The global coronavirus pandemic highlighted racial disparities in both health and economic opportunities, and sparked a long-overdue conversation on how to address racial inequality in America. This included how the country’s largest corporations should step up and use their power, resources, and voices to enact change.
In June, Robert F. Smith called on large corporations to use 2% of their annual net income for the next decade to empower minority communities, including capitalizing financial institutions that service Black-owned businesses.
“The deprivation of capital is one of the areas that creates a major problem to the enablement of the African American community,” Smith said. “The first thing to do is put capital into those branch banks to lend to these small businesses to actually create an opportunity set… drive it into these small businesses, which employs 60%-plus of African Americans.”
The country is taking notice. On June 30, Netflix announced plans to allocate 2% of their cash holdings — initially up to $100 million — into financial institutions and organizations that directly support Black communities in the U.S.
As a first move, Netflix is allocating $25 million 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 corporations in the U.S. An additional $10 million will go to Hope Credit Union to fuel economic opportunity in underserved communities across the Deep South, which will financially support an estimated 2,500 entrepreneurs, homebuyers, and consumers of color.
“This is how we turn outrage into action,” Smith said. “One hundred million dollars to Black-owned banks is a giant step forward. If major U.S. companies invest 2% of profits in left behind communities, we can close the wealth gap in 10 years.”
Advancing economic justice for Black Americans goes beyond just shoring up the problems in the short term, it requires building a long-term strategy that gives Black people equal opportunity to capital.
No single person or company can close the racial wealth gap alone. But if more companies take action like Netflix and listen to leaders like Robert F. Smith, corporate America can make a significant impact on racial equality.
