Netflix said Tuesday that going foward it will allocate 2% of its cash holdings — initially up to $100 million — to financial institutions and organizations that directly support Black communities as part of a commitment to racial equity
“We know great stories can create empathy and understanding. Stories like Ava DuVernay’s 13TH and Explained’s Racial Wealth Gap show how systemic racism in America has sustained a centuries-long financial gap between Black and White families,” the company said in blog post by Aaron Mitchell, Director, Talent Acquisition and Shannon Alwyn, Director, Treasury.
“We believe bringing more capital to these communities can make a meaningful difference for the people and businesses in them, helping more families buy their first home or save for college, and more small businesses get started or grow.”
According to the FDIC, Netflix said, banks that are Black-owned or led represent a mere one percent of America’s commercial banking assets — a factor contributing to 19% of Black families having either negative wealth or no assets at all – more than double the rate of White households – according to the U.S. Federal Reserve.
“Black banks have been fighting to better their communities for decades but they’re disadvantaged by their lack of access to capital. The major banks, where big multinational companies including ours keep most of their money, are also focusing more on improving equity, but not at the grassroots level these Black-led institutions can and do. So we wanted to redirect some of our cash specifically toward these communities, and hope to inspire other large companies to do the same with their cash deposits.”
The company said the first step in this $100 million commitment will be to put $35 million of cash in two vehicles: $25 million will be moved to a newly established fund called the Black Economic Development Initiative. It will be managed by the Local Initiatives Support Corporation, a non-profit with a track record of developing underinvested communities. They will invest the funds into Black financial institutions serving low and moderate-income communities and Black community development corporations in the U.S; $10 million will go to Hope Credit Union in the form of a Transformational Deposit to fuel economic opportunity in underserved communities across the Deep South.
The idea is for the fresh capital to help fuel social mobility and opportunity in the low- and moderate-income communities these groups serve.
“We plan to redirect even more of our cash to Black-led and focused institutions as we grow, and we hope others will do the same. For example, if every company in the S&P 500 allocated a modest amount of their cash holdings into efforts like the Black Economic Development Initiative, each one percent of their cash would represent $20-$30 billion of new capital. And that would help build stronger communities, offering more Black families pathways to prosperity and a more equitable future.”