Key Takeaways
- • The Atlanta-based Fearless Fund agreed to a settlement with the American Alliance for Equal Rights, ending its lawsuit over the $20,000 Strivers Grant Contest for Black women business owners, both sides announced Wednesday.
- • The settlement followed a 2-1 US Court of Appeals for the 11th Circuit ruling two months earlier that ordered the program suspended, finding the group was likely to prevail on its claim under section 1981 of the 1866 Civil Rights Act.
- • Fearless Fund CEO Arian Simone announced a new $200 million debt fund offering loans of $5,000 to $250,000 to under-resourced founders.
- • Lawyers on both sides framed the settlement as narrow, and no precedent-setting ruling was issued, leaving the legal question on race-exclusive programs unresolved.
Summary
The Fearless Fund, a venture capital firm based in Atlanta, has closed its Strivers Grant Contest, which provided $20,000 to businesses majority-owned by Black women, as part of a settlement with the American Alliance for Equal Rights. The conservative group, led by activist Ed Blum, had sued over the program, alleging it discriminated on the basis of race. Both sides announced the settlement on Wednesday, according to the Associated Press.
The settlement came two months after a 2-1 ruling by a US federal appeals panel in the 11th Circuit, which ordered the firm to suspend the contest. The majority found the American Alliance for Equal Rights was likely to prevail in its claim that the program violated section 1981 of the 1866 Civil Rights Act. Two judges appointed by former President Donald Trump sided with Blum; Judge Robin Rosenbaum, an appointee of former President Barack Obama, dissented, arguing that none of the anonymous plaintiffs demonstrated a real intention to apply for the grants.
Blum said race-exclusive programs "are divisive and illegal," and that he had urged the firm to open the contest to women of all races rather than shut it down. Arian Simone, CEO and co-founder of the Fearless Fund, said she was pleased to put the lawsuit behind the firm and continue its mission. Alphonso David, president and CEO of The Global Black Economic Forum and counsel to the Fearless Fund, said the Strivers Grant was a small part of the firm's operations and had already been scheduled to wind down, and that the settlement "is very narrow" and will not affect its investments or other activities. Ben Crump, the civil rights attorney who represented the Fearless Fund, said the settlement avoided a Supreme Court ruling that could have eliminated race-based funding.
The Fearless Fund, which counts JPMorgan Chase & Co. and Mastercard among its foundation backers, also announced a new $200 million debt fund that will offer loans of $5,000 to $250,000 to under-resourced founders. The case is viewed as a bellwether in the broader legal challenges conservative groups have brought against corporate diversity, equity and inclusion programs, following the Supreme Court's decision ending race-conscious college admissions. Lowe's and John Deere have recently altered or dropped DEI programs amid similar pressure. David Glasgow of New York University's Meltzer Center said companies settling such cases avoid the risk of adverse rulings that could cause wider damage.
The settlement came two months after a 2-1 ruling by a US federal appeals panel in the 11th Circuit, which ordered the firm to suspend the contest. The majority found the American Alliance for Equal Rights was likely to prevail in its claim that the program violated section 1981 of the 1866 Civil Rights Act. Two judges appointed by former President Donald Trump sided with Blum; Judge Robin Rosenbaum, an appointee of former President Barack Obama, dissented, arguing that none of the anonymous plaintiffs demonstrated a real intention to apply for the grants.
Blum said race-exclusive programs "are divisive and illegal," and that he had urged the firm to open the contest to women of all races rather than shut it down. Arian Simone, CEO and co-founder of the Fearless Fund, said she was pleased to put the lawsuit behind the firm and continue its mission. Alphonso David, president and CEO of The Global Black Economic Forum and counsel to the Fearless Fund, said the Strivers Grant was a small part of the firm's operations and had already been scheduled to wind down, and that the settlement "is very narrow" and will not affect its investments or other activities. Ben Crump, the civil rights attorney who represented the Fearless Fund, said the settlement avoided a Supreme Court ruling that could have eliminated race-based funding.
The Fearless Fund, which counts JPMorgan Chase & Co. and Mastercard among its foundation backers, also announced a new $200 million debt fund that will offer loans of $5,000 to $250,000 to under-resourced founders. The case is viewed as a bellwether in the broader legal challenges conservative groups have brought against corporate diversity, equity and inclusion programs, following the Supreme Court's decision ending race-conscious college admissions. Lowe's and John Deere have recently altered or dropped DEI programs amid similar pressure. David Glasgow of New York University's Meltzer Center said companies settling such cases avoid the risk of adverse rulings that could cause wider damage.
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