Netflix revealed on Tuesday that 2% of its cash reserves would be spent in financial companies and organizations “directly support Black communities in the U.S.”
In a blog post the video sharing company said its initial investment would be as high as $100 million. Throughout the first phase, $25 million will be transferred to a new fund named the Black Economic Development Initiative invested in “Black financial institutions serving low and moderate-income communities and Black community development corporations in the U.S.,” the company outlined.
This said the $10 million would go to Hope Credit Union to boost job growth around the Deep South in underserved areas.
“Over the next two years, HOPE estimates the Netflix deposit will support financing to more than 2,500 entrepreneurs, homebuyers and consumers of color,” the company mentioned.
Netflix has “roughly $5 billion in our cash balance sheet as of last quarter,” Spencer Neumann the CEO said. “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 financial institutions have chosen “probably a little lower interest rate but [the difference is] relatively small. We think that’s worth it.”
The campaign comes on from the uproar about George Floyd’s police shooting in Minneapolis last month. Several businesses have been making grants and intervention programs to answer the appeal to eradicate social injustices and inequality in national demonstrations.
The idea was proposed to Netflix CEO Reed Hastings by Aaron Mitchell, Netflix ‘s director of talent acquisition. Within a couple of weeks, Mitchell teamed up Netflix Treasury Director Shannon Alwyn to bring together the $100 million commitment.
“19% percent of Black families have either negative wealth or no assets at all, compared to only 9% of White households, according to the U.S. Federal Reserve. … 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.” Mitchell and Alwyn said in a blogpost on Tuesday.
The deal comes nearly two weeks after Hastings donated $120 million to historically Black colleges and universities and his wife, Patty Quillin. Hastings has given millions to charter schools in funding, and a $100 million philanthropic fund for education for children started in 2016.