Hello Alice, an online platform for business owners, in August became the subject of a lawsuit by American First Legal (AFL), a right-of-center nonprofit organization formed by former senior Trump White House advisor Stephen Miller. The suit claims that the company’s grant program (in conjunction with insurance company Progressive), which offers $25,000 grants to Black small-business owners to use toward the purchase of a commercial vehicle, is unconstitutional. Plaintiffs say that grant programs that limit participation to certain racial minorities are discriminatory. Ideally, they say, such programs should be open to everyone. Hello Alice has distributed over $38 million in grants to small business owners since its founding in 2015.
“We’re not the first to be targeted,” co-founders Elizabeth Gore, Carolyn Rodz, and Kelsey Ruger, wrote in a statement about the suit. In reference to the AFL, the entreprenerus add: “They’ve taken legal actions against programs benefitting Native American, Latino, and Black small business owners, even pulling funding from U.S. veterans.”
Neal Katyal, who is representing Hello Alice in the lawsuit, says the lawsuit is meritless because it’s based on “a narrow statute about contracts that doesn’t apply to what Hello Alice and Progressive are doing,” the Wall Street Journal reports.
The plaintiff–Freedom Truck Dispatch, a small trucking company–alleges that the grant program violates a provision of the Civil Rights Act of 1866, known as Section 1981. The statute prohibits discrimination on the basis of race, color, and ethnicity when making and enforcing contracts. The lawsuit argues that by accepting funds from the program, small business founders enter into a contract with the provider.
This then, the plaintiff suggests, would put grants on the same level as contracts. In a statement, AFL general counsel, Gene Hamilton says: “As alleged in our complaint, our client–who is a small business owner fighting to create a better life for himself and his family–was denied a contract with Progressive that would have provided him with $25,000 toward the purchase of a new truck solely because of the amount of pigment in his skin.”
Earlier this month, on October 3, 2023, a federal judicial panel in Atlanta blocked Fearless Fund, a venture capital firm, from providing $20,000 grants to women founders of color from its foundation. Former President Donald Trump appointed both judges who granted the injunction. The Fearless Fund plans to seek further review, the WSJ reports, arguing that charitable organizations have the right to issue grants as they please. Founders Arian Simone and Ayana Parsons have invested nearly $27 million in some 40 businesses led by women of color and awarded another $3.7 million in grants.
In 2022, Black and Latino founders received only 1 percent and 1.5 percent of total U.S. venture capital funding, according to a June 2023 report from McKinsey and Company. Women-founded teams received 1.9 percent of funds, and only 0.1 percent of VC funds went to Black and Latino women founders.
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