A federal appeals court has temporarily blocked an Atlanta-based venture capital firm from offering grants to Black women entrepreneurs amid a lawsuit alleging the program illegally excludes other races.

On Saturday (September 30), the Atlanta-based 11th U.S. Circuit Court of Appeals ruled 2-1 that Fearless Fund could no longer offer the Strivers Grant, which awards $20,000 to businesses owned by Black women, per AP.

The decision was a reversal of Tuesday's ruling by U.S. District Judge Thomas W. Thrash, which allowed the grant program to continue after conservative activist Edward Blum's American Alliance for Equal Rights filed a lawsuit claiming it violated the Civil Rights Act of 1866 by only making Black women-owned businesses eligible for the award.

Thrash said Tuesday the grants fell under "charitable donations," which is "expressive conduct" entitled to protection under the First Amendment.

However, the appeals court wrote Saturday that the Fearless Fund's program is “racially exclusionary” and Blum's lawsuit will likely prevail. The First Amendment "does not give the defendants the right to exclude persons from a contractual regime based on their race," the appeals court said.

Blum, who previously spearheaded the Supreme Court's move to reject affirmative action, praised the ruling.

“The members of the American Alliance for Equal Rights are gratified that the 11th Circuit has recognized the likelihood that the Fearless Strivers Grant Contest is illegal,” Blum said in a statement. “We look forward to the final resolution of this lawsuit.”

In a statement on Sunday (October 1), the Fearless Fund said it would comply with the court's order but maintained that it would prevail in the lawsuit. “We strongly disagree with the decision and remain resolute in our mission and commitment to address the unacceptable disparities that exist for Black women and other women of color in the venture capital space,” the Fearless Fund said.

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