New York (CNN Business)Netflix (NFLX) on Tuesday said it would invest in Black-owned banks in an effort to help close the wealth gap between Black and White America.
The streaming service announced plans to deposit 2% of its cash, or an estimated $100 million, into Black-owned financial institutions and community development organizations, which have a better track record of lending to minority borrowers than mainstream consumer banks.Minority-owned banks and credit unions represent just 1% of America’s total commercial banking assets.
“We believe bringing more capital to these 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,” Netflix said in a statement.As part of the initiative, the company is also investing $25 million into the New York-based Local Initiatives Support Corporation, a development finance company with 35 offices across the country that backs Black entrepreneurs across a variety of businesses.Read More
Maurice Jones, CEO and President of the Local Initiatives Support Corporation (LISC), speaking at LISC’s 40th anniversary event in 2019. LISC President & CEO Maurice Jones said most Black-owned businesses are sole proprietorships with up to 10 employees with annual revenues of less than $1 million, and typically aren’t prioritized by large commercial banks like Chase (CCF), Bank of America (BAC), or Wells Fargo (CBEAX).He said Netflix first approached his organization about a potential deal after the May 25 killing of George Floyd at the hands of Minneapolis police, which set off a national reckoning over systemic racism. “My recollection is they reached out to us after seeing the work we were doing around investing in small businesses, particularly businesses led by people of color,” Jones told CNN Business.About 10% of Netflix’s $100 million investment will go to the Hope Credit Union, which finances underserved communities in the Deep South.
Jones said Netflix is one of several major companies that have invested in LISC over the last three weeks. He said he’s “never seen anything like” the outpouring of support that Black-owned financial institutions have received since Floyd’s killing, but noted that support needs to be sustained over a period of years if companies are sincere in wanting to close the nation’s racial wealth gap.”Do we have the stamina, the faithfulness, to do this for years, the way we did in Europe with the Marshall Plan after WWII?” Jones asked. “If we build black wealth and minority communities in this country, it will be good for them and the entire economic health of the country.”
Source: edition.cnn.com