The Fearless Fund will shutter its grant program for Black women to end a lawsuit with affirmative action opponents, marking a major retreat by diversity advocates grappling with a legal environment in which race-specific programs are proving nearly indefensible in certain jurisdictions.
By Julian Mark
and “Race-exclusive programs like the one the Fearless Fund promoted are divisive and illegal,” said Edward Blum, the conservative activist behind the Fearless Fund lawsuit and architect of a broad campaign to dismantle diversity, equity and inclusion (DEI) initiatives. “Opening grant programs to all applicants, regardless of their race, is enshrined in our nation’s civil rights laws and supported by significant majorities of all Americans.”
The Fearless Fund challenge was among the first launched in the private sector after the Supreme Court overturned race-conscious admissions at Harvard University and the University of North Carolina at Chapel Hill in June 2023; it was seen as a test case for how the high court’s logic of race neutrality would extend to the private sector. Legal support lined up on both sides, with Fearless Fund backers calling the case an inflection point in the battle for racial equity.
“This is the life and blood of the civil rights movement,” the Rev. Al Sharpton, a civil rights leader and supporter, said in April just before the 11th Circuit panel ruled against the Fearless Fund.
But Sharpton said in an interview Wednesday that he counseled Fearless Fund chief executive Arian Simone to settle the case given its poor odds for victory in light of the 11th Circuit ruling and the Supreme Court’s conservative supermajority. He described the settlement as a “sacrifice” and “painful decision.”
“If we had fought, and Blum and them wanted to go all the way to the Supreme Court, we’d have lost the fight for generations,” Sharpton said.
Attorneys for the venture firm called the settlement “narrow” and also suggested the fund wanted to limit the case’s scope to the 11th Circuit, which has jurisdiction over cases in Florida, Alabama and Georgia.
“The impact of resolving this matter is significant in that a decision by two judges on the 11th Circuit will not bind the country,” said Alphonso David, president and CEO of the Global Black Economic Forum and an attorney in the case. “The Fearless Fund can now continue their work toward expanding economic opportunity.”
From the moment the lawsuit was filed, “I pledged to stand firm in helping and empowering women of color entrepreneurs in need,” Simone said in a statement. “I stand by that pledge today and in fact my commitment remains stronger than ever.”
The Fearless Fund’s decision to not continue its fight in a conservative jurisdiction is a strategy recently embraced by the Biden administration, which has declined to appeal decisions that forced two of the federal government’s oldest affirmative action programs to become race-neutral. Legal experts said the government declined to appeal to avoid losses in higher courts that would set precedents disqualifying other diversity programs.
The settlement comes as a vast array of DEI programs are being challenged in courts around the country. More than 100 lawsuits have been filed since 2021, and the cases have only accelerated since the Supreme Court’s ruling on affirmative action last summer. About 50 such cases are pending around the country, covering programs that range from DEI training to hiring practices to diversity requirements on government boards.
For his part, Blum, who launched the case that culminated in the Supreme Court’s landmark ruling on college admissions, has scored numerous victories in the past year. Some of his lawsuits led major law firms and even the Smithsonian’s Latino museum to drop their race-targeted fellowships.
As the legal risk has risen, firms have been shifting their approach to DEI to guard against potential lawsuits, with some recasting or discarding race-based initiatives. Others have rebranded their programs or overhauled internal DEI teams, and moved away from using racial and gender considerations in hiring and promotion.
The legal onslaught may also be contributing to a chilling effect in funding toward minority-owned start-ups. In 2023, Black-founded start-ups brought in $705 million in funding, just 0.5 percent of total venture dollars allocated in the United States. That marks a 71 percent drop from the previous year, according to Crunchbase, and the lowest amount allocated to Black-owned start-ups since at least 2016. Meanwhile, DEI initiatives aimed at diversifying the tech sector are folding as funding dries up and sentiments turn on diversity efforts.
Jarvis Sam, former chief DEI officer at Nike and founder of the Rainbow Disruption, a DEI consultancy, said Fearless Fund’s settlement and the end of its grant program represent a “big loss for the work that we do.”
Fearless Fund “kind of stood on its own” as a provider of capital for Black female entrepreneurs, who have long struggled to access funding from venture capital firms, Sam noted.
Lauren Hartz, a partner at Jenner & Block and co-chair of the law firm’s DEI protection task force, cautioned that, as a matter of law, the outcome of the Fearless Fund case is relatively limited. Not only is it limited geographically to the 11th Circuit, but the appeals court’s opinion was also only preliminary and did not rule definitively on the case’s merits, she said.
However, she said, “we can expect going forward that Edward Blum and other opponents of DEI will push for a very broad interpretation and application of that decision as they continue to battle DEI programs in courts around the country.”
Mike Delikat, a partner at Orrick and co-founder of the law firm’s DEI task force, said the Fearless Fund’s choice to settle the case was probably a strategic decision to limit the scope geographically.
“At the end of the day, I think it’s preordained how the Supreme Court would rule on this issue,” he said, noting the court’s conservative supermajority and recent stance on affirmative action.
