Ever since the Supreme Court ruled last year that affirmative action in higher education was unconstitutional, a tidal wave of legal attacks against diversity, equity, and inclusion programs has swept the country. The targets include government programs for businesses owned by people of color, scholarships based on race and other identities, and diversity fellowship programs at law firms and nonprofits, including at the Smithsonian and the American Association of University Women.
So far, the attacks are working. A string of victories by groups opposed to affirmative action has put charities and foundations on the defensive. Some are changing their programs to avoid costly lawsuits; others are settling litigation to avoid court rulings that could create adverse precedents.
A notable defeat for DEI occurred in early September when the Fearless Foundation, the charitable arm of the Fearless Fund venture-capital firm, agreed to settle its case with the American Alliance for Equal Rights, led by conservative activist Edward Blum, and end its grant program for businesses owned by Black women. The outcome is disappointing and further proof that the tsunami of litigation is having a chilling effect on DEI efforts by nonprofits.
Still, it’s hard to blame the Fearless Foundation for settling. The foundation’s case seemed doomed after an 11th Circuit Court of Appeals panel voted two to one in June to allow an injunction against its grant program to stand. A ruling on the merits would have created binding precedent in three Southern states. So perhaps the foundation’s decision to withdraw and leave the fight for another day was the best choice.
But is this even a winnable fight? Should charities and foundations just give up? While the challengers to DEI programs may seem to have the upper hand right now, we’re still in the early days of this battle, and the law is more uncertain than it may appear. The Supreme Court’s affirmative-action decision was a case of constitutional law, involving the equal-protection clause, which applies to government entities or to private organizations, such as universities, that receive federal financial assistance. Last summer’s ruling against admission policies at Harvard University and the University of North Carolina involved access to education, not scholarships or private charitable assistance.
Further, “affirmative action” is a legal term, commonly associated with employment and higher education, and it has its own legal limitations in those contexts. It is a mistake to put charitable “affirmative action” on the same legal playing field.
The Supreme Court has never held, for example, that private charitable efforts at affirmative action are wrong or illegal. Decades of precedent supporting affirmative-action efforts by charities remains intact.
And even though the Fearless Foundation decided to settle, it bears repeating that the 11th Circuit panel’s approach involved an unprecedented interpretation of a Civil War-era civil-rights statute that would have extended it to prohibit private charitable conduct. This would deploy the law in a way Congress never intended: to handcuff private efforts to address inequality. This interpretation is neither reasonable nor inevitable.
High Stakes
As more courts start to understand the stakes — that philanthropic freedom is under attack — the outcomes of some cases may start to change. Because what is happening right now is actually pretty radical. Federal and state courts, and state legislatures, are suddenly in the business of telling charities what they can and cannot do and whom they may and may not fund. And they are using antidiscrimination language to do it, creating a false equivalence between invidious and remedial forms of discrimination.
Think back to the famous 1958 First Amendment freedom-of-association case — NAACP v. Alabama. The state of Alabama demanded the NAACP’s membership lists in an effort to shut down the group and intimidate its supporters. The NAACP’s purpose? To advance the economic and social interests of Black people in America. Like the NAACP, the Fearless Foundation, a charity formed to close the economic funding gap for businesses owned by Black women, was attacked and effectively forced to shut down because it used race as a criterion to help those businesses.
This is an assault on the mission of a private charity, plain and simple, aided by a court through its interpretation, ironically, of a civil-rights law designed primarily to help Black people.
The United States has a long tradition of encouraging and protecting private efforts to fix social problems without government interference. In fact, a basis for the independent nonprofit sector is as an alternative to government, a place to promote innovation, diversity of viewpoint, and social action. Charities exist to fix social problems. That’s what they do. It’s what we want them to do.
Not all these DEI cases raise the same issues or invoke the same laws. Civil-rights law is complicated. And as always in formulating a charitable mission and designing programs to further that mission, charities and foundations should be sure that any use of racial or other identity-based criteria are central to their mission. Not every use of race is remedial or charitable.
At the same time, what charities can and must fight for is the freedom to pursue privately funded solutions to social problems. And if the courts continue to pervert the interpretation of civil-rights protections, charities should take the fight to Congress.
Fortunately, we are far removed from segregation and Jim Crow laws. But we are nowhere close to a society where race and other forms of identity are irrelevant in social and economic life. The attacks on DEI-related philanthropic programs wrongly assume that we now live in an equal-opportunity world and wrongly assert that discrimination in any form, even that designed to help fix social problems, is counter to public policy. In reality, we are waging a new civil-rights battle for public policies that allow charities to do the right thing.
