stockcam/iStockBy CATHERINE THORBECKE, ABC News
(NEW YORK) — Netflix announced it is allocating 2% of its cash holdings going forward — a sum of up to $100 million initially — into financial institutions that directly support Black communities in the U.S. as a way to help ameliorate the deep-seated racial wealth gap.
“Because of capital isolation, many Black communities lack the access to capital that could help reduce the staggering racial wealth gap that’s persisted for generations,” Spence Neumann, Netflix’s chief financial officer, said in a statement Tuesday.
“Moving some of Netflix’s cash deposits into Black-focused institutions and organizations in the U.S. can put more capital to work for the people and businesses in these communities and narrow the gap,” Neumann added.
The announcement comes as corporate America is facing a growing reckoning over its role in racial justice, after protests over the killing of George Floyd have put immense public pressure on companies to affirm support through actions and not just words.
The 2% investment idea has been attributed to Black billionaire Robert F. Smith, who has long advocated for large corporations to use 2% of their net income to empower minority communities and capitalize Black-owned financial institutions and businesses, according to a 2019 Forbes interview.
In a separate statement announcing the investment, Netflix’s Director of Talent Acquisition Aaron Mitchell and Treasury Director Shannon Alwyn said they believe bringing capital into Black 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.”
Black-owned or led banks represent just 1% of America’s commercial banking assets, Mitchell and Alwyn added, citing FDIC statistics, saying this is one factor that contributes to the nation’s racial wealth gap. Moreover, Mitchell and Alwyn noted that 19% of Black families in the U.S. have either negative wealth or no assets at all — more than double the rate of White families, citing Federal Reserve data.
The two said they hope that Netflix redirecting masses of wealth to Black-led financial institutions will help inspire other large companies to do the same.
As a first step, Mitchell and Alwyn say they will be putting $25 million in cash into the Black Economic Development Initiative, which will invest the funds into Black financial institutions that serve predominately low and moderate-income communities.
They will also put $10 million into the Hope Credit Union, where they say the deposit will be used to fuel economic opportunities across the Deep South.
Netflix’s investment news comes on the heels of its CEO Reed Hastings announcing he and his wife, philanthropist Patty Quillin, were making a $120 million donation to Historically Black Colleges and Universities.
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