The scandal unfolding around the Dream Keeper Initiative — the $300 million investment in programs aimed at supporting San Francisco’s Black community — is a case study in the ethics violations and mismanagement rampant in city partnerships with nonprofits.
But a larger issue looms: Diversity-oriented city programs based on race and other identity categories practically invite lawsuits.
Though I’m not a lawyer, anyone following recent news can see there’s a strong case to be made that Dream Keeper, along with a handful of other race- and gender-specific City Hall initiatives, aren’t simply corrupt; they’re illegal under state and federal law.
Following landmark decisions in federal court, the legal landscape has shifted decisively against public and private programs that offer preferential treatment to those of a given race, sex, or other protected characteristic. Though the most recent decisions focused on race-based affirmative action in college admissions and privately funded programs, they open all federally funded programs to potential lawsuits based on the same legal logic: that the Equal Protection Clause of the 14th Amendment and Title VI of the Civil Rights Act of 1964 prohibit identity-based discrimination.
For example, in American Alliance for Equal Rights vs. Fearless Fund Management, the 11th Circuit Court of Appeals in June held that a privately funded grant program open only to Black women was “substantially likely” to violate a federal law prohibiting intentional racial discrimination in contracting. The 11th Circuit’s ruling is a preliminary injunction, not a final decision, and the court doesn’t have jurisdiction in California. But the ruling sets a precedent for legal challenges to similar race-based grant programs in San Francisco.
Combine these decisions with California’s Proposition 209 — which bans the use of race, ethnicity, or sex as criteria in public employment, contracting, or education — and it’s clear there’s a strong foundation for a successful lawsuit against San Francisco’s identity-based cash transfer programs.
A spreading legal quagmire
So what are the most visible violators of our laws against race-based preferences?Consider Dream Keeper’s Downpayment Assistance Loan Program, or DALP, which provides several classes of residents with a $30,000 “wealth building grant” and a $500,000 deferred second loan with no interest and no monthly payments required. The program most likely violates both Prop. 209 and the 14th Amendment’s Equal Protection Clause.
Although Dream Keeper’s DALP eligibility requirements don’t explicitly state that applicants must be Black, they are given priority if they live in one of four HOPE SF public housing developments, receive Section 8 housing vouchers, or were displaced due to an earlier city redevelopment project. Dream Keeper money itself predominantly goes to programs serving Black residents, and the city has a separate DALP aimed at the general population. So it’s reasonable to infer that admission to the Dream Keeper DALP is effectively race-based — a straightforward violation of Prop. 209.
Similar programs elsewhere have been successfully challenged on these grounds. Minnesota’s Legislature was forced to shutter its Down Payment Assistance Grant Program for buying farmland, which prioritized racial minorities, women, and members of the LGBTQ+ community for $15,000 grants. It was hit with a lawsuit claiming the program violated the Equal Protection Clause.
San Diego is fending off a near-identical lawsuit alleging that what was once known as the Black, Indigenous, and other People of Color First-Time Homebuyer Program, which provides $40,000 grants, violates the 14th Amendment. There’s little reason to think Dream Keeper DALP grants, which dwarf these other programs in scale, would be on firmer legal ground.
What’s more, Dream Keeper’s Economic Mobility grants, which provide “cash transfers through guaranteed income pilots and direct payments” to select Black recipients, may also be illegal under the Equal Protection Clause, thanks to the Fearless Fund precedent enforcing a federal ban on race-exclusive contracts.
A citywide system of preferences
Dream Keeper isn’t the only city program operating in questionable territory. The Guaranteed Income for Transgender People program, or GIFT, gave 55 low-income trans San Franciscans $1,200 a month for 18 months. It prioritized the enrollment of “Black, Indigenous, or People of Color” and “monolingual Spanish-speakers,” among others, until a recent lawsuit from the nonprofit Californians for Equal Rights Foundation ended the program, alleging violations of the 14th Amendment and other laws.
GIFT operated under the auspices of the city’s Office of Transgender Initiatives, which also helped coordinate the (now-defunct) Our Trans Home SF, a housing program providing 90 low-income people with five-year rent subsidies of up to $2,000 a month. The city additionally operates the Ending Transgender Homelessness Initiative, a $6 million program that earmarks short-term rental subsidies exclusively for trans homeless people — apparently in violation of the Equal Protection Clause and the Fair Housing Act of 1968, which prohibits identity-based discrimination in housing assistance.
Elsewhere, the Office of Racial Equity, which seeks to root out “structural and institutional racism in [San Francisco’s] internal practices and systems,” has spent the past few years mandating that all city departments — from the airport to the Arts Commission — draft plans to diversify their workplace demographics. The effort appears strikingly similar to Seattle’s Race and Social Justice Initiative; that is the subject of a lawsuit alleging a hostile work environment, brought by a city employee who claims the program violates Title VII of the Civil Rights Act, which prohibits race-based employment discrimination.
It’s only a matter of time before San Francisco contends with a similar discrimination lawsuit. But whether it quickly shuts these programs down in response or litigates all the way up to the Supreme Court, one thing is clear: City Hall has a massive legal headache of its own making yet to come.
Sanjana Friedman is head of content for tech review site Product Hunt by day and a freelance writer by night. Find her on X @metaversehell