Netflix Inc is set to shift about $100 million to lenders that serve the Black community, making it the largest company yet to pledge cash to historically underfunded financial institutions.
According to reports, the online TV giant will start by shifting $25 million into the Black Economic Development Initiative, a new fund that will invest in Black-owned financial institutions serving low-income communities, and $10 million to Hope Credit Union. Going forward, the company will steer 2% of its cash on hand, which currently amounts to about $5 billion, to financial organizations that directly support African-American communities.
Netflix’s move, of shifting the huge sum, reportedly sent shares of Black-owned banks soaring. Carver Bancorp Inc. jumped as much as 192% in premarket trading and Broadway Financial Corp. gained as much as 96%.
Top U.S. companies have rushed to show support for African Americans following the death of George Floyd, one of several Black people killed by police in the past few months. Many businesses and rich individuals have pledged money to civil rights causes, including Netflix Chief Executive Officer Reed Hastings, who earmarked $120 million of his personal fortune to historically Black colleges and universities. But his company wanted to propose a solution that addresses more systemic causes of inequality.
Hope Credit Union serves more than 1.5 million people in states including Alabama and Louisiana, but it doesn’t have enough money to fully support the financial needs in its communities, according to its CEO, Bill Bynum.
“We are capital-starved, just like the people in the communities we serve,” Bynum said. “Having a global voice like Netflix say it’s important to invest in financial institutions like Hope is tremendously important, not just for the capital we will use to make mortgage loans and small business loans, but for what it says.”