LOS GATOS (CBS SF / CNN) — Netflix 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 headquartared in Los Gatos 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.READ MORE: Lowell High School Alumni File Lawsuit To Reinstate Merit-Based Admissions
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.
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, Bank of America, or Wells Fargo.
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.READ MORE: Environmental Whistleblower Sets Off Probe Into Illegal Discharge Of Petcoke At Port Of Benicia
“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.”
Earlier this month, Netflix CEO Reed Hastings and his wife Patty Quillin announced they would donate $120 million to advance the mission of Historically Black Colleges and Universities (HBCUs).
“We’ve supported these three extraordinary institutions for the last few years because we believe that investing in the education of Black youth is one of the best ways to invest in America’s future,” Hastings and Quillin said in a statement.MORE NEWS: COVID: UCSF Researchers Examine Impact Of Coronavirus On Young Brains After 3 Teens Develop Psychosis
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