Netflix commits $100M to support black-owned banks, black communities
Netflix distributes its wealth among 30 banks worldwide
Netflix announced Tuesday that the video-streaming company is putting 2 percent of its total cash holdings, worth about $100 million, toward black-owned banks and other financial organizations.
The move comes as the country's biggest companies offer financial support to black businesses and civil rights groups in the wake of George Floyd's death, but Netflix's $100 million commitment is more of an investment than a donation. The company's current business model already relies on about 30 banks worldwide to distribute its holdings, according to The New York Times.
COLIN KAEPERNICK'S LIFE STORY IS COMING TO NETFLIX
"As part of our commitment to racial equity, we are turning understanding into action. Going forward, Netflix is going to allocate two percent of our cash holdings - initially up to $100 million - into financial institutions and organizations that directly support Black communities in the U.S.," Netflix Director of Talent Acquisition Aaron Mitchell and Treasury Director Shannon Alwyn said in a blog post.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NFLX | NETFLIX INC. | 755.51 | -0.59 | -0.08% |
The commitment will start with $35 million split between a new fund called the Black Economic Development Initiative, which will invest in black financial institutions, and HOPE credit union, which aims to provide financial services and support to low-income residents in the South.
BIDEN PLEDGES TO REVERSE TRUMP'S CUTS, HIKE COSTS: 'A LOT OF YOU MAY NOT LIKE THAT'
$25 million will go toward the Initiative, managed by the Local Initiatives Support Corporation, which Mitchell and Alwyn describe as "a non-profit with a track record of developing underinvested communities."
(Photo by Thomas Trutschel/Photothek via Getty Images)
"They will invest the funds into Black financial institutions serving low and moderate-income communities and Black community development corporations in the U.S.," their blog post read.
HOPE said Netflix's $10 million investment in the credit union will be in the form of a Transformational Deposit.
"In each Deep South state served by HOPE, for every dollar in net worth held by white households, Black households hold between ten and twenty cents. Through Transformational Deposits, HOPE imports funds into these capital-starved communities to make business, mortgage and consumer loans and provide other financial services that build wealth and foster economic mobility," HOPE said in a press release.
BLACK BUSINESS OWNERS DECIMATED BY CORONAVIRUS PANDEMIC, STUDY FINDS
HOPE estimates that in two years, the Netflix deposit will help provide funding to "more than 2,500 entrepreneurs, homebuyers and consumers of color."
Netflix's idea apparently came to life in April when Netflix executives and employees were brainstorming ways to diversify the company, those involved with the plan told the Times.
The idea stemmed from the book "The Color of Money: Black Banks and the Racial Wealth Gap," by Mehrsa Baradaran, which discusses financial disparities between white and black communities in the U.S. and how black-owned financial institutions are underfunded, according to the blog post.
"This capital will 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," Mitchell and Alwyn wrote.
They added that black-owned banks make up only 1 percent of U.S. commercial banking assets, citing the FDIC.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
If every S&P 500 company put "a modest" portion of their cash holdings into organizations that support black communities, "each [1] percent of their cash would represent $20-$30 billion of new capital," they wrote. "And that would help build stronger communities, offering more Black families pathways to prosperity and a more equitable future."
Netflix has created a "Black Lives Matter" movie and TV show playlist on the streaming service that promotes shows about racial injustice or race in general. Netflix co-founder Reed Hastings and his wife, Patty Quillin, donated $120 million to historically black colleges earlier in June.