Yahoo Movies Netflix Invests $100 Million in Black-Led Banks to Help Narrow Racial Wealth Gap
Netflix said it has invested $100 million so far into six Black-led financial institutions in the U.S., as part of the company’s pledge to allocate 2% of cash holdings into banks serving Black communities.
In June 2020, amid racial-equality protests across America, Netflix announced plans to invest capital in Black banks to help address racial wealth inequality. As of Sept. 30, 2021, the company reported $7.5 billion in cash and equivalents on its balance sheet (so 2% of that would be $150 million). Because the streamer pegged its commitment to 2% of cash reserves, the investment is anticipated to grow over time: At the end of 2021, Netflix plans to top up the funding and put more cash into the financial institutions.
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“More capital moving into these institutions means more home and small-business loans, resulting in more opportunities for Black communities,” Aaron Mitchell, HR director of Netflix Animation Studios, and treasurer Shannon Alwyn, wrote in a blog post Wednesday.
The Netflix execs wrote that to help close the wealth gap, “we need more companies to join this movement” and linked to a post from last year outlining its learnings from the initiative. “Together, we can contribute to more healing and progress for Black communities,” Mitchell and Alwyn wrote.
The funding in Black banks carries higher risk than other types of investments, according to the Netflix execs. “In contrast to Netflix’s normally conservative investment policy, many of these Black-led financial institutions come with more risk so we had to make exceptions to how things are traditionally done to make this investment work,” Alwyn wrote in a blog post last year. “However, every company manages their cash differently and has a different appetite for risk. The key is for each company to determine what level of risk they’re willing to take on.“
Netflix is launching in a web series, “Banking On Us,” to highlight the real-world stories of how providing loans to homeowners and businesses has made a difference in local communities. The first episode, “Investing in the Black Community,” premieres today on YouTube (available at this link). Episode 2, on business ownership, will premiere Dec. 8 at 9 a.m. PT and episode 3, on home ownership, will premiere Dec. 15 at 9 a.m. PT.
Separately, last year Netflix co-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
Netflix’s 2% cash holdings pledge of $100 million has been allocated as follows:
$10 million was deposited with Hope Credit Union in the form of a Transformational Deposit to fuel economic opportunity in underserved communities in Alabama, Arkansas, Louisiana, Mississippi and Tennessee.
$25 million was invested as seed funding to establish the Black Economic Development Fund, managed by the Local Initiatives Support Corporation (LISC). The fund invests in Black-led banks, anchor institutions, businesses, and real estate developers. It reached its $250 million goal this year after capital investments from 11 public and private companies, including PayPal, Costco, Square, and McKinsey & Co.
$10 million was invested with The Change Co. to provide financing to Black homeowners fairly and responsibly.
$25 million was invested as seed funding for the Enterprise Community Impact Note to support its Equitable Path Forward initiative. The initiative supports historically marginalized housing providers in creating and preserving affordable homes in diverse communities.
$10 million was deposited with OneUnited Bank as the start of an ongoing relationship.
$20 million was invested in Calvert Impact Capital’s Community Investment Note. The funds are earmarked to support housing and community development projects focused on U.S. BIPOC communities.
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