Get access to Protocol
Aaron Mitchell, the director of HR for Netflix Animation Studio, had already been working for months on a proposal to address the racial wealth gap when the killing of George Floyd rocked the country in May. Suddenly, it seemed like every company was coming out of the woodwork with pledges to invest and diversify and do better.
On May 27, Mitchell sent an email to Netflix CEO Reed Hastings asking him what he thought of a plan to invest $100 million in Black banks, a unique strategy to funnel more capital back into Black communities struggling amid the COVID-19 pandemic. At that point, no other corporation had made a similar public commitment. Mitchell said the $100 million was an arbitrary amount of money with symbolic significance: It was the same amount that Netflix spent on "House of Cards," a flashpoint in the company's history.
"I said, 'What do you think about this as an action? There's a lot of angst, a lot of people calling for action, and I think we have something that might work,'" Mitchell told Protocol. "His answer was yes, let's work it out."
Within 30 days, Netflix became the first large tech company to declare that it would deposit up to 2% of its holdings with Black-owned and Black-serving banks, an effort to put real money toward the fight to end the racial wealth gap.
In the months since, tech companies have become some of the most aggressive corporate players to dive into the reinvigorated "Bank Black" movement, depositing millions of dollars in financial institutions and funds serving majority-Black populations amid escalating public pressure. Netflix, Twitter, Square, PayPal and Uber have entered the fray with their own slightly different plans to invest, pledging — in widely-circulated press releases — to do their part in creating economic equality. Yelp last week became the latest company to announce it will be depositing $10 million across three Black-owned banks: Carver in New York City, Broadway in Southern California and Citizens Savings Bank in Memphis.
"We were inspired by other companies' examples of doing this and the question that almost every leader in our company is asking themselves: 'What can I personally do … from my station inside the company?'" said Miriam Warren, Yelp's senior vice president of engagement, diversity and belonging.
"Putting some money into deposit in a bank is not a crazy, radical move," Warren added. "This is something that makes sense and is obvious and, frankly, why haven't we thought about this before now?"
In typical Silicon Valley fashion, the process has become almost competitive, with each company touting its strategy as the best model for others to follow. Some, like Yelp, are putting cash directly into Black-owned banks, while others are investing money in funds that have broader reach. One example: Twitter has committed $100 million to launch the Finance Justice Fund with the Opportunity Finance Network, which will invest in a network of community financial development institutions across the U.S. Twitter said it hopes its partnership will develop into a model that other companies will follow.
There's some mistrust of the Silicon Valley companies as they elbow their way into the space, considering their less-than-stellar track record on racial justice and diversity issues. And leaders in the "Bank Black" movement, including bank owners and advocates, say tech is only skimming the surface if their intention is to make a real difference in closing the country's deeply entrenched racial wealth gap, which has left white families with an average net worth that is nearly 10 times higher than the average Black family's.
"I don't think it's enough to say we're going to move deposits over, which is a great step," said Ryan Williams, the CEO and co-founder of real estate startup Cadre, who has been pushing for tech to partner more closely with Black-owned banks. "There also has to be a more holistic view on how else we can accelerate the growth and multiplication of capital these institutions are able to deploy among their communities."
Netflix was the first and largest tech company to choose to put money in Black-serving financial institutions this year. So far, the company has deposited $10 million with the Hope Credit Union and $25 million in financing for a new fund, the Black Economic Development Fund, which injects capital into Black-led banks, anchor institutions and business transactions. (The Black Economic Development Fund is run by Local Initiatives Support Corporation, a nonprofit.)
Last Monday, Enterprise Community Partners announced that Netflix committed $25 million toward its "Equitable Path Forward" fund, an effort to support historically marginalized housing providers.
Shannon Alwyn, Netflix's director of treasury, said more announcements are coming. She's working with a small team at Netflix to figure out where they'll put the rest of the money, in consultation with dozens of outside experts and organizations.
"When we started, we knew nothing," Alwyn said. "As I got a little more sophisticated in this, I see there's this spectrum in things you can do. On the one side it's something you'd think would be very easy, which is depositing money, which is what we did. Then the other side is creating a fund to tackle exactly what you want to do."
Each of the companies involved in the growing movement has its own model, typically using a mixture of direct deposits and investments with mission-driven funds, which provide an extra layer of distance between the companies and their money. A Twitter spokesperson said, while capital infusions directly to minority-owned banks can be beneficial, there are often limits to how much they can accept, so the Opportunity Finance Network is better equipped to handle large capital infusions. (Most community banks are not prepared to deal with an influx of millions of dollars.)
In September, Square committed $25 million in direct deposits with CDFIs and minority deposit institutions, or MDIs, as well as $50 million more to separate outside funds (as well as $25 million "reserved for future investment into social impact projects"). PayPal created a $500 million economic opportunity fund and has so far committed $50 million to early-stage Black and Latinx venture funds, $50 million in LISC's Black Economic Development Fund, and $50 million to Optus Bank, which has a stated commitment to ending structural racism.
Dominik Mjartan, the CEO of Optus Bank, said he was skeptical of PayPal's announcement when it first came out over the summer. "I really was suspicious of these big announcements coming because I've seen for years how community development banks, and particularly minority-owned banks, get used for PR stunts or for purposes that may not be aligned with the genuine needs of our communities," Mjartan said. But ultimately, he reached out with an offer to talk and found himself on the phone with PayPal executives within a few days. He said PayPal's commitment is not "just noise."
To Mjartan and others, the key now is keeping up the momentum and continuing to push for the best models possible to actually make a difference.
"I think it's a good first step — and it's very incomplete," said Rodney Foxworth, CEO of Common Future, a network that pushes for economic equality.
Calls to go further
Ultimately, it's not particularly onerous for a tech company to switch a small percentage of its deposits from one bank to another. It's not a donation, so the company isn't parting ways with any money, and it doesn't put its cash at risk. "Deposits and this drive to deposit money into Black-owned banks or community development banks is a great start, but you cannot solve 400 years of systemic disparities with those deposits," Mjartan said.
So Black business leaders are pushing for more: equity investments. Mjartan said equity investment was one of his initial proposals to PayPal, and he's been advising other tech executives to follow the same route, though he hasn't found much success yet. Brian Betts, the president and chief financial officer of Operation Hope, which is partnering with Twitter, said he made the same suggestion to Twitter during initial conversations, but he recognizes it's a much tougher ask.
"The easiest way [to invest] is to put deposits in, but they're less impactful," Betts said. "The longer you commit to that deposit, whether it's five or 10 years, that does improve the ability to make more of an impact. And then, of course, equity's going to be the biggest bang for the buck. It's going to make the biggest impact."
Equity investments are a much riskier and longer-term commitment, and there's often hesitance from companies' treasury departments to tie up capital for years. Netflix's Alwyn said the company realizes "that is the ultimate need," but buying shares in particular banks proved outside of the company's investment policy. "We weren't ready to make that full change as of yet," she said.
Experts agreed equity investments could become the next frontier in supporting Black financial institutions — as long as companies are willing to take the plunge. "It's my sense that that's a very unfamiliar place to the treasury departments of these tech firms," Foxworth said.
In the interim, leaders of Black banks and economic justice nonprofits are adapting to this new reality. Tech companies are cautiously forming new relationships on the ground within the movement, including with the banks and funds they're investing in, to see where the momentum will ultimately take them.
And of course, there's fear, even among some of the people partnering with tech, about the staying power of this movement and whether the powerful companies will pull their money or abandon their relationships with local banks as the public's attention wanes.
"We are making business decisions based on this movement," Mjartan said. "We are counting on this support that then allows us to lean in more than we would have otherwise. And if we lean in and they cut the ropes, we're going to crash. And that's my fear."
Cadre's Williams said companies should act aggressively now. "If we revert to the status quo and pretend there aren't real and growing disparities, five or 10 years from now, there's going to be another version of what we saw this past year," he said. "And you're going to be forced to reckon with, 'Why did you not do anything? What was the justification for inaction?'"
Emily Birnbaum ( @birnbaum_e) is a tech policy reporter with Protocol. Her coverage focuses on the U.S. government's attempts to regulate one of the most powerful industries in the world, with a focus on antitrust, privacy and politics. Previously, she worked as a tech policy reporter with The Hill after spending several months as a breaking news reporter. She is a Bethesda, Maryland native and proud Kenyon College alumna.