Netflix said it will allocate 2% of its cash on hand — with an initial outlay of up to $100 million — to banks and other financial institutions that directly support Black communities in the U.S.
The streamer announced the initiative Tuesday, saying banks led or owned by Black people represent a minuscule portion of the country’s banking assets.
“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,” Netflix director of talent acquisition Aaron Mitchell and treasury directory Shannon Alwyn wrote in a blog post.
Netflix reported $5.15 billion in cash and equivalents as of March 31, 2020, so 2% of that is about $100 million. The funding for financial institutions serving Black communities will increase as the company grows, Netflix said.
The announcement comes after Netflix earlier this month said it will donate $5 million to organizations dedicated to creating opportunities for Black creators, Black youth and Black-owned businesses. Also this month, Netflix CEO Reed Hastings and his wife, Patty Quillin, announced $120 million in grants to Spelman College, Morehouse College and the United Negro College Fund in support of scholarships, with the couple saying “we believe that investing in the education of Black youth is one of the best ways to invest in America’s future.”
For its first investments under the new program, Netflix said it is putting $35 million of its cash into two vehicles.
The first, funded with $25 million, is a newly established fund called the Black Economic Development Initiative, managed by the Local Initiatives Support Corporation (LISC), a nonprofit organization 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.
Netflix is putting another $10 million into Hope Credit Union, based in Jackson, Miss., in the form of a Transformational Deposit “to fuel economic opportunity in underserved communities across the Deep South,” the executives wrote.
Mitchell and Alwyn cited Netflix originals like Ava DuVernay’s “13th” and Explained’s “Racial Wealth Gap” as illustrating “how systemic racism in America has sustained a centuries-long financial gap between Black and White families.”
According to the FDIC, banks that are Black-owned or led represent just 1% of America’s commercial banking assets. That, the Netflix execs said, is one factor contributing to 19% of Black families having either negative wealth or no assets at all, which is more than twice the rate of white households.
Netflix hopes to “inspire other large companies to do the same with their cash deposits,” Mitchell and Alwyn added. If every company in the S&P 500 allocated a “modest amount” of their cash holdings into similar efforts, each percentage of that cash would represent $20 billion-$30 billion of new capital.
Netflix said Mitchell has “long been passionate about these issues” and worked with Alwyn to develop the 2% cash investment commitment within a matter of weeks. Mitchell was inspired by the book “The Color of Money: Black Banks and the Racial Wealth Gap” by Mehrsa Baradaran, according to Netflix.