After the supreme Court ended the practice of race-conscious admissions in higher education in 2023, conservative lawsuits sprung up against entities that have tried to level the playing field for women and People of Color who have been disproportionately left out of venture capital funding. A 2023 study from Deloitte, Venture Forward, and the National Venture Capital Association (NVCA) noted that Black and Hispanic female employees comprised only 2 percent of investment professionals and partners among venture capital firms.
For this reason, many sustainable and responsible investors have been supporting funds and programs that help female entrepreneurs of color in particular. One such fund, Fearless Fund—based in Atlanta, Ga.—had the Strivers Grant Contest that provided $20,000 to Black female entrepreneurs. A high-profile lawsuit filed by the American Alliance for Equal Rights (AAER) challenging the program on racial discrimination grounds was upheld this summer by a U.S. federal court of appeals panel. The panel suspended the grant program by ruling that AAER is likely to prevail in its lawsuit claiming that the program is discriminatory.
Last month, this lawsuit was settled out of court. While the Strivers Grant Contest, which was already in its final stage, will end as part of the settlement, the organization will still invest in and support organizations that assist under-resourced Black entrepreneurs.
Investors and grant makers committed to advancing racial equity and justice are pleased that the judicial system will not set a legal precedent to impede investing in and giving to companies and initiatives that close the racial wealth gap. They can continue to make investments in these initiatives that are building the economic power of people and communities that have been marginalized by racist practices for decades.
“Importantly, the agreement is very narrow and does not restrict or relate to any other investment or charitable activity of the Fearless Fund or the Foundation going forward,” said Alphonso David, President and CEO of the Global Black Economic Forum and co-counsel to the Fearless Fund and Fearless Foundation, in a recent news article. “The impact of resolving this matter is significant in that a decision by two judges on the 11th Circuit will not bind the country. The Fearless Fund can now continue their work toward expanding economic opportunity.”
The notion that investment and philanthropic programs that exclude certain individuals because of their race is unjust and polarizing. It is also entirely misguided considering that longstanding lending and equity investment practices towards women and People of Color have concretized inequality based on misogyny and racism. Rectifying centuries of injustice is entirely warranted and justified. It is not racist to fight back against racism. Natural Investments continues to invest in entrepreneurs and communities of color in an effort to cultivate their economic power.
