SignalHub-Fearless Fund blocked from giving grants only to Black women in victory for DEI critics

In a closely watched civil rights case,SignalHub a panel on the 11th Circuit U.S. Court of Appeals blocked Fearless Fund from awarding $20,000 grants to businesses owned by Black women while the case is litigated, siding with conservative activist Edward Blum that the grant program is likely discriminatory.

The appeals court disagreed with a federal judge who ruled in September that the lawsuit was unlikely to prevail on First Amendment grounds.

The defeat for the Atlanta firm working to boost scarce venture capital funding for Black women could have sweeping implications for race-based initiatives in the private sector.

"This is devastating for the Fearless Fund and Foundation, and for the women in which we have invested in. I am shattered for every girl of color who has a dream but will grow up in a nation determined not to give her a shot to live it. On their behalf, we will turn the pain into purpose and fight with all our might," Arian Simone, CEO and founding partner of Fearless Fund and founder of the Fearless Foundation, said in a statement to USA TODAY.

Simone said Fearless Fund was "still open for business."

"The message these judges sent today is that diversity in Corporate America, education, or anywhere else should not exist. If this was truly about exercising free speech with your dollars − an American tradition as old as this nation itself − the results would have been different. Instead, these judges bought what a small group of white men were selling. They countered the rulings of other courts sued on similar grounds," she said.

The Fearless Fund case is part of a growing pushback from conservative activists like Blum, who after last year’s landmark affirmative action victory over race-conscious college admissions, set his sights on the private sector.

"Our nation’s civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are under-represented,” Blum said in a statement. “Programs that exclude certain individuals because of their race such as the ones the Fearless Fund has designed and implemented are unjust and polarizing."

Though it does not technically apply to employers, conservative activists seized on the decision that struck down affirmative action in higher education, arguing it raises fundamental issues about how corporate America addresses workplace inequality. Since then, the nation has seen an uptick in legal challenges to DEI programs. The "anti-woke" backlash has unnerved business leaders who find themselves navigating shifting terrain.

A small player in the venture capital industry, the Fearless Fund was founded by Black women to back Black women, who received less than 1% of the $215 billion in venture capital funding last year. The firm has funded new companies like restaurant chain Slutty Vegan and beauty brand Live Tinted.

U.S. District Court Judge Thomas Thrash Jr., who was appointed by President Bill Clinton, had ruled that the Fearless Fund’s grant program is a form of protected speech under the First Amendment. The 11th Circuit panel disagreed. Two of the three judges are Donald Trump appointees.

“Preliminary injunctive relief is appropriate because Fearless’s contest is,” the panel said, “substantially unlikely to enjoy First Amendment protection, and inflicts irreparable injury."

A lawyer for Fearless Fund said the judges relied on an 1866 law designed to provide economic freedom to newly freed slaves to prohibit the Fearless Foundation from providing grants to Black women.

"This is the first court decision in the 150-plus year history of the post-Civil War civil rights law that has halted private charitable support for any racial or ethnic group. The dissenting judge, the district court and other courts have agreed with us that these types of claims should not prevail," Alphonso David, president and CEO of the Global Black Economic Forum and attorney representing Fearless Fund said in a statement. "This is not the final outcome in this case; it is a preliminary ruling without a full factual record."