Appeals court blocks grant contest for Black women-run businesses

Over the weekend, a federal appeals court temporarily blocked a contest from awarding grants to businesses that are majority-owned by Black women. That prevents the program, run by Atlanta-based venture capital firm Fearless Fund, from gong on while a lawsuit by the American Alliance for Equal Rights — run by conservative activist Edward Blum — moves forward.

It’s one of a number of legal challenges being made against racial diversity efforts in the workplace.

Lawsuits like the one happening in Atlanta could have a chilling effect on diversity, equity and inclusion efforts across the business world.

“I think that they’re designed to cause people to withdraw,” said Stacy Hawkins, a law professor at Rutgers, who’s also run corporate diversity programs.

Hawkins said that employers might roll back diversity initiatives even if they’re perfectly legal, “because they fear now that there is going to be some consequence associated with continuing that conduct.”

There could also be fallout for Black entrepreneurs who are seeking funding.

“We’re sort of, kind of reactionary herd animals,” said Sarah Kunst, who runs the venture capital firm Cleo Capital.

Some investors could press pause on any DEI efforts they worry could get them sued, but Kunst said that it’s a chance for all venture capitalists to review their investing practices and make sure they are funding every entrepreneur with a good idea — including women of color.

“If you’re an investor who historically has not paid enough attention to Black women as a demographic to back, you’re leaving money on the table,” she said. “And that means you’re not doing your job very well.”

In the first half of 2021, Black women received less than 0.4% of all venture funding in the U.S,, according to Crunchbase. That’s despite being about 8% of the total population.

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