Since the racial reckoning triggered by the death of George Floyd in the summer of 2020, corporations have opened their checkbooks and flashed their woke credentials. Much of their spending — by one account more than $200 billion — has been focused on legally and morally questionable programs that give benefits to individuals based solely on the color of their skin. In short, the corporate response to George Floyd was largely to support nonwhite businesses and organizations serving nonwhite communities.
But now, in the face of growing lawsuits, and with encouragement from groups like the World Economic Forum, corporations are off-loading their social justice agendas to outside groups. This new type of woke laundering is problematic because corporations are obtaining the publicity they crave (being recognized as a “woke corporation”) while at the same time minimizing or eliminating potential legal liabilities that could result from race discrimination. This is a dangerous moral hazard, especially for a civil society that values equality and nondiscrimination.
The path to woke laundering started at the beginning in 2020, when the World Economic Forum encouraged business leaders to turn their companies into “corporate activists: companies that take concrete action” to change society. And many of the largest companies heeded this call, setting up their own racial-justice programs.
Amazon, for example, created its own program called the “Black Business Accelerator,” a program offering a “suite of resources” only to black-owned businesses. Other businesses — those owned by whites, Asians, and Hispanics — were ineligible for the Accelerator. Amazon also created a second program, the “Impact Accelerator: Black Founders” program, which offered much more — up to $225,000 in grants to black-owned businesses.
Comcast, America’s second-largest media company, started the RISE program, which offered small-business owners technology makeovers, marketing services, and millions of dollars of grants. These benefits were available free of charge to selected recipients, but white male business owners were ineligible for the program.
This new aggressive form of social-justice spending — corporate-run programs designed to help only certain minorities — faced scrutiny in the courts because federal and state laws prohibit racially discriminatory programs like this. Amazon was sued twice, once over a $10,000 grant given to nonwhite delivery service drivers, and then again over the Black Business Accelerator.
New Tactics to Avoid Litigation
Comcast was also sued. On behalf of four small business owners, the Wisconsin Institute for Law and Liberty, where I work as deputy counsel, alleged that Comcast was violating federal law by refusing to contract with our clients based on race. As the case progressed toward important deadlines, Comcast abandoned the program and then entered into a confidential settlement with our clients.
In response to this growing litigation, corporations have changed tactics: Many now launder their race discrimination through third-party organizations. Visa, for example, touts an entrepreneur program called the “Visa Entrepreneurship Program.” The program is available only for “Black and African American entrepreneurs to grow their ideas.” But contrary to website branding, Visa doesn’t run this program. A Delaware-based public benefit corporation called Bridge for Billions designs and manages so-called diversity, equity, and inclusion (DEI) programs. Bridge for Billions runs these DEI programs on behalf of corporations like Visa. The Bridge for Billions website touts Chanel, Coca-Cola, Salesforce, and Heineken as corporations that “trust us” with their social-justice programs.
Softbank — one of the world’s largest corporations — promotes its SB Opportunity Fund, which is described as an “uncapped evergreen fund” investing in new startups, but only black, Latino, and Native American startups. Softbank, apparently realizing that handing out contracts based on race is illegal under federal law, has outsourced this project to a separate, Florida-based company called SB Opportunity Fund Manager, LLC.
The list goes on and on. JP Morgan claims credit for a $52 million “Entrepreneurs of Color” fund actually run by the Local Initiatives Support Corporation. And many other large corporations, from CVS to Exxon to Walmart to American Express, tout “diversity” or “minority business” programs aimed solely at nonwhite business owners, yet these programs are run by third parties, perhaps lessening their legal liability, or at least providing a fig leaf of protection if lawsuits are threatened.
Some corporations have even brazenly laundered their race discrimination through the ultimate nonprofit entity: public schools. American Family Insurance, the largest mutual insurance company in America, gives tens of thousands of dollars in grants to local school districts to run race-based programs. With this money, for example, the Sun Prairie Area School District sends its black student union on a multi-day, multi-state college tour (all expenses paid) and runs a reading club for black girls only called “Dear Diary.” Bank of America is not far behind, recently announcing a special black-only internship, run through the University of Memphis.
Corporations Should Stay Race-Neutral
This is quite a moral hazard. On the one hand, the world’s largest corporations desperately want credit for being “woke” and advancing “racial equity” through programs targeted solely at certain races. Such practices — involving blatant race discrimination — are immoral and contrary to core American values, despite being in fashion with corporate elites. Yet the typical guide rails — state and federal law — may be less available remedies if corporations launder their discrimination through third parties.
Corporations should avoid this temptation to outsource their discrimination and perhaps take a lesson from Comcast, one of the first corporations to face legal scrutiny for its race-based program. Following the settlement with our clients, Comcast renewed its efforts toward something called “Project Up,” which, from all indications, is a race-neutral program designed to “advance economic mobility, and open doors for the next generation of innovators, entrepreneurs, storytellers, and creators.” Comcast will run this program itself and reap the goodwill that will undoubtedly come, while adhering to (lawful) nondiscrimination principles.
Other corporations would be smart to follow suit and avoid the harmful consequences of continued race-based discrimination. Corporations are certainly free to pursue left-wing and “woke” policies, but there is simply no justice in laundering intentional race discrimination through third parties.
Daniel Lennington directs the Equality Under the Law Project at the Wisconsin Institute for Law and Liberty, where he serves as deputy counsel.
**Source: How Corporations Avoid Lawsuits Over Racial Bias With Loophole