Illustration: Sarah Grillo/Axios

Netflix has pledged to allocate about 2% of the $5 billion it holds in cash — some $100 million — to "financial institutions and organizations that directly support Black communities in the United States," the company announced today.

Why it matters: U.S. corporations are sitting on trillions of dollars of cash, which is earning them effectively no interest. Aaron Mitchell, a recruiter at Netflix, had the idea that some of that cash could be deposited at Black-owned banks, where it would be reinvested into Black communities.

The catch: As part of this pledge, Netflix is investing $25 million into a newly established fund called the Black Economic Development Initiative.

  • But that investment isn't a "short-term, highly liquid investments that are readily convertible to known amounts of cash" — so they won't count as cash on Netflix's balance sheet.

The bottom line: Netflix says that it wants to "inspire other large companies" to move their cash deposits to Black-led institutions. But given the limits of deposit insurance, that's easier said than done when billions of dollars are on the line.

  • Corporate treasurers go to great lengths to keep their billions of dollars of cash in risk-free instruments. That does not include things like savings accounts at banks, which are only insured up to $250,000.
  • Netflix hasn't worked out all the details of how it's going to meet its $100 million pledge. The big question remains open: Whether it is possible for significant sums of corporate cash to be held in Black-led institutions, while still remaining classed as cash for GAAP purposes.

Editor's note: This story has been corrected to reflect that Netflix's investment in the Black Economic Development Initiative is $25 million (not $35 million).

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