115: The Fearless Fund

Written September 17, 2024

Photo by Tingey Injury Law Firm on Unsplash

For the past year, I have been holding my breath, waiting to see how this chapter in our country’s history will unfold. It is a collective sensation that many are experiencing right now. Feeling uncertain of what the future will bring and anxiously awaiting an answer. My worries were not about the election like you might assume, but rather anticipating the results of a court case. On Thursday, I opened my morning news app and breathed a sigh of relief. The American Alliance For Equal Rights vs. Fearless Fund was settled.

It has been over a year since affirmative action was overturned in collage admissions. On June 29, 2023, the U.S. Supreme Court ruled that race-conscious affirmative action in college admissions violated the Equal Protection Clause of the U.S Constitution as well as Title VI of the Civil Rights Act of 1964. After the ruling, there was copious public debate on what this meant for the future of diversity, equity, and inclusion. Meanwhile, the lawyer responsible for bringing the case to the courts quietly flew under the radar and just kept working.

Edward Jay Blum is a 72-year-old American white man who has made a career out of litigating cases that oppose classifications and preferences based on race and ethnicity. He’s a very good lawyer and well-organized activist. Since 1990, he has filed over two dozen cases attempting to remove the concept of race from America’s laws, eight of which have made it to the Supreme Court. In the legal world, that’s a lot. In 2014, he founded Students for a Fair Admission, the organization that filled the court case that overturned affirmative action in college admissions.

Nine days following the Supreme Court ruling, the New York Times journalist Lulu Garcia-Navarro interviewed Edward Jay Blum in the article tiled: He Worked for Years to Overturn Affirmative Action and Finally Won. He’s Not Done. It’s an interesting look into the mindset of a man actively changing history.

“Like the vast majority of Americans, I believe that an individual’s race and ethnicity should not be used to help them or harm them in their life’s endeavors. And those life’s endeavors include, you know, if they’re gerrymandered into a voting district because they’re a certain race, if they’re applying for a job that they’re not going to get because they’re a certain race or they’re applying to a college or university that they won’t be admitted to because of their race or ethnicity.”

While the affirmative action case was monumental, it was also limited. The ruling applied to programs or activities that receive federal financial assistance. Private businesses are a different mater. So on August 2, 2023, Blum filed another case aimed at non-profit organizations and private businesses.

The American Alliance for Equal Rights (AAER) alleged that the Fearless Foundation, a venture capitalist firm that supports women of color entrepreneurs, violated the Civil Rights Act of 1866 which prohibits discrimination on the basis of race in the making or enforcement of contracts. In question was a program designed specifically for Black women-owned small businesses which awards grants up to $20,000. The plaintiffs in the case included three anonymous white women business owners who were disqualified from applying for the grant due to their race.

The AAER, the organization that filled the case on behalf of the women, is another non-profit organization formed by Blum. Their mission is to “challenge distinctions and preferences made on the basis of race and ethnicity” and they believe that “the ancient faith that gave birth to our nation’s civil rights laws is the principle that an individual’s race should not be used to help them, or harm them, in their life’s endeavors.” When asked in the New York Times interview if he believed in systemic racism Blum answered:

“No, I do not believe in it. What your question implies is that in the American DNA there is racism. It was founded upon racism. It is part of what this country is. I reject that.

It would be foolish of anyone to say that the experience of African Americans in the United States is not unique in the American experience. But you cannot remedy past discrimination with new discrimination. You cannot remedy the preferences that whites had in our nation’s life with different preferences for different ethnic groups. That cannot be how a multiracial, multiethnic nation maintains its social fabric.”

History tells us a different story, especially when it comes to how resources are distributed.

In 2022, only 2.1% of the total capital invested in venture-backed startups went to women. Companies led by Black women typically received less than 1% of all venture capital investment. When women did receive funding, it was less than half the amount of their male counterparts. According to one study, the average investment for women was $935,000 compared to the $2.1 million invested in companies with male founders.

The mission of the Fearless Fund is to bridge the gap in venture capital funding for women of color. In addition to the grant program, they also invest directly in women owned companies through capital investments and operate a for profit loan program.

If the three anonymous white women business owners named in the lawsuit were truly harmed by lack of funding in venture capitalism, then why not file a lawsuit for gender discrimination, considering only 2.1% of all funding in the industry went to women? Instead, they parted with their female colleagues, aligned with white men, and targeted the racial group that gets the least. Divide and conquer is a tried and true tactic, as old as the concept of race itself. Equity is never the point.

The Fearless Fund won the first round of the lawsuit, but AAER appealed and the U.S. Court of Appeals for the 11th Circuit blocked the grant program, saying the program was “racially exclusionary” and “substantially likely” to violate a federal law prohibiting racial discrimination in contracting. Ironically, that law was originally written to protect the right of African Americans after the Civil War. The question quickly became, would another one of Blum’s lawsuits head to the supreme court? Thankfully no.

Last week, the parties settled the case and Fearless Fund agreed to terminate their grant program. While it may not feel like a win for the defendants, it was the best outcome. Arian Simone, the founding partner and CEO of the Fearless Fund explained that the grant program was already at its conclusion and only one grant was left to award. "If we have to forego that one grant to stay in business to deploy millions, that is definitely a win," she told CBS news.

The Fearless Fund has no plans to take the case to the Supreme Court because the risk is too high. If the ruling were to be upheld, then every non-profit or for-profit program targeted at reducing the racial equity gap would be at risk. Including the Tacoma Black Fund, a local organization that I am on the board of.

This is not the end for Edward Jay Blum or the AAER. They currently have four court cases filed, all of which test the constitutionality of equity policy and practices. One is against Southwest Airlines for a program that provides free round-trip flights to Hispanic students pursuing higher education. Another challenges the Minnesota Board of Social Work for language that requires five of their fifteen Governor-appointed members to be from a community of color or underrepresented communities. The third is aimed at the Smithsonian Institute and their Latino Museum Studies Program which offers internships to Latina and Latino undergraduate students. Finally, AAER is taking on their own colleagues, challenging the Morrison & Foerster Law Firm for a fellowship program that requires applicants to be African American/Black, Latinx, Native Americans/Native Alaskans, and/or members of the LGBTQ+ community. If Blum’s track record holds, at least one of these cases will likely make it to the Supreme Court.

Blum’s argument showcases a crucial and misguided understanding of equity. Counter to his beliefs, systemic racism is very real. The United State of America was founded upon racism (slavery…hello!) and it remains a crucial piece of how we function today.

Working to achieve equity means acknowledging that some groups operate from an unequal starting place and then creating solutions to correct the imbalance. It requires that people in power recognize unfairness and willingly share their resources. Not everyone is willing to do that.

In times like these, we must be diligent. Don’t be tricked by gaslighters who seek to re-gain power and control by distorting reality and forcing us to question our judgment. That's psychological abuse, not justice, even if it comes from the Supreme Court.