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The Fearless Fund, DEI, and Attacks on Philanthropic Freedom

Chronicle of Philanthropy

April 3, 2024

Anyone who believes foundations have the right to decide who and what they fund should be concerned about the lawsuit brought against the Fearless Fund, and its associated foundation, over a grant contest exclusively for Black women. That includes those of us who don’t support race-specific policies and programs.

The organization behind the litigation currently winding its way through the courts is the American Alliance for Equal Rights, the nonprofit run by conservative activist Edward Blum. That same group successfully challenged college affirmative action admissions policies before the Supreme Court last summer.

Like that case, this one is based on what amounts to a reverse racial discrimination claim. It charges that the Strivers Grant contest operated by the Fearless Fund, an Atlanta-based venture capital firm, and its Fearless Foundation, is racially discriminatory because provides $20,000 prizes exclusively to Black women entrepreneurs.

Just as it sued on behalf of Asian students in the Students for Fair Admissions vs. Harvard affirmative action case, the Alliance is representing business owners who, it notes, have all the necessary qualifications for a Strivers prize — except for their race.

A Troubling Precedent

Though the cases appear similar, there’s a key difference that should trouble all who value the independence of American philanthropic institutions — even skeptics of affirmative action and diversity, equity, and inclusion programs. Quite simply, the Fearless Fund prize is awarded by a 501(c)(3) nonprofit foundation. As such, it should have the discretion to conduct its grant program as it chooses.

Consider the details of this complex case. The Alliance argues that the Fearless prize is discriminatory because it violates the Civil Rights Act of 1866, which bars race discrimination in private contracting. In its court brief, the organization contends that agreeing to the terms of the grant constitutes a contract with Fearless, which, under this logic, is “operating a racially-discriminatory program that blatantly violates the guarantee of race neutrality” as spelled out in the Civil Rights Act.

On the other side, attorneys for the Lawyers’ Committee for Civil Rights Under Law assert that the claims of Blum’s group run contrary to the original intent of the Civil Rights Act, which sought to rectify laws that prevented Black people from entering into contracts and being full participants in the economy.

But where would the Lawyers’ Committee for Civil Rights stand if the Fearless program were limited only to white people? It would likely challenge the program as a civil rights violation, perhaps under the terms of Shelley vs. Kraemer, which held that racially restrictive housing covenants could not be enforced.

The technicalities of contracting, however, shouldn’t be the focus of this case. Attorneys for the Fearless Foundation argue that as a nonprofit grant maker it has a First Amendment right to “expressive activity” in deciding where to focus its grant making. By striking down the Fearless contest, the courts could undermine the basic tenets of what the conservative Philanthropy Roundtable calls “philanthropic freedom”— grant makers’ discretion to decide what problems they want to address.

The Fearless Fund, which has corporate support from JPMorgan Chase among others, is clear about its approach to addressing what it sees as a social ill: “Our goal is to create a world where women of color have equal access to the resources they need to succeed in business,” according to its “vision statement.”

Philanthropic Discretion

It may be that this makes the grant program so race-specific as to be a civil rights violation. But would any grant program that had the effect of targeting Black people fall in the same category? What about Julius Rosenwald’s famous support for schools for rural Southern Black children during Jim Crow? Or a foundation that limited its higher education support to historically Black colleges and universities? Should philanthropy not have discretion — including the right to over-emphasize race in its decision making?

That argument led one federal judge in September to deny the Alliance’s attempt to forbid Fearless from awarding the grants, stating that the organization was protected by the First Amendment. But soon after, the 11th Circuit Court of Appeals issued an injunction barring Fearless from proceeding with its grant program, writing that, “although the First Amendment protects the defendants’ right to promote beliefs about race, it does not give the defendants the right to exclude persons from a contractual regime based on their race.”

Attorneys for Fearless appealed the decision in January, but the Alliance may well prevail. That would be unfortunate. One doesn’t need to approve of the Fearless prize to accept the organization’s right to award it. Indeed, nothing would preclude the Alliance, or those who sympathize with its efforts, from criticizing Fearless — not in a court of law but in the court of public opinion. As in the college admissions case, a strong argument could be made that any disadvantaged Atlanta residents seeking to start their own businesses deserve help — and that race and disadvantage are not always synonymous.

That such an argument can be intellectually defensible but not legally binding leads to another important point raised by this case: Supporting philanthropic freedom shouldn’t prevent critics from speaking out about the focus of grant making, regardless of where they fall on the political spectrum. This is especially important for those of us who see major foundation giving as leaning too heavily toward progressive ideals, particularly as they relate to issues such as DEI and climate change.

In other words, I may “disapprove of what you say, but I will defend to the death your right to say it.” Philanthropic freedom is both a necessary but insufficient prerequisite for prudent grant making.