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Four studies reveal that offering diversity awards (i.e., awards for applicants from marginalized groups) has unintentionally negative implications for equity. Across the four studies, applicants from marginalized groups were more likely to select the more lucrative award when two unrestricted awards were offered (Study 1: adults from racial groups underrepresented in U.S. colleges who were recruited from Amazon Mechanical Turk, N = 168; Studies 2–4: college women, N range = 152–628). However, the presence of a less lucrative diversity award caused applicants to apply for and prioritize diversity awards over more lucrative unrestricted awards. Fit, or how much applicants felt the award was for someone like them, mediated their increased likelihood of applying for diversity awards over unrestricted awards. These findings suggest that diversity awards may inadvertently siphon applicants from marginalized groups out of application pools for unrestricted awards. Greater examination of unrestricted awards is needed to increase their attractiveness and fit, especially in instances when diversity awards are also offered.