Netflix to Invest $100 Million in Black Community’s Financial Institutions
Netflix, Inc. plans to transfer 2% of its cash holdings to banks and credit unions that serve primarily Black communities to augment access to loans for people and businesses. Following the nationwide protests sparked by the killing of George Floyd in Minneapolis police custody, many companies like Netflix exhibited active support of organizations focused on social justice, education, and racial inequity.
Netflix had already been discussing diversity recruitment and the makeup of its leadership, and barriers to capital in Black communities arose in these conversations. Aaron Mitchell of Netflix’s executive recruiting team found inspiration from the book “The Color of Money: Black Banks and the Racial Wealth Gap”. The book’s author, Mehrsa Baradaran, expressed her hope that Netflix’s actions will move other corporations to realize “they can do something with capital and not just make statements on social media.”
Netflix Chief Executive Reed Hastings signed off on Mr. Mitchell’s proposal. Mr. Hastings and his wife, Patty Quillin, said they were donating $120 million to historically Black colleges and universities.
Netflix previously committed to donating $5 million to support Black artists, advocacy groups, and businesses. The death of Mr. Floyd and subsequent racial-justic protests sped up the process of reallocating Netflix’s cash. The company now expands its actions beyond donating, transferring $100 million of its $5 billion in cash holdings to institutions serving Black communities which systematically lack access to capital.
According to Netflix’s blog, FDIC data finds that Black-owned or led financial institutions make up only 1% of U.S. commercial banking assets.
“It’s pretty stark how undercapitalized some of these financial institutions are,” said Netflix Chief Financial Officer Spencer Neumann. Racism “creates these unequal economic opportunities, and capital isolation is one of them.”
$25 million of the $100 million will go to the Black Economic Initiative, a new fund managed by the Local Initiatives Support Corporation, to invest in Black financial institutions serving low and middle income communities. $10 million is allocated for the Hope Credit Union to “fuel economic opportunity to underserved communities across the Deep South,” said Netflix.
“It’s really critical that leading voices like Netflix say it’s important to invest in these institutions so we can then reinvest in these communities,” Hope Chief Executive Bill Bynum said. “We will generate hundreds of mortgages, business loans, getting people out of debt traps with these resources. It is a game changer.”