This article was originally published by Candid.
On January 31, the Eleventh Circuit of the United States Court of Appeals began hearing oral arguments in a case that holds significant implications for U.S. philanthropy and the nonprofit sector.
Following the U.S. Supreme Court’s ruling last June against race-conscious admissions in higher education, we were concerned that the decision could lead to further limitations on diversity, equity, and inclusion (DEI) efforts across the sector. We were warned of potential litigation risks and implications for race-conscious decisions relating to scholarships, grantmaking, fellowships, and the collection of demographic data.
Those concerns were borne out just a few months later in the form of a lawsuit brought by the American Alliance for Equal Rights (AAER)—led by the same conservative activist who’d brought the higher education case—against the Fearless Fund and its Fearless Foundation. AAER claims that the foundation’s grant program—which provides grants, tools, and mentorship to Black women entrepreneurs, who often lack access to mainstream venture capital—is racially discriminatory. When the district judge denied a preliminary injunction against the program, AAER appealed the decision.
We at Independent Sector (IS) and the Council on Foundations are deeply concerned that a ruling in favor of AAER would pose a direct threat to First Amendment rights, including philanthropy’s right to exercise its views through giving. In December, our organizations filed a joint amicus brief to support the Fearless Foundation and protect the right to give.
What is at stake?
Why would this case against a small foundation threaten First Amendment rights for the entire sector?
AAER’s claim that it is discriminatory to address a funding gap for historically disadvantaged women of color ignores the history of our nation and seeks to restrict the Fearless Foundation’s right to pursue its mission. In doing so, it undermines the freedom of expression guaranteed by the First Amendment for all to choose how and where to give. What is at stake is the ability to express our values through philanthropy—by giving to the causes, organizations, and movements aligned with those values.
As the amicus brief notes, the court has already held that the First Amendment protects a foundation’s right to express its mission through grantmaking. Charitable giving is expressive conduct and a form of nonpartisan, constitutionally protected speech.
If AAER’s lawsuit were to succeed, however, it could restrict the causes that grantmakers and individuals can donate to. This would, in turn, harm nonprofits that rely on those donations to address unmet needs and build strong communities nationwide.
Given these threats, our amicus brief called on the court to dismiss AAER’s lawsuit and rule in line with the First Amendment. We also asked the court to affirm the constitutional right of philanthropic organizations, nonprofits, and individual donors to give to charitable causes that are aligned with their values—including support for groups that have been historically marginalized.
Long-term implications for the sector
Our country has a history of generous giving to causes as diverse as we are: from hurricane and wildfire relief efforts to community kitchens to feed the hungry and shelter for the unhoused, from individual donations of $25 to multimillion-dollar foundation grants. The ability to give according to our own values is essential to U.S. philanthropy and the nonprofit sector.
A ruling unconstitutionally restricting the Fearless Foundation’s expression of its values would have severe long-term implications for philanthropy more broadly: discouraging donors, restricting work to advance equity and justice, and harming communities and causes nationwide. But it wouldn’t stop there. As a result of this lawsuit against a grant program for Black women entrepreneurs, various other DEI and social change efforts across all sectors could come under threat.
AAER has said that if the appeals court sides with the Fearless Foundation, it intends to pursue the litigation until the courts reach a final decision. While the three-judge panel has not indicated when it might rule on the case, we believe our sector as a whole has a stake in the outcome and potential consequences. That’s why we issued a statement last December, after filing the amicus brief, to encourage other nonprofits and philanthropic organizations to show their support for the right of individuals and philanthropies to give in line with their values.
With over 200 signers on our statement, the message from the field is clear: At a time when the number of people making charitable donations to nonprofits has been on a steady decline—as evidenced in IS’s most recent Health of the U.S. Nonprofit Sector: Quarterly Review—we should be making it easier, not harder, for people to give and support nonprofits working to create change and provide critical community services.
Photo credit: Carol M. Highsmith
