A button to launch the Netflix application is visible on a remote control in this photo illustration in Warsaw, Poland on April 25, 2019.
Jaap Arriens | NurPhoto | Getty Images
Netflix announced Tuesday that it will begin putting 2% of its cash holdings into financial institutions and organizations to “directly support black communities in the United States.”
The video streaming giant said in a blog post that its initial commitment will be as much as $ 100 million.
In the first phase of allocating these funds, $ 25 million will be transferred to a new fund called the Black Economic Development Initiative, which will invest in “black financial institutions serving low and moderate income communities and black community development companies in the United States. “the company said.
He said $ 10 million will go to the Hope Credit Union to fuel economic opportunities in underserved communities in the deep south.
“Over the next two years, HOPE estimates that Netflix’s filing will support the financing of over 2,500 entrepreneurs, homebuyers and black consumers,” said the company.
Netflix has “about $ 5 billion in our last quarter financial balance sheet,” CFO Spencer Neumann said in a Squawk Box interview Tuesday. “If we can move 2% to these Black or Black led financial institutions … where we can still manage our liquidity … it is a way to do it on an ongoing basis and we hope to learn from this and continue to grow . “
Neumann said that the financial institutions that Netflix has chosen provide “probably a slightly lower interest rate but [the difference is] relatively small. We think it’s worth it. “
The initiative follows protests over the killing of George Floyd’s police last month in Minneapolis. Many companies have announced donations and action plans to respond to the call in national protests to eliminate injustice and racial inequality.
Aaron Mitchell, director of talent acquisition at Netflix, proposed the idea to Netflix CEO Reed Hastings. Mitchell teamed up with Netflix’s Treasury director Shannon Alwyn to pool the $ 100 million commitment in a few weeks.
In Tuesday’s blog post, Mitchell and Alwyn said: “19% of black households have negative wealth or no assets, compared to only 9% of white households, according to the United States Federal Reserve … Black banks they have existed to fight this for generations, stimulating economic growth by extending credit in often non-banking communities. But they are disadvantaged in their access to capital, especially by large multinational companies, compared to other banks “.
The plan comes almost two weeks after Hastings and his wife Patty Quillin donated $ 120 million to historically black colleges and universities. Hastings has allocated millions to fund charter schools and in 2016 launched a $ 100 million philanthropic fund for the education of children.
On Monday, Netflix announced a six-episode drama series “Colin in Black and White”, watching the experiences of former NFL quarterback Colin Kaepernick as a teenager who shaped his defense. Kaepernick collaborated with Emmy-winning director Ava DuVernay on the project.
Kaepernick, born of a white mother and a black father, was adopted in Wisconsin by a white couple who moved to California as a child.
“We try to give a different perspective to the different realities that blacks face,” said Kaepernick in a note. “We explore the racial conflicts that I faced as a black man adopted in a white community during my high school years.”
– The Associated Press contributed to this report.