Netflix puts aside $100 million to support Black communities

Netflix (NFLX) rrecently joined the wagon of organizations standing in solidarity against social injustice and racial disparity. Last week, Netflix announced its plan to put aside 2% of its cash holdings (about $100 million), for the purpose of supporting financial institutions and organizations that directly advocate for and support Black communities in the U.S.

In a blog post, the video streaming service said it is certain that “bringing in 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.”

The idea was birthed and proposed by Aaron Mitchel, Netflix’s talent acquisition director, and Harvard Business School alum. He presented the idea to Netflix CEO Reed Hastings, who then teamed up with Shannon Alwyn, Netflix treasurer to develop the initiative. In the blog post, it was revealed that Mitchell, though he proposed the idea, was inspired by a book titled “The Color of Money: Black Banks and the Racial Wealth Gap” written by Mehrsa Baradaran.

In the book, Baradaran addressed and examined the of the tenacious racial wealth gap in the U.S., drawing instances from the history of Black banking, from 1863 when the Emancipation Proclamation was signed to date. According to her, the “catch-22” of Black banking is the need to help communities escape poverty. “Blacks were poor, and due to segregated housing, their homes were worthless. What this meant for Black banks was that their deposits were costlier and their loans were less stable, which created a combustible situation over time,” Baradaran writes.

The book gives an insight of the economic implication pumping more money into Black banks can achieve, as a result, Netflix is providing a portion of that capital to support these Black banks and communities.

Netflix’s first step in providing the $100 million financial support is by sharing $35 million into two places. $25 million will be allocated to the Black Economic Development initiative, a new fund. The fund will be responsible for investing in Black financial institutions that serve low and moderate-income Black communities, as well as Black community development corporations in the United States. The remaining $10 million will be allocated to Hope Credit Union “to fuel economic opportunity in underserved communities across the Deep South.”

Netflix is calling on other large corporations to participate in this program. The company believes that “if every company in the S&P 500 allocated a modest amount of their cash holdings into efforts like the Black Economic Development Initiative, each 1% of their cash would represent $20 to $30 billion of new capital. And that would help build stronger communities offering Black families pathways to prosperity and a more equitable future.”