Two prominent philanthropy organizations on Tuesday filed a friend of the court brief supporting a foundation named in a lawsuit, which tests whether last summer’s Supreme Court decision barring affirmative action in college admissions can be applied to philanthropic grant making.
The Council on Foundations and Independent Sector’s amicus brief comes in response to a lawsuit filed by the nonprofit American Alliance for Equal Rights, founded by conservative legal activist Edward Blum. Blum’s group Students for Fair Admissions successfully argued two cases before the Supreme Court that resulted in a ruling against affirmative-action admissions policies at Harvard University and University of North Carolina.
In the current case, the American Alliance for Equal Rights argues that the Fearless Fund Management, LLC, an Atlanta venture-capital fund, and its associated philanthropy, the Fearless Fund Foundation, discriminated against applicants from other racial groups by offering a $20,000 grant program exclusively to Black women.
The suit says the fund violates Section 1981 of the 1866 Civil Rights Act, the first federal law prohibiting racial and ethnic discrimination when making and enforcing contracts.
In response, the amicus brief argues that philanthropic grant making is an example of free expression protected by the First Amendment.
“The First Amendment protects expression not only from unconstitutional laws, but also unnecessary litigation that chills speech,” the groups wrote in the brief.
The brief states that directing an organization where to donate alters its speech.
“Prohibiting the Foundation from directing its generosity to Black- women-owned businesses, or forcing it to donate equally to non-Black-owned businesses would indisputably dilute, if not completely impede, the Foundation’s expression of its message,” the brief says.
Since the increased calls for racial justice after the police murder of George Floyd in 2020, progressive philanthropy has emphasized grants to Black-led organizations or ones that promote racial equity. For foundations and nonprofits that focus on removing racial barriers to success, the lawsuit is a “direct attack on philanthropy,” according to Kathleen Enright, president of the Council on Foundations.
Enright said that the Reconstruction-era civil-rights law on which the American Alliance for Equal Rights is basing its case was passed to ensure that previously enslaved Black Americans could have the same rights as their white counterparts.
“To use that section of the Civil Rights Act in this case is a bastardization of its intent,” she said.
Other legal experts, however, contend that any discrimination based on race is intolerable.
The Supreme Court’s decision in the Students for Fair Admissions cases made clear that promoting diversity as a rationale for discriminating on the basis of race in college admissions is unconstitutional, said Jonathan Berry, a lawyer who was a U.S. Department of Labor official during the Trump administration. The decision, he said, could be applied to other activities, including limiting philanthropic grants to people of a certain race.
Rather than making grants to members of a specific race to right historic wrongs, Berry said, grant makers should tailor their grant making to specific instances of injustice.
“Using race as a proxy for injustice itself leads to all manner of injustice and should not be perpetrated,” he said.
Fallout From Affirmative-Action Decision
Since the Students for Fair Admissions decisions, the nonprofit sector has been on edge because it isn’t clear whether the ruling would extend to charities, said Scott Curran, a philanthropy adviser and former general counsel of the Clinton Foundation.
At the heart of the current lawsuit is the question of whether a grant is considered a contract that benefits both parties involved, Curran said, adding that grants have historically been seen as gifts that are outside of contract law, which forbids discrimination.
Still, the lines between the two are not clearly drawn, Curran said, which puts a big target on the back of wealthy foundations that make grants based on race.
Small organizations that rely on foundation grants are also exposed, especially if lower court decisions get appealed, said Gene Takagi, principal of the NEO Law Group, which represents charities.
“Small nonprofits are low-hanging fruit and easy targets because they can’t put up a defense that’s going to take it up through the court system unless they’ve got money backing them up,” he said. “They’re probably going to just give in and say, ‘OK, we’ll cut out those programs.’”
Philanthropy leaders including Akilah Watkins, president of Independent Sector, have complained that the summer’s Supreme Court decision has had a “chilling effect” on grant making that aims to achieve racial equity. Most grant makers have continued their support, she said, but some have started to target their grants to grantees serving people in certain ZIP codes or of certain income levels, which can be used as proxies for race.
Doing so, she said, ignores the reality of racial discrimination.
“When we embed the challenges of a race within economic proxies or social proxies, it doesn’t allow us to have a more full and robust conversation about a particular group’s historical and contemporary structural barriers,” she said. “It changes the conversation.”
