A nonprofit fund for Black female entrepreneurs, which is being federally sued in a case challenging the use of race-based philanthropy, is getting an assist from two of the nation’s leading nonprofit membership organizations whose leaders say giving is a constitutionally permitted form of free expression protected by the First Amendment.
Independent Sector and the Council on Foundations, both based in Washington, D.C., filed amicus curiae (a joint friend-of-the-court brief) defending the Atlanta-based Fearless Foundation’s grantmaking as a legitimate expression of its founders’ values aimed at lifting historically underrepresented groups. The foundation has a mission to bridge the gap in venture capital funding for women-of-color business owners through scalable grantmaking and mentorship, including a competition in which successful entrants can receive grant awards of $20,000 each.
Lawyers for the nonprofit American Alliance for Equal Rights (AAER) filed a complaint and request for a preliminary injunction this past August barring the foundation from continuing with the grant program, which they alleged in the filing violated Section 1981 of the Civil Rights Act of 1866. The Northern District of Georgia federal court in Atlanta denied the injunction request, which is now on appeal before the U.S. Court of Appeals for the 11th Circuit, also in Atlanta. At issue is whether the use of race as a criterion in grantmaking violates the civil rights law that was enacted 157 years ago to protect formerly enslaved people from racial discrimination.
The leader of the plaintiff organization, Edward Jay Blum, is a conservative legal activist who successfully used the same law to challenge race-based admission policies by Harvard University and the University of North Carolina earlier this year. Both cases culminated in a U.S. Supreme Court ruling in this past June overturning affirmative action in higher education, which the plaintiff’s attorneys now argue in two separate but related cases should result in the end of race-based philanthropy and corporate diversity programs as well. The latter dispute is currently before the U.S. District Court for the Southern District of Florida in Miami.
In a joint statement, leaders of Independent Sector and the Council on Foundations argued philanthropies and individuals have a right to donate to charitable causes that align with their values, including when it comes to supporting historically marginalized groups. “Any argument that it’s discrimination to help women of color gain opportunity in a field where they are underrepresented ignores the history of our nation,” said Akilah Watkins, president and CEO of Independent Sector. “It’s also a blatant attack on the right to free expression that the First Amendment affords everyone who gives.”
Kathleen Enright, president and CEO of the Council on Foundations, echoed the statement. “The American spirit of generosity plays out in ways as diverse as we are, precisely because giving is about supporting the causes that matter to each of us,” she said.
Blum, founder of the American Alliance for Equal Rights, countered that the framers of the nation’s civil rights laws didn’t provide allowances for racial discrimination to continue based on notions of which groups were overrepresented or underrepresented in particular fields. Leaders of three conservative think tanks — the Manhattan Institute in New York City, the Buckeye Institute in Columbus, Ohio, and the American Civil Rights Project in Dallas — have since signed on to a joint amicus curiae brief of their own supporting that position.
“A useful way of determining the fairness and ultimately the legality of a policy is to apply the ‘shoe on the other foot’ test,” Blum told The NonProfit Times. “In the case of the Fearless Fund, would a different venture capital fund’s requirement that only white men are eligible for its funding and support be fair and legal? If the answer is no, then it must follow in the law that racially exclusive policies that target a different race and sex must be unfair and illegal as well.”
Fearless Foundation leaders could not be reached for comment but have previously said that only 0.39% of the $288 billion deployed by venture capital firms in 2022 went to women of color business founders, according to data on the group’s website. Blum, however, counters that most such funding is directed to businesses in specific fields with high financial upside such as artificial intelligence, biopharmaceuticals, renewable energy, medical devices, and software that typically require their principals to have advanced degrees in engineering and science. Any resultant funding gaps are “never a sufficient justification to exclude certain men and women from public programs by race or ethnicity,” he argues.
Independent Sector and Council on Foundations leaders have since called on colleagues to sign a sector-wide petition supporting the right for individuals and philanthropies to give in line with their values. More than 100 have already done so, including leaders of the National Council of Nonprofits in Washington, D.C. Shannon McCracken, CEO of The Nonprofit Alliance in Washington, D.C., said leaders of her organization are aware of the petition as well but haven’t yet decided whether to sign on. “We are reviewing it and have not yet made a decision,” she said.
