In July, Oregon state legislators had agreed to allocate portions of the money the state received from the CARES Act Coronavirus Relief fund for specific groups within the state. One group receiving a portion of this earmarked allotment are those who “self-identify as Black.” However, by the end of October two lawsuits had been filed claiming discrimination, and by the end of December, $8.8 million of the fund that had not been awarded yet was frozen due to the lawsuits still pending.

Under the CARES Act, each state received a minimum of $1.25 billion to provide for residents, business owners, and community organizers negatively impacted by the COVID-19 pandemic. While the federal government issued guidelines on how the money must be spent, each state is largely responsible for creating programs, grants, and funds that will have the greatest impact within their state. In some states, such as New Hampshire, the governor has control over how the funds are to be spent, while in other states, like Oregon, the state’s legislature has reviewing and approval authority.

Oregon received about $1.4 billion in federal COVID-19 relief. In July, the Oregon legislature voted to allocate $200 million of the federally received funds to target specific communities and sectors of the economy. They voted to fund $25.6 million for grants for small businesses, $30 million to pay workers who need to quarantine, $35 million for emergency relief checks, $50 million to cultural institutions, and $62 million for the Oregon Cares Fund.

The Oregon Cares Fund is “a targeted cash investment in the Black Community.” It accounts for 4.5% of the $1.4 billion the state received from the federal government for COVID-19 relief. The target populations for the fund are “Black people, Black-owned business, and Black community-based organizations.”

The Oregon Department of Administrative Services awarded the $62 million grant to The Contingent, a local non-profit based in Portland. Working with the state and another local non-profit, the Contingent is “responsible for managing business grants from the Fund” while the Black United Fund, “is responsible for managing grants to individuals from the Fund.”

Multiple state and federal agencies have proven and studied how minorities in the U.S. are more likely to be negatively impacted by the pandemic, either financially or physically. On November 30, 2020, the Centers for Disease Control and Prevention published data on the hospitalization and death due to COVID-19 by race and ethnicity. Black or African Americans are 3.7 times more likely to be hospitalized and 2.8 times more likely to die from COVID-19.

Many Black entrepreneurs, regardless of gender, cite the lack of capital as their main barrier to entry into an industry. A Guidant Financial 2020 study on Black entrepreneurs found that “44 percent of respondents [use] cash to fully or partially finance their business… continuing a multiyear trend.” Unfortunately, “fewer African-American small businesses are approved for financing, often at lower amounts of money with higher interest rates” according to the Washington Post.

The Guidant study also found that “African-American businesses owned by women… earned on average $24,000 per firm [versus] $142,900 among all women-owned businesses” which is the greatest gap of any group in the Guidant study.

The U.S. Census Bureau reported the median income for black households in 2019 was $46,073 across all states in the United States. In comparison, white households make on average $76,057 per year. That means that in 2019 “the median Black household earned just 61 cents for every dollar of income the median white household earned” across the United States. The Census Bureau showed an increase in median income for all race categories but also revealed that the income gap persists. The Guidant study further explains that this “wealth gap also contributes to financing challenges…making it harder to [get] financing.”

These studies, along with many others, prove that minorities are often stuck in a never-ending cycle of not having enough money to qualify for financing, and then not being able to finance their business, leaving fewer minorities opening and operating businesses. This lack of representation in business often has nothing to do with motivation, ingenuity, or the skills required to open a business. It is due to being blocked out of financial resources that many in the White community have access to. This fund was intended to target that gap in representation caused by this lack of funding.

Great Northern Resources, Inc., a small family-owned logging business, sued the Oregon Department of Administrative Services on October 29, 2020. The company wanted “to challenge the constitutionality of the State of Oregon’s use of strict race-based criteria for distributing money from the Oregon Cares Fund.” Since filing, the lawsuit has become a class-action lawsuit, joined by Walter Leja, owner of Dynamic Service Fire and Security.

The lawsuit is one of two cases against the state that has led to the freezing of millions of dollars coming from the Oregon Cares Fund. Great Northern Resources claims their application was not even considered because their owner was not Black. The company states in the lawsuit they “applied to several government-relief programs” but “received no financial assistance” since the beginning of the pandemic. Great Northern was denied twice by the Small Business Administration’s (SBA) Economic Injury Disaster Loan program, once from the Greater Eastern Oregon Development Corporation (with their second application pending), and they declined to apply for the COVID-19 EIDL program from the SBA.

The lawsuit requested a “preliminary and permanent injunction” to the distribution of funds from the Oregon Cares Fund on the premise that the program violates 42 U.S. Code Section 1983, Title VI of the Civil Rights Act of 1964, and 42 U.S. Code section 1981 by using “race as an essential factor in considering applications and distributing grants from the fund.” The lawsuit is underwritten by the Project on Fair Representation, a conservative non-profit that also challenged the race-based admission to universities in the U.S., including Harvard.

This class-action lawsuit, along with a lawsuit filed by a Mexican American owner of a coffee shop in Portland, raises racial issues that are not new to Oregon. Oregon Public Broadcasting reported on these disputes on race in June 2020. Their reporting refreshed the memory of many that Oregon began as a “whites-only state, through a series of Black exclusionary laws that were designed to discourage Black Americans from living in the first place.” This foundational racist behavior from Oregon’s beginning still has impacts playing out today.

The money sent to the states by the federal government had to be awarded by December 30, 2020. Any remaining funds are to be returned to the federal government, making many Oregonians anxious that this money will be lost forever due to these lawsuits being held up in litigation.