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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).

Go deeper

Dion Rabouin, author of Markets
Sep 29, 2020 - Economy & Business

Brookings fellow predicts reparations could happen in next 10 years

Thanks to growing momentum and changing attitudes among Americans, Brookings Institution fellow Andre Perry predicts that within 10 years the U.S. will provide some form of reparations to Black people.

What we're hearing: "What's happening in the streets today is indicative of the attitude change that is occurring in America," Perry, a scholar-in-residence at American University and author, said during our interview for "Axios on HBO."

The rebellion against Silicon Valley (the place)

Photo illustration: Sarah Grillo/Axios. Smith Collection/Gado via Getty Images

Silicon Valley may be a "state of mind," but it's also very much a real enclave in Northern California. Now, a growing faction of the tech industry is boycotting it.

Why it matters: The Bay Area is facing for the first time the prospect of losing its crown as the top destination for tech workers and startups — which could have an economic impact on the region and force it to reckon with its local issues.

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Telework's tax mess

Illustration: Annelise Capossela/Axios

As teleworkers flit from city to city, they're creating a huge tax mess.

Why it matters: Our tax laws aren't built for telecommuting, and this new way of working could have dire implications for city and state budgets.