In a keynote address he gave at the Forbes 400 Summit on Philanthropy, Robert F. Smith made a bold call to action, imploring large corporations to use 2% of their annual net income for the next decade to empower the Black community. This proposal follows Smith also circulating a plan among prominent CEOs calling on big banks to capitalize on the financial institutions that service Black-owned businesses and entrepreneurial ventures.
“Nowhere is structural racism more apparent than in corporate America. 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.” – Robert F. Smith
Black and Latino communities have largely been abandoned by large banks and are starved of the capital needed to build businesses and local institutions in the long term. Pumping in reparative capital and investing directly in financial architecture would be a fast way to advance economic justice for Black Americans.
An investment equal to 2% of net income over the next decade would be a small step toward restoring equity and mobility in America. America’s big corporations should feel compelled to act given that many industries have been built on exclusionary practices and discriminatory policies. The average American household charitably donates 2% of its income annually, and Smith believes corporate America should at least do the same.
For example, the net income of the ten largest U.S. banks over the last ten years was $968 billion. Just 2% of that would amount to $19.4 billion, which could be used to fund the ‘capillary banking system’ — community development banks and minority depository institutions that primarily serve Black communities when other banking institutions often won’t.
Black communities have experienced systemic inequality and exclusion in every sector of the economy. To repair some of the historical damage that big businesses have caused the community, corporations should give back. The nation’s banking sector should, over the next ten years, provide billions of dollars of capital to Black-owned banks and community development banks, with some of the funds used to digitize these lenders. Telecom and tech sectors should provide money to help prepare 180,000 students at America’s historically Black colleges and universities for the jobs of the future, and to digitize one million minority small businesses.
This plan for economic justice would not only ensure Black Americans have better access to opportunity, but also increase the nation’s economic activity by more than $1 trillion annually. This plan will show Americans there is hope, there is an opportunity for the American dream to be revitalized, and will give us all confidence that we can actually make this a better country and a better place to live.