Conservative legal challenges to grant programs and affirmative action are raising concerns among Black entrepreneurs and business leaders. On June 2, a three-member panel of the U.S. Court of Appeals for the Eleventh Circuit ruled that the Fearless Fund, a Black-woman owned venture capital firm in Atlanta, violated the 1866 Civil Rights Act by awarding monetary grants to qualified Black women. The judges declared that grants disbursed by the nonprofit arm of the Fearless Fund 'likely violated the federal Civil Rights Act of 1866,' casting doubt on the future of diversity, equity, and inclusion (DEI) programs across the country [bde82014]. The ruling is in direct conflict with the aims of DEI programs and is seen as a setback in the fight against racial disparities in venture capital funding. The Fearless Fund has directed more than $30 million to over 41 enterprises run by women of color. The lawsuit is part of a broader campaign by Gov. Ron DeSantis and other extremist Republicans to dismantle DEI efforts in Florida and across the country. Several states have passed anti-DEI laws, forcing the closure of multicultural and LGBTQ+ centers and hindering college staff working on issues such as financial aid and sexual assault. Venture capital investments in Black-founded startups have plummeted by 45% in 2022 [bde82014]. Black entrepreneurs already face disparities in access to capital and funding, with higher loan rejection rates and lower venture capital funding. The lawsuits are seen as a question of fairness by the conservative group American Alliance for Equal Rights (AAER), while civil rights activists argue that they could perpetuate systemic racism. If successful, these lawsuits could have implications for diversity, equity, and inclusion initiatives. Black entrepreneurs often lack generational wealth and collateral needed for loans, making it difficult to start businesses without financial support. These legal challenges come at a time when Republican lawmakers are increasingly opposing diversity initiatives, and the conservative majority on the Supreme Court is undermining affirmative action. Black business leaders stress the importance of an equal playing field and support for Black entrepreneurs to address the racial wealth gap and promote economic parity and justice. Opponents of workplace diversity programs are using Section 1981 of the Civil Rights Act of 1866 to challenge equity policies and funding for minority-owned businesses. The American Alliance for Equal Rights, led by conservative activist Edward Blum, is using the law to go after the Fearless Fund, a venture capital fund that invests in businesses owned by women of color. The 1981 section has been used to challenge other companies and institutions, including Progressive and Pfizer. The cases are being closely monitored as the battle over racial considerations shifts to the workplace following the Supreme Court's ruling on affirmative action in college admissions. Section 1981 grants individuals the same rights and benefits as white citizens regarding contractual relationships. The standard of proof for the 1981 section is high, and it requires the plaintiff to show that race was the central cause in denying a contract opportunity. The case against the Fearless Fund could potentially end up at the Supreme Court. Similar lawsuits have already led some companies to change their criteria for diversity fellowship programs [d0b730ff]. The article also calls for Black people to use their spending power and financial literacy to support start-ups, venture capital projects, and businesses owned by people of color [bde82014].
In a separate development, the Hewlett Foundation, founded by Bill Hewlett and his wife Flora in 1966, is facing accusations of funding racist 'Diversity, Equity, and Inclusion' (DEI) initiatives. The foundation is accused of spending millions to support illegal and racist DEI initiatives across America. Specific examples include providing funding to organizations that encourage the takeover of higher learning institutes in support of anti-Semitic international actors. The foundation has given funds to organizations such as the Action Center on Race & The Economy Institute, which stands with those organizing in support of Hamas, and Achieving the Dream, an organization promoting equity in education. The foundation has also provided funding to the Alameda County Office of Education, the American Constitution Society for Law and Policy, the American Library Association, the Asia Society, the AXIS Dance Company, Black Feminist Future, the Center for American Progress, and the Center for Black, Brown, and Queer Studies. America First Legal (AFL) is calling for the foundation to stop funding these organizations and to uphold the constitutional mandate of equality for all [ee71a1bc].