US judge refuses to block venture capital fund's grants for Black women

By Nate Raymond

(Reuters) -A federal judge in Atlanta on Tuesday rejected a bid to bar a small venture capital fund from awarding grants to businesses run by Black women, in a case brought by the anti-affirmative activist behind the successful U.S. Supreme Court challenge to race-conscious college admissions policies.

U.S. District Judge Thomas Thrash during a hearing denied a request by Edward Blum's American Alliance for Equal Rights for a preliminary injunction blocking Fearless Fund from considering applications for grants only from businesses led by Black women.

Blum's group had asked the judge to temporarily block the Fearless Fund's "racially exclusive program" while the court considered the merits of the case. The judge said he would issue a written decision later.

With a Saturday deadline approaching for this year's grant applications, Blum's organization quickly filed an emergency appeal asking the Atlanta-based 11th U.S. Circuit Court of Appeals to prevent Fearless Fund from picking a grant winner.

It said Thrash's decision rested on a single ground: That Fearless' charitable grant program was a form of speech protected by the U.S. Constitution's First Amendment, a holding that Blum's group said "would obliterate nondiscrimination law."

Fearless Fund founders Arian Simone and Ayana Parsons in a joint statement said they were pleased that Thrash rejected Blum's attempt to shut down their grant program, part of their initiative to address ongoing racial disparities in the venture capital arena.

"We realize there is still a long road ahead, but today we remain fearless and steadfast in creating pathways that empower women of color entrepreneurs," Simone and Parsons said.

The lawsuit is one of three that Blum's Texas-based group had filed since August challenging grant and fellowship programs designed by the venture capital fund and two law firms to help give Black, Hispanic and other underrepresented minority groups greater career opportunities.

A different group founded by Blum, who is white, was behind the litigation that led to the June decision, powered by the Supreme Court's 6-3 conservative majority, declaring race-conscious student admissions policies used by Harvard University and the University of North Carolina unlawful.

According to the Fearless Fund, businesses owned by Black women in 2022 received less than 1% of the $288 billion that venture capital firms deployed.

The fund aims to address that disparity, and counts JPMorgan Chase, Bank of America and MasterCard as investors. It has invested nearly $27 million in 40 businesses led by minority women since its founding in 2019.

It also provides grants, and Blum's lawsuit took aim at its Fearless Strivers Grant Contest, which awards Black women who own small businesses $20,000 in grants and other resources to grow their businesses.

The lawsuit alleges that the program's criteria illegally excludes applicants who are white, Asian or other races, in violation of Section 1981 of the 1866 Civil Rights Act.

That federal law was enacted after the U.S. Civil War to guarantee all people the same right to make and enforce contracts "as is enjoyed by white citizens."

While the law was adopted with formerly enslaved Black people in mind, courts have interpreted it for decades as protecting white people from racial discrimination as well.

(Reporting by Nate Raymond in Boston; Editing by Will Dunham and Alexia Garamfalvi and David Gregorio)