Nationwide conversations around social justice that sparked in the summer of 2020 include calls to businesses to consider their part in systemic racism. As a result, many companies made new or additional commitments to serve communities of color. Netflix was among these corporations and announced in June 2020 that it would move 2% of its cash holdings, or up to $100 million, to Black-owned banks and institutions in an effort to close the racial wealth gap. For context, Brookings reports that Black Americans make up 13% of the U.S. population, but only “possess 2.6% of the nation’s wealth.”
In December 2021, Netflix declared that it fulfilled its pledge. “More capital moving into these institutions means more home and small-business loans, resulting in more opportunities for Black communities. And because we pegged our commitment to 2% of Netflix’s case, the investment also grows overtime. So we will be “topping up” our commitment at the end of the year and moving more cash — over and above the $100 million already committed — into these institutions,” Netflix said in a December 2021 update.
Netflix’s $100 million commitment was distributed to the following organizations and institutions, according to its own reporting:
- $10 million to Hope Credit Union, a financial institution that serves underbanked communities across Alabama, Arkansas, Louisiana, Mississippi and Tennessee.
- $25 million to establish the Local Initiatives Support Corporation’s (LISC’s) Black Economic Development Fund, which is an “impact investment fund built specifically to address economic challenges in the Black community and to help close the racial wealth gap.”
- $10 million to the Change Company to help finance Black homeowners.
- $25 million for Enterprise Community Impact Note to help “dismantle the deeply-rooted legacy of racism in housing.
- $10 million to One United Bank, which is the “first Black digital bank and the largest Black owned bank in the country.”
- $20 million to Calvert Impact Captial’s Community Investment Note, a “fixed income security that finances organizations creating positive social and environmental impact in communities around the world.”
The 2% Solution
The 2% solution is a plan proposed by founder and CEO of Vista Equity Partners, Robert F. Smith. The plan suggests that if large corporations allocate 2% of their annual net income toward minority communities, then the racial wealth gap could be eliminated within the next decade.
“Nowhere is structural racism more apparent than in corporate America,” Smith said in a 2020 interview. “If you think about structural racism and access to capital, 70% of African American communities don’t even have a branch, bank of any type.”
Netflix’s 2% commitment will not only make a lasting positive impact for Black Americans who lack access to capital, it also takes part in improving the overall U.S. economy in the process. According to a 2019 McKinsey Global Institute analysis, closing the racial wealth gap “would add $1.5 trillion to the economy,” and The 2% solution is one way to achieve that.
Learn about other efforts to support Black-owned businesses.