As Fearless Foundation Settles Case, Council on Foundations, Independent Sector Encourage Funders to Continue Giving in Line With Values

Press Release

As Fearless Foundation Settles Case, Council on Foundations, Independent Sector Encourage Funders to Continue Giving in Line With Values

Thursday, September 12, 2024

WASHINGTON - The Fearless Fund and Fearless Foundation announced a settlement yesterday with the American Alliance for Equal Rights (AAER) and will end its Fearless Strivers Grant Contest that was targeted in a racial discrimination lawsuit by AAER. The settlement does not restrict any charitable activity or investment of the Fearless Fund or Fearless Foundation outside of the grant contest, according to Fearless.

"The Fearless Foundation case is settled, however philanthropy's commitment to advance a society that works for everyone endures. Targeted support for historically marginalized groups can and should remain a priority," said Council on Foundations President and CEO Kathleen Enright. "Giving takes forms as diverse as our nation, and that's a strength. We will continue to speak out for the right of all individuals and charitable organizations to give according to their values."

"This settlement underscores the continued need to defend our First Amendment right to exercise our values through philanthropy, including giving that supports historically marginalized groups. While the settlement may have a limited legal impact, we remain concerned about forces in our society making it harder for nonprofits and philanthropy to live out our values and serve our communities," said Independent Sector President and CEO Dr. Akilah Watkins. "We will continue to stand against efforts to restrict or chill the charitable sector's vital work toward a more just, equitable society."

AAER filed suit against Fearless last August, alleging that its grant program for Black female entrepreneurs was racially discriminatory. The most recent ruling before the settlement, from the U.S. Court of Appeals for the 11th Circuit, said that AAER had standing to sue and that the grant program was likely to violate Section 1981 of the Civil Rights Act of 1886 because it created a contractual relationship between Fearless Foundation and its grantees. Section 1981 prohibits discrimination on the basis of race or ethnicity when making or enforcing contracts. The court also ruled that the grant program had to remain halted under a preliminary injunction while the case proceeded in court.

The Council and Independent Sector filed an amicus brief in December calling on the court to dismiss this lawsuit and rule in line with the First Amendment that philanthropies and individuals have a constitutional right to donate to charitable causes that align with their values. The two organizations stand by that commitment.

The Council and Independent Sector recommend that foundations continue their race-based and race-conscious grantmaking programs; however, they should ensure that their grants are considered gifts and do not create contractual relationships with grantees. For more information on how this settlement impacts philanthropy and foundation grantmaking, please review our guide for an in-depth analysis from the Council's government affairs and legal team, and join our Q&A session with our legal and DEI teams on September 18.

The Council and Independent Sector thank the 230 philanthropic and charitable organizations standing with us in committing to making it easier for organizations and people to give, across all dimensions of society, not harder.

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About the Council on Foundations
The Council on Foundations is a nonprofit membership association that serves as a guide for philanthropies as they advance the greater good. Building on our 75-year history, the Council supports over 900 member organizations in the United States and around the world to build trust in philanthropy, expand pathways to giving, engage broader perspectives, and co-create solutions that will lead to a better future for all. Learn more about the Council and become a member by visiting www.cof.org.

About Independent Sector
Independent Sector is the only national membership organization that brings together a diverse community of changemakers at nonprofits, foundations, and corporate giving programs to ensure all people in the United States thrive. Learn more about IS and become a member by visiting independentsector.org.

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