Hope Credit Union and Local Initiative Support Corporation (LISC), two financial institutions that received part of Netflix’s $100 million commitment to support Black communities, are injecting the capital into Black-owned businesses and affordable housing.

Hope’s portion of the Netflix commitment is “designed to import wealth into communities from where it has been extracted,” said Sheila Byrd, communications director at Hope. “The investment will support small business, mortgages and consumer loans to more than 2,500 people of color over the course of two years.”

Netflix, the streaming giant, pledged $100 million, or 2% of its cash holdings, to fight racism. The funds will be distributed among many financial and social organizations combating racial and economic injustice in the United States. 

Black communities and businesses are just as “capital-starved” as “the people in the communities we serve,” Hope CEO Bill Bynum told Bloomberg. LISC, a community development financial institution (CDFI) and Hope Credit Union, which serves Black communities across five southeastern states, will receive $25 million and $10 million, respectively, by month’s end. 

Hope Credit Union serves Deep South states, like Arkansas, Mississippi, Alabama and Tennessee, and three out of four of the credit union’s members are Black. The Jackson, Miss.-based credit union said last year it originated 87% of mortgages to people of color, and gave 61% of its commercial loans to minority and women-led businesses. 

“For every dollar held in net worth by a white household in Deep South states, Black households hold between 10 to 20 cents,” the credit union said in a statement.

Funds will be directed toward capital-starved communities like Itta Bena, a majority Black Mississippi Delta town with a poverty rate of 42%, a median household income of $20,417, and only $1.2 million in total local deposits, Byrd said.

LISC will focus on short-term business loans in order to preserve the $25 million and “help the community for as long as they can,” said George Ashton, managing director of strategic investments at LISC. The CDFI originated more than $1.8 billion in loans nationwide in 2019, and expects the Netflix funds to last more than five years if it sticks to short-term financing.

“We plan on using these funds to provide liquidity to many Black-owned businesses nationwide who are struggling due to the pandemic,” Ashton said. LISC will prioritize short-term financing to businesses “at an affordable rate,” and will hold off on housing investments until next year, he said. 

Also read: Fintechs rally for social justice online, but what is being done offline?

With the rise of the protests across the country, many companies have shown their support for social justice via messages on social media. Fintechs like Plaid, Varo Money, Chime and Kabbage, took to Twitter to protest systemic racism and police brutality during the #BlackOutTuesday social media campaign last month. However, activists have pointed out that real action goes further than such messages and many companies have since been called out by the public with the #openyourpurse hashtag. 

This week, the Royal Bank of Canada pledged $111 million to racial diversity initiatives on the heels of Bank of America’s announcement last month of a $1 billion program to assist communities of color impacted by the pandemic. PNC Bank has committed more than $1 billion to community development financing, and PayPal said in June it would put $530 million toward businesses owned by people of color. Facebook last month pledged to donate $10 million to “groups working on racial justice.” 

“The biggest net gain of this effort is that it hopefully will be a tipping point and motivation for others to get involved in the same way,” Ashton said. “We’ve been fielding calls from a number of different institutions that are also interested in taking a similar pledge of 2% of their cash on hand going into the Black economic ecosystem.”

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