Netflix has announced its plans to invest $100 million into financial institutions that support the Black community.
As part of an initiative to help fight systemic racism as well as the racial wealth gap, the media giant pledged 2% of its $5 billion in cash on hand, reports CNBC.
“If we can move 2% into these Black owned or Black led financial institutions … where we can still manage our liquidity … it’s a way to do this on an ongoing basis and hopefully learn from this and it continues to grow,” Netflix CFO Spencer Neumann said.
The first step of the plan will be to invest $25 million into the newly established Black Economic Development Initiative, which will help Black-owned financial institutions that serve low and moderate-income communities.
Another $10 million will fund the Mississippi-based Hope Credit Union, which primarily serves low-income residents in the Deep South, reports the Clarion-Ledger.
According to Hope Credit Union CEO Bill Bynum, the company serves more than 1.5 million people but does not have enough capital to fully support communities’ financial needs.
“We are capital-starved, just like the people in the communities we serve,” Bynum told Bloomberg. “Having a global voice like Netflix say it’s important to invest in financial institutions like Hope is tremendously important, not just for the capital we will use to make mortgage loans and small business loans, but for what it says.”
Netflix’s investment into Hope Credit Union is the first in the institution’s initiative to make more business, mortgage and consumer loans available to low-income families. The Netflix funding will go toward supporting 2,500 entrepreneurs, homebuyers and consumers of color over the next two years.
The venture was the idea of Netflix’s Director of Talent Acquisition Aaron Mitchell, who pitched it after having dinner with leaders of underrepresented groups, according to Bloomberg. Dinners of this sort have been hosted by the company since October as part of its effort to improve diversity within the company.
Mitchell brought the idea to Neumann after the killing of George Floyd, and the proposal was then sent to CEO Reed Hastings, who accelerated the plan.
“I have talked to a lot of companies, but this is the first company that’s actually done something about it,” said Mehrsa Baradaran, author of The Color Of Money.
The company believes investing 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,” according to a statement released by Mitchell and Shannon Alwyn, the company’s treasury director.
Netflix cited statistics from the U.S. Federal Reserve which concluded that 19% of Black families have either no assets at all or negative wealth, compared to 9% of white households.
“Black banks have existed to fight this for generations, spurring economic growth by extending credit in often underbanked communities. But they’re disadvantaged in their access to capital, especially from large multinational companies, when compared to other banks,” the statement read.
Mitchell said he hopes this financing will narrow the racial wealth gap and capital isolation Black communities face due to a lack of access to capital.
“We have been on this journey now for at least the last three years,” Mitchell said. “We still have lots of work to do, but we are making meaningful progress.”
