Netflix said on Tuesday that it would move up to $100 million, or 2 per cent of its cash holdings, to financial institutions that focus on Black communities. It is intended to address a longstanding problem that these communities face: a lack of capital for the banks and other lenders that service them.
Earlier in June, the streaming company’s chief executive, Reed Hastings, pledged $120 million to support scholarships at historically Black colleges and universities. The move on Tuesday by the company he runs aims to fight racial inequality not through charity but via a routine commercial aspect of its business. As the company’s considerable cash pile grows, so might its deposits.
Netflix will start with $35 million, split two ways: $25 million in financing for a new fund, the Black Economic Development Initiative, that will itself invest in Black financial institutions, and $10 million deposited with the Hope Credit Union. These institutions join the roughly 30 banks worldwide that Netflix uses to hold their cash.
The big banks where Netflix and other multinational companies keep their money are not able to operate “at the grassroots level these Black-led institutions can and do,” Netflix said in a statement. “So we wanted to redirect some of our cash specifically toward these communities, and hope to inspire other large companies to do the same with their cash deposits.”
After encouragement from Mr Hastings and Spencer Neumann, Netflix’s chief financial officer, Mr Mitchell — who joked in an interview that he had “no business” devising ways the company should manage its money — worked with Shannon Alwyn of the company’s treasury division to put the plan into action.
The project took on greater urgency the next month after the killing of George Floyd while in the custody of Minneapolis police officers, which set off weeks of nationwide protests against systemic racism and police brutality.
Source: New York Times