In June, Netflix announced its initiative to financially support Black communities to the tune of $100 million to “address the racial wealth gap…by using our banking relationships in ways to address it,” according to Treasury Director Shannon Alwyn. On July 24, 2020, Netflix held a webinar to discuss its partnerships with the HOPE Credit Union and Local initiatives Support Corporation (LISC), which are part of their broader commitment to allocate 2% of its cash holdings – around $100 million – to financial institutions that directly support Black communities in the US. Alwyn and Aaron Mitchell, Director of Talent Acquisition, announced the initiative and its initial “transformational deposits” into the Black Economic Development Initiative managed by LISC ($25 million) and the Hope Credit Union ($10 million).
After Mitchell approached her with the idea, Alwyn said “my initial thought was that all of the internal communications have said let’s pause non-critical things and try to get through this work from home environment” but “as we started to get through it, my team and I realized what an issue this is so if it makes a small impact, it’s enough to take on.” Netflix targeted LISC because they have “a great reputation for managing other impact funds,” including COVID-19 relief funds in NYC and LA, and it holds a Double A rating from the S&P. In 40 years, LISC has invested $22 billion in grants, loans, and technical assistance while leveraging $65 billion. It performs community and economic development finance work in every state in the union, and its president Maurice Jones said the organization is “grateful that Netflix has stepped up with this focus on MDI’s and organizations that are supporting minority owned and Black owned businesses.” As part of Netflix and LISC’s new Black economic development initiative, Jones said they will take Netflix’s initial $25 seed investment as “an initial seed investment for a much larger fund” while focusing on “black-led banks and black-led partners to invest.” LISC will use the seed money to invest in CDFI’s (Community Development Investment Funds) and MDI’s, and in areas where there are none, they are going to invest in small businesses directly. They also plan on investing in anchor institutions like HBCUs.
Bill Bynum, CEO of HOPE, a credit union, loan fund, and policy center that serves residents in Arkansas, Louisiana, Mississippi, and Tennessee, also spoke about the impact of Netflix’s cash investment. HOPE uses transformations of deposits to spur economic growth in the deep south, providing responsible lending; as Bynum said: “we try to import the capital into these places where wealth has been denied and restricted for growing with its black residents.” HOPE spurs economic development by providing capital for housing, healthcare, education and education. According to Bynum, over 60% of HOPE’s recipients don’t have a bank account or rely on check cashers/petty loan distributors, 85% of HOPE’s mortgages are first time home buyers, and 66% of hOPE’s members were either unbanked or underbanked prior to coming to the credit union. HOPE generates around 40-50 business loans in a typical year, but with COVID, they’ve done over 2500 loans in the last 4 months. According to Bynum, “liquidity is very important to us – being able to provide capital that we usually see that these communities can’t fuel themselves.”
While some may write-off Netflix’s commitment as ingenuous because they gave the money to intermediaries, their diligence in selecting their partners and their willingness to admit that they do not have experience building economic opportunity in Black communities so they partnered with two organizations that do should be commended and applauded. Bynum notes that the wealth gap between a black family with children and a white family with children are 100 to 1 and that black businesses earn on average $75K in revenue vs. $650K for an average white business, while highlighting that the gap “can’t close without intentional, focused efforts and the kind of investment that Netflix has made in HOPE and LISC.” It is a strong first step for the streaming behemoth in the fight for racial equality in the United States.