Angela R. Logan, University of Notre Dame

In a 2-1 vote on June 3, 2024, a panel of the U.S. Court of Appeals for the 11th Circuit held that the Fearless Foundation – the charitable arm of the Fearless Fund venture capital firm – must suspend its Strivers Grant Contest. The contest is limited to Black women who are majority owners of businesses.

The Conversation asked Angela R. Logan, a scholar of nonprofit administration and diversity, equity and inclusion policies, to explain the significance of this case, American Alliance for Equal Rights v. Fearless Fund Management, and what's at stake.

What is the Fearless Fund?

Ayana Parsons and Arian Simone, two experienced Black entrepreneurs, established the Fearless Fund in 2018 to provide financial and technical support to businesses led by other Black women.

The Fearless Fund also runs a charity, the Fearless Foundation. Among other things, it runs the Strivers Grant Contest, which provides four winners with US$20,000 and mentoring to help them grow their businesses.

The Fearless Foundation received $332,000 in revenue and had just $141,560 in net assets in 2022, the most recent year for which this information is available. In other words, it's very small. Large U.S. foundations have multibillion-dollar endowments.

What is the American Alliance for Equal Rights?

The American Alliance for Equal Rights says it filed this lawsuit because it believes that denying non-Black people the opportunity to win a contract through the contest violates their civil rights.

The group, led by former stock broker and activist Edward Blum, is best known for its use of litigation to block affirmative action in higher education.

In June 2023, a majority of U.S. Supreme Court justices ruled on two cases the alliance brought on behalf of Asian American students who wanted to attend Harvard University and the University of North Carolina. The court found that race-conscious admissions in higher education were unconstitutional, effectively eliminating affirmative action for college and university admissions.

Unlike with their education cases, none of the plaintiffs whom Blum's group is representing in this new case actually entered the Fearless Fund grant contest, because they believed they wouldn't be awarded funding. They are also anonymous.

The American Alliance for Equal Rights responded to the ruling by saying it “is grateful” that the court has ruled in its favor, adding “our nation's civil rights laws do not permit racial distinctions because some groups are overrepresented in various endeavors, while others are underrepresented.”

What does the ruling suggest about the status of DEI efforts?

This case is setting an important precedent by alleging that the Fearless Foundation's contest violates a federal statute enacted as part of the Civil Rights Act of 1866: 42 U.S.C. Section 1981. That statute prohibits discrimination on the basis of race in contracts.

That law, passed right after the Civil War, was specifically supposed to protect recently emancipated Black people from discrimination.

In my view, shared by leading philanthropic organizations, the alliance is distorting U.S. racial history by using that statute to argue that it's unconstitutional to help Black businesswomen overcome their lack of access to capital.

This litigation also is problematic because it is at odds with the traditional role that nonprofits play in the United States. By providing services that for-profit enterprises and the government do not offer, nonprofits bridge gaps. They have a long and storied history of assisting those on the margins of society: immigrant communities, people with different physical and mental abilities, and those living in poverty.

And because this case could set the stage for larger, more aggressive actions to dismantle corporate diversity, equity and inclusion efforts, I believe this ruling has struck another blow against attempts to make the nation's economy and society more equitable, just and inclusive.

Why does this matter?

It is extremely hard for Black women with startups to build their businesses. Among all Black-led startups, financial support has declined steadily since it surged in the summer of 2020.

Businesses owned by Black and Latino women get less than 1% of all venture capital funding.

Not long ago, it seemed like this trend might turn around.

Following the outrage that followed the murder of George Floyd by Minneapolis police officer Derek Chauvin in May 2020, the private sector and nonprofits alike marshaled efforts to increase their giving and provide other kinds of support for Black people. Although the Fearless Fund was established before Floyd's murder, it, too, saw increased interest and support – especially in 2021.

But as the general public's attention and interest in justice for Black Americans has waned, so, too, have these commitments.

This diminished engagement has coincided with some states restricting or even banning DEI efforts altogether at public colleges and universities, including Florida and Texas. At least seven other states have passed similar laws restricting DEI programs and instruction tied to racial justice, and bills have been proposed in another 15 states.

This ruling could now make foundations leery of contributing to nonprofits that assist women and people of color out of a fear that they will be sued.

Where do you think this case is heading?

I think this case will eventually be heard by the Supreme Court.

If that happens, I hope the justices realize that opportunities for entrepreneurs of color remain limited. I believe they should recognize the need for efforts like the Fearless Fund and its Strivers Grant Contest that seek to level the playing field for Black women.

Angela R. Logan, Teaching Professor of Management & Organization, Academic Director of the Master of Nonprofit Administration, University of Notre Dame

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Cristina Bodea, Michigan State University and Ana Carolina Garriga, University of Essex

Nearly every country in the world has a central bank – a public institution that manages a country's currency and its monetary policy. And these banks have an extraordinary amount of power. By controlling the flow of money and credit in a country, they can affect economic growth, inflation, employment and financial stability – all things that can, if played right, provide politicians with economic boosts around election time, only to saddle the economy with problems further down the line.

That is why, recently, central banks across the globe received significant leeway to set interest rates independently and free from the electoral wishes of politicians.

In fact, monetary policymaking that is data-driven and technocratic – rather than politically motivated – has since the early 1990s been seen as the gold standard of governance of national finances. By and large, this arrangement – in which central bankers keep politicians at arm's length – has achieved its main purpose: Inflation has been relatively low and stable in countries with independent central banks, such as Switzerland or Sweden – certainly until the pandemic and war in Europe began pushing up prices globally.

In comparison, countries such as Lebanon or Egypt, where independence was never extended, or Argentina and Turkey, where it has been curtailed, have experienced more bouts of high inflation.

But despite independence being seen to work, central banks over the past decade have come under increased pressure from politicians. They hope to keep interest rates low and reap voter gratitude for a humming economy and cheap loans.

Donald Trump is one recent example. While president, Trump criticized his own choice to head the U.S. Federal Reserve and demanded lower interest rates. Now, should Trump return to the White House, some of his allies have drawn up plans that would see a reelected Trump sitting in the Fed's interest rate-setting meetings or, at the very least, replace current Fed Chair Jerome Powell.

Similarly, the Bank of England's independence has been formally put under review. The British government has also publicly pressured the Bank of England to cut interest rates, presumably to bolster the economy in advance of July's general election.

As political economists, we are not surprised to see politicians try to exert influence on central banks. Monetary policy, even with independence, has always been political. For one thing, central banks remain part of the government bureaucracy, and independence granted to them can always be reversed – either by changing laws or backtracking on established practices.

Moreover, the reason politicians – especially those facing an election – may want to interfere in monetary policy is that low interest rates remain a potent, quick method to boost an economy. And while politicians know that there are costs to besieging an independent central bank – financial markets may react negatively, or inflation may flare up – short-term control of a powerful policy tool can prove irresistible.

Legislating independence

If monetary policy is such a coveted policy tool, how have central banks held off politicians and stayed independent? And is this independence being eroded?

Broadly, central banks are protected by laws that offer long tenures to their leadership, allow them to focus policy primarily on inflation, and severely limit lending to the rest of the government.

Of course, such legislation cannot anticipate all future contingencies, which may open the door for political interference or for practices that break the law. And sometimes central bankers are unceremoniously fired.

However, laws do keep politicians in line. For example, even in authoritarian countries, laws protecting central banks from political interference have helped reduce inflation and restricted central bank lending to the government.

In our own research, we have detailed the ways that laws have insulated central banks from the rest of the government, but also the recent trend of eroding this legal independence.

Politicizing appointees

Around the world, appointments to central bank leadership are political – elected politicians select candidates based on career credentials, political affiliation and, importantly, their dislike or tolerance of inflation.

But lawmakers in different countries exercise different degrees of political control.

A 2023 study shows that the large majority of central bank leaders – about 70% – are appointed by the head of government alone or with the intervention of other members of the executive branch. This ensures that the preferences of the central bank are closer to the government's, which can boost the central bank's legitimacy in democratic countries, but at the risk of permeability to political influence.

Alternatively, appointments can involve the legislative power or even the central bank's own board. In the U.S., while the president nominates members of the Federal Reserve Board, the Senate can and has rejected unconventional or incompetent candidates.

Moreover, even if appointments are political, many central bankers stay in office long after the people who appointed them have been voted out. By the end of 2023, the most common length of the governors' appointment is five years, and in 41 countries the legal mandate was six years or longer.

In the 2000s, several countries shortened the tenure of their central banks' governors to four or five years. Sometimes, this was part of broader restrictions in central bank independence, as was the case in Iceland in 2001, Ghana in 2002 and Romania in 2004.

The low inflation objective

As of 2023, all but six central banks globally had low inflation as their main goal. Yet many central banks are required by law to try to achieve additional and sometimes conflicting goals, such as financial stability, full employment or support for the government's policies.

This is the case for 38 central banks that either have the explicit dual mandate of price stability and employment or more complex goals. In Argentina, for example, the central bank's mandate is to provide “employment and economic development with social equity.”

Conflicting objectives can open central banks to politicization. In the U.S., the Federal Reserve has a dual mandate of stable prices and maximum sustainable employment. These goals are often complementary, and economists have argued that low inflation is a prerequisite for sustainable high levels of employment.

But in times of overlapping high inflation and high unemployment, like in the late 1970s or when the COVID-19 crisis was winding down in 2022, the Fed's dual mandate has become active territory for political wrangling.

Since 2000, at least 23 countries have expanded the focus of their central banks beyond just inflation.

Limits on government lending

The first central banks were created to help secure finance for governments fighting wars. But today, limiting lending to governments is at the core of protecting price stability from unsustainable fiscal spending.

History is dotted with the consequences of not doing so. For example, in the 1960s and 1970s, central banks in Latin America printed money to support their governments' spending goals. But it resulted in massive inflation while not securing growth or political stability.

Today, limits on lending are strongly associated with lower inflation in the developing world. And central banks with high levels of independence can reject a government's financing requests or dictate the terms of loans.

Yet over the past two decades, almost 40 countries have made their central banks less able to limit central government funding. In the more extreme examples – such as in Belarus, Ecuador or even New Zealand – they have turned the central bank into a potential financier for the government.

Scapegoating central bankers

In recent years, governments have tried to influence central banks by pushing for lower interest rates, making statements criticizing bank policy or calling for meetings with central bank leadership.

At the same time, politicians have blamed the same central bankers for a number of perceived failings: not anticipating economic shocks such as the 2007-09 financial crisis; exceeding their authority with quantitative easing; and creating massive inequality or instability while trying to save the financial sector.

And since mid-2021, major central banks have struggled to keep inflation low, raising questions from populist and antidemocratic politicians about the merits of an arm's-length relationship.

But chipping away at central bank independence is a historically sure way to high inflation.

Cristina Bodea, Professor of Political Science, Michigan State University and Ana Carolina Garriga, Professor of Political Science, University of Essex

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Michael Z. Green, Texas A&M University

The Supreme Court has ruled in favor of Starbucks in a case that could make it harder for a federal agency to enforce labor laws in disputes that can arise during organizing campaigns. On June 13, 2024, the court announced that eight of the nine justices had signed onto a decision, written by Justice Clarence Thomas, on the Starbucks Corp. v. McKinney case. Justice Ketanji Brown Jackson concurred overall with the decision but dissented on some key points in a separate opinion.

The Conversation U.S. asked Texas A&M law professor Michael Z. Green to explain the significance of the court's decision and how it could affect the right to organize unions in the United States.

What is this case about?

Seven baristas who were attempting to organize a union at a Starbucks shop in Memphis, Tennessee, were fired in February 2022. Starbucks justified their dismissal by asserting that the employees, sometimes called the “Memphis 7,” had broken company rules by reopening their store after closing time and inviting people who weren't employees, including a television crew, to go inside.

In June of that year, the shop became one of more than 400 Starbucks locations since 2021 that have voted in favor of joining Workers United, an affiliate of the Service Employees International Union.

The union filed a charge over the mass dismissal with the National Labor Relations Board, the federal agency responsible for enforcing U.S. workers' rights to organize. While resolution of the charge was pending, Kathleen McKinney, the NLRB director for the region that includes Memphis, sought an injunction in a federal district court to force Starbucks to give the Memphis 7 their jobs back immediately as the NLRB continued its process to reach a final decision.

The company must “cease its unlawful conduct immediately so that all Starbucks workers can fully and freely exercise their labor rights,” she said.

According to the NLRB, the injunction was appropriate in this case because Starbucks fired nearly all of the members of the union organizing committee at the Memphis store and the evidence showed the chilling effect this action had on the “lone remaining union activist.” This chilling effect “harmed the union campaign in ways that a subsequent Board ruling could not repair.”

By August 2022, a judge agreed with the NLRB and ordered Starbucks to reinstate the Memphis 7. The baristas were soon back on staff.

The company appealed the case all the way to the Supreme Court because, it asserted, the court should not have ordered the company to reinstate the workers while the NLRB proceedings were still pending.

But the NLRB argues, and the lower courts agreed, that the terminations chilled further union activities at the store even after the election.

As of today, five of the seven remain employed at the Memphis coffee shop.

What are the tests at the heart of this case?

The justices have decided which approach federal courts should use when they consider requests for injunctions sought by the NLRB. Previously, different courts had used different standards.

Until now, five appeals courts, including the one where this case arose, had been basing their decisions on a two-part test:

First, the courts determine whether there is “reasonable cause” to believe an unfair labor practice has occurred. Second, they determine whether granting an injunction would be “just and proper.”

Four other appeals courts were using a four-part test:

First, the courts ask whether the unfair labor practice case is likely to succeed on the merits in establishing that labor violations occurred. Second, they look to see if the workers the NLRB is attempting to protect will face irreparable harm without an injunction. Third, after showing likelihood of success and irreparable harm, they ask whether those factors outweigh any hardships the employer is likely to face due to compliance with the court's order. Fourth, they ask whether issuing the injunction serves the public interest.

Two other appeals courts had relied on a hybrid test that appears to have components of both tests. They ask whether issuing an injunction would be “just and proper” by considering the elements of the four-part test.

The majority ruled in favor of Starbucks by saying that all district courts must rely on a four-part test in these instances from now on.

How common and serious are these situations?

In its Supreme Court brief, Starbucks asserted that having to give workers their jobs back in these circumstances can cause “irreparable injury” and that it's an “extraordinary remedy.”

A Bloomberg Law analysis of Starbucks' unfair labor practice cases, including the one involving the Memphis 7, determined that NLRB administrative law judges had found labor violations in 48 out of 49 cases.

Although the NLRB issues hundreds of unfair labor practice complaints against employers every year, it usually doesn't turn to the courts to force the rehiring of employees – it only sought these types of injunctions 17 times in 2023, for example.

And seven of those efforts involved Starbucks. Despite the small number of overall injunctions, the large number of unfair labor practice complaints – and the eventual 48 out of 49 findings of violations – might support the rare use of injunctions in this case.

What's the potential impact of this ruling?

This ruling may or may not have made it harder for union organizers to preemptively get their jobs back in cases like this.

While all judges will now have to apply the four-part test, the Supreme Court majority's decision did not clarify how the test should be applied. Also, many courts were already using a four-part test.

Specifically regarding Starbucks, the underlying unfair labor practice case has been resolved, since the workers have gotten their jobs back and their workplace has joined a union.

What's more, Starbucks has agreed to negotiate collective bargaining agreements with the union, which has continued to make inroads at the company's coffee shops.

This is an updated version of an article published on April 23, 2024.

Michael Z. Green, Professor of Law and Director, Workplace Law Program, Texas A&M University

This article is republished from The Conversation under a Creative Commons license. Read the original article.