In a recent ruling, the U.S. District Court for the District of Columbia upheld the Small Business Administration's (SBA) decision to deny a grant application from Folsom Street, a nonprofit organization based in San Francisco. The court found that Folsom Street's activities fell under a statutory prohibition against entities that present live performances of a prurient sexual nature. This decision impacts Folsom Street and similar organizations that seek federal funding through the Shuttered Venue Operators Grant (SVOG) program.
The case, Folsom Street v. Small Business Administration, was filed on September 26, 2026, under Civil Action No. 2022-0926. Folsom Street applied for an SVOG award during the COVID-19 pandemic, which aimed to provide emergency financial assistance to eligible live entertainment businesses affected by the pandemic. The organization hosts events that cater to the adult alternative lifestyle community, focusing on leather and fetish themes.
Folsom Street's application for over $500,000 was denied by the SBA, which cited a statutory prohibition against awarding grants to entities that present live performances of a prurient sexual nature or derive significant revenue from such activities. The organization challenged this decision, arguing that it met all eligibility requirements and that the denial was arbitrary and capricious.
In its ruling, the court, presided over by Judge Jia M. Cobb, found that the SBA's denial was lawful and supported by substantial evidence. The court noted that the SBA had provided a clear rationale for its decision, stating, "SVOG awards cannot be issued to a person or entity that presents live performances of a prurient sexual nature; or derives, directly or indirectly, more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature." The court emphasized that the SBA's interpretation of the term 'prurient' was not contrary to law.
The court's opinion detailed the SBA's reasoning, which included an analysis of Folsom Street's mission and the nature of its events. The SBA determined that Folsom Street's activities, including street fairs that featured nudity and sexually suggestive performances, fell within the definition of prurient. The agency reviewed promotional materials, social media posts, and articles that described the events, concluding that they promoted nudity and sexual arousal.
Folsom Street argued that it was being unfairly singled out compared to other organizations that had received SVOG awards. However, the SBA maintained that those organizations did not present events featuring nudity with the intent to sexually arouse patrons. The court upheld this distinction, stating that the SBA's decision was not arbitrary or capricious.
The ruling has significant implications for Folsom Street and similar organizations that may seek federal funding in the future. It underscores the challenges faced by entities involved in adult-themed entertainment when applying for government grants. The court's decision reinforces the SBA's authority to interpret eligibility criteria and emphasizes the importance of adhering to statutory guidelines.
Looking ahead, Folsom Street may consider appealing the ruling, although details on any potential appeal were not available in the court filing. The case highlights ongoing debates about funding for organizations that cater to alternative lifestyles and the interpretation of laws surrounding sexual expression.