Texas Nonprofit Drops Minority-Focus In Grants After Lawsuit
A Texas nonprofit grant program aimed at supporting diverse small business owners, has agreed to revise its application process after being sued for allegedly discriminating against white men.
The lawsuit was brought by the American Alliance for Equal Rights (AAER), a group led by conservative activist Edward Blum, who is also suing Fearless Fund, a Black women-led VC firm.
Lawsuit Challenges Race-Based Criteria
The lawsuit centered around a $50,000 grant offered by the Founders First Community Development Corporation, a nonprofit founded by Kim Folsom and led by Shaylon Scott.
The grant was initially intended for Texas-based businesses owned by individuals who were Black, Latinx, Asian, women, LGBTQIA+, military veterans, or located in low- to moderate-income areas.
AAER filed the lawsuit in April, arguing that the grant program likely violated federal laws prohibiting race discrimination in contracts by excluding white male applicants.
Read: Group Behind Fearless Fund Lawsuit Targets Law Firms’ Diversity Fellowships, Alleging Racial Discrimination
US District Judge Reed O’Connor, known for his rulings against progressive policies, issued a preliminary injunction in July, temporarily halting the grant program.
O’Connor’s decision suggested that the AAER’s argument was likely to succeed, prompting Founders First to reconsider its criteria.
Settlement and Broader Implications
In a settlement filed in federal court, Founders First agreed to stop collecting data on applicants’ race, effectively opening the grant to all individuals regardless of their race or other protected characteristics.
The organization has not commented on the settlement, but Edward Blum expressed satisfaction with the outcome.
According to Reuters he stated that he hopes other organizations will follow Founders First’s lead in removing racial classifications from their programs.
As more companies and nonprofits reevaluate their diversity policies in light of these legal challenges, the future of race-conscious grant programs remains uncertain.
Feature Image Credit: Founders First CDC
