When Transparency Becomes a Trap: Lessons from the Fearless Fund Ruling?

My eldest daughter (she’s 16) has plans to build a business alongside her studies after completing her GCSEs next week. She is my child, as this is probably business idea number four as we have gone through various iterations of lip gloss, t-shirt and drop shipping enterprises since she was 11 years old. As the supportive mum, her IOUs, “I’ll pay you back, mum, I promise,” are getting longer by the day, and I am the owner of a gazillion website domain names and a few Shopify accounts to boot. ?

I think about her and others like her—young Black women aspiring to be their bosses and make their mark as budding entrepreneurs.

Over the last year, I've been closely following the case of the Fearless Fund , an Atlanta-based, Black woman-owned venture capitalist firm. Recently, a US federal court of appeals panel suspended the firm’s Fearless Strivers Grant Contest, a program designed to support Black female business owners with a $20,000 funding award. The team at Fearless Fund have been pivotal in supporting Black female entrepreneurs; however, in a 2-1 ruling, the panel found that the grant program likely violates Section 1981 of the Civil Rights Act of 1866, which prohibits race-based contract decisions.

This ruling, driven by conservative activism, highlights the ongoing challenges faced by Black entrepreneurs in a legal system historically skewed against us. We are far from reaching any form of equality, which necessitated the Civil Rights Act of 1866 to give redress for formerly enslaved people.

The Civil Rights Act of 1866 was designed to integrate formerly enslaved Black Americans fully into society, ensuring they enjoyed the same rights as white citizens. However, Black (and Hispanic) women-owned businesses receive less than 1% of venture capital funding. Between 2009 and 2017 , firms started by Black women received a mere 0.0006% of VC funding. Additionally, Black entrepreneurs' loan requests are three times less likely to be approved than white entrepreneurs. These statistics underscore the persistent economic disparities that the Fearless Fund aims to address – the business case should be self-evident. Their mission is not just about funding but also about fostering an ecosystem where women of colour can thrive, innovate, and lead.

White supremacy: A political, economic and cultural system in which whites overwhelmingly control power and material resources and in which white dominance and non-white subordination exist across a broad array of institutions and social settings. – Professor Frances Lee Ansley (1989)

The rise and power of conservative activism

Edward Blum, a conservative activist, has been a driving force behind the dismantling of affirmative action in college admissions and now initiatives like those of the Fearless Fund. Blum, lacking a legal background, has effectively utilised tactics developed by civil rights organisations, repurposing them to challenge and undermine efforts to promote racial equity. His actions are a case study example of how legal strategies can be co-opted to maintain systemic racial inequalities.

Blum's involvement in this case is particularly troubling, given his history. He was instrumental in the Supreme Court case that ended affirmative action in college admissions, arguing that race-conscious admissions policies were discriminatory against white and Asian students. Now, he has set his sights on diversity initiatives in the business world, using similar arguments to challenge programs designed to mitigate inequalities experienced by Black people.

It's important to understand that Blum's tactics are not new. They echo the strategies used by civil rights organisations like the NAACP but are twisted to serve an agenda undermining the progress those organisations fought for. This repurposing of civil rights tactics to maintain white supremacy is a powerful reminder of how the law can be manipulated to serve different ends. It also highlights how such movements gain traction by capitalising on political and social anxieties.

As Professor Kimberlé Crenshaw has noted recently, "The very laws that were designed to dismantle racial hierarchies are now being used to uphold them." Blum's actions exemplify this phenomenon, as he leverages the language of equality and non-discrimination to attack programs that aim to redress historical and ongoing racial injustices.

Moving the focus away from Blum and other activists like him, it would be disingenuous to claim that his influence has not significantly altered the course of public and corporate progress. High-profile companies, notably PwC and tech unicorns like Google and Meta , significantly scaled back their diversity efforts in response to growing pressure from anti-DEI activists.

As I observed what happened with Fearless Fund, I paid close attention to what didn’t happen. Where are the institutional investors, the banks, the big corporations that committed millions to social justice initiatives after the murder of George Floyd? This isn’t a rehash of the lack of action post-George Floyd—we know this and have talked about it at length. But I wish to emphasise that the successful legal attacks have been predominantly led by one person, albeit with strategic resources and unnamed silent supporters, who aren’t even lawyers.

US law has historically played a critical role in constructing and conserving white supremacy. While overtly race-conscious laws that favour white people may have been removed, the law continues to maintain white dominance and non-white subordination across various institutions and social settings [see the work of Erica K. Wilson – The Legal Foundations of White Supremacy , 2018]. Blum, feeling aggrieved by his political career being cut short, has turned civil rights tactics on their head, using them to protect outcomes favourable to white people at all costs.

Fearless Fund isn’t asking for handouts or taxpayer money; they found a way to finance and support Black women entrepreneurs, which are still ignored in venture capital circles. Despite the shocked exclamations and disappointment, few corporations have stepped forward to use their might and scale to defend the team at Fearless Fund.

Using the myth of meritocracy to further our own aims and ambitions

Consider this: White-led organisations never openly advertise for white-only managers and directors. These organisations talk about diversity and inclusion while maintaining their white-dominated status. Venture capitalist funds talk about looking for only the ‘best’ businesses and most solid entrepreneurs. They argue that it’s a coincidence or an example of meritocracy in action that most of the funding goes to white entrepreneurs. It’s not their fault that most FTSE100 and Fortune 500 boards' racial composition has remained unchanged over the last few decades. The most successful business leaders and entrepreneurs happen to be white, right?

Ok, cool, what if we adopted the same approach and embodied that same mindset? Follow me for a moment with this hypothetical situation:

What if Black-led organisations opened our programs and initiatives to everyone and just happened to select and support Black individuals only? By leveraging the principles of meritocracy, as white organisations consistently do, we could achieve similar outcomes without the fanfare and accusations that we are playing the victim – it, therefore, becomes a coincidence that the individuals who benefit the most happen to be Black. That will be our story, and we can stick to it.

Imagine that when challenged about the racial disparities in our hiring and promotional practices, funding, and resource allocation, which invariably prioritise people who look like us, we could take time to reflect and then point to unconscious bias as the possible explanation. In response, we could reaffirm our commitment to running a meritocratic and fair organisation. We remain steadfast in asserting that we only hire and promote the most capable individuals and apportion funding to the best entrepreneurs, which could be our default response to any public or private challenge.

Going one step further, when tasked with addressing the under-representation of white people in leadership positions, for example, we can engage in difficult conversations and focus on awareness-raising activities, utilising the fear of saying and doing the wrong thing as examples of the challenges we face to address such racial disparities.

You get my point.

Calling out the double standards

As Black people, are we adhering to a set of rules—emphasising transparency about our target demographic and goals—that is ultimately an illusion? Many organisations and institutions clearly do not follow these same principles.

If Black people are expected to rise above such tactics and be the poster-child community who can “rise above it all,” it’s important to recognise the inherent double standards and the inconsistencies in how the principles of fairness and meritocracy are applied and upheld.

Taking it back to the disgraceful ruling against the Fearless Fund, if the small self-determined efforts and funding focused on Black women provoke such a violent response, could it be that transparency is undermining our success?

In other news

?? Amazon won a lawsuit in which white business owners challenged the tech giant’s Diversity Grant program. The initiative awards $10,000 in startup costs to qualified Black, Latino, and Native American entrepreneurs. [Bloomberg ]

?? A judge dismissed a lawsuit brought against Hello Alice and Progressive over a grant program for Black truck drivers but it can still be appealed. [Yahoo Finance ].

?? According to Gravity Research, companies are changing how they talk about DEI in earnings calls and public documents. The company analysed nearly 1,000 documents from Fortune 100 companies—issue reports, SEC filings, and earnings calls—to see if and how their language has changed from 2023 to 2024. [Gravity Research – you can ‘apply’ to access a replay of their webinar here .]

?? British companies should ditch political activism, says UK equalities minister and business secretary Kemi Badenoch. Her comments come from a survey by centre-right think-tank Policy Exchange, whereby 50% of respondents thought businesses were too concerned with “taking political positions” on contested issues. [Independent ]

??? Civil Service diversity jobs will be scrapped. The radical overhaul will prevent managers from hiring new staff dedicated to boosting equality and inclusion. [The Telegraph ]

?? Don’t listen to the latest Tory claims – slavery and empire made Britain rich. The right-wing is obsessed with ‘workers’, but until it addresses Britain’s past, it cannot prepare for the future. [Open Democracy ]

???The Black Lives Matter era is over. It taught us the limits of diversity for diversity’s sake. Hastily established racial equality schemes are being shuttered. What survives is a movement that’s achieving real change. [Guardian ]

Just in case you missed the previous episodes of Advancing Racial Equity 4.0 Podcast

Sustainability: From Origins to Opportunities with Stuart McLachlan

Named one of the ‘Top 32 ESG pioneers in the UK’, Stuart has over 30 years of experience and is currently the CEO of Anthesis Group , a global sustainability company he founded in 2013.

In this conversation, Stuart discusses the evolution of sustainability from primarily environmental concerns to encompassing social and governance issues as well. He emphasises the interconnectedness of environmental and social challenges, citing the impact of regulations like the Corporate Sustainability Reporting Directive (CSRD) on driving businesses towards more responsible practices.

One of my favourite parts of the conversation is where Stuart advocates for businesses to "emotionally divest from old models to embrace both the challenges and opportunities of this new era."

https://podcasts.apple.com/gb/podcast/sustainability-from-origins-to-opportunities/id1561794567?i=1000655759777

Racial Equity: An Issue of Risk Rather Than A Matter of Conscience with Tejal Patel

Tejal joined the SOC Investment Group in 2016 as Corporate Governance Director, where she focused on shareholder advocacy issues, including the opioid crisis and racial equity audits.??

In her current role, she has worked with investor coalitions to develop strategies for issuer engagements, shareholder proposals, director accountability, and asset manager outreach.? She serves as a director and the Labor Constituency Co-Chair for the Council of Institutional Investors (CII) and previously served on the U.S. Asset Owners Advisory Council from 2019-2021.?

This episode explored the delicate balance between setting meaningful goals and the resistance encountered when calling for a deeper, more substantial commitment to racial equity and implementing preventative measures.?

We also talked about:

- Corporate accountability and what it looks like when you have an outsider influencing internal accountability and disclosures

- Translating social issues into business risk

- The three types of resistance faced by financial institutions that are required to undergo a racial equity audit?

- Pitfalls of diversity and inclusion (in the way forced or advocated by the companies themselves)

- The cost-benefit analysis of racial equity audits versus facing fines for discriminatory practices. The numbers for the latter will astound you!

https://podcasts.apple.com/gb/podcast/racial-equity-an-issue-of-risk-rather-than/id1561794567?i=1000657273019

?? More guests talking with me in more depth.

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