by the First Amendment. However, the majority opinion of the appellate panel disagreed, stating that the First Amendment does not shield the grant program from scrutiny.
Conclusion:
The temporary pause on grant applications by the Fearless Fund, resulting from the lawsuit filed by the American Alliance for Equal Rights, sheds light on the ongoing challenges faced by underrepresented entrepreneurs in accessing venture capital funding. While the court’s ruling has raised concerns, it has also sparked important discussions about racial bias, equality, and fairness within the venture capital industry. The ultimate outcome of this legal battle will have significant implications for the future of inclusive entrepreneurship and funding practices.
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