*Billionaire Robert F. Smith is calling on large corporations to invest 2% of their annual net income over the next decade to help empower Black communities.
Smith’s proposal is part of his new “2% Solution,” which “calls on big banks to capitalize the financial institutions that service Black-owned businesses and minority-run entrepreneurial ventures,” per Minority Business Development Agency.
“Nowhere is structural racism more apparent than in corporate America,” Smith said in a keynote address he gave at the Forbes 400 Summit on Philanthropy last week “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.”
In recent days, Smith, whose net worth is estimated to be $5 billion, has been sharing a concrete plan with the nation’s business leaders that argues that an investment equal to 2% of net income over the next decade would be a small step toward restoring equity and mobility in America.
He has implied that America’s big corporations should feel compelled to support such a plan given the exclusionary practices of many industries over several decades. Smith made the case that the average American household charitably donates 2% of its income annually and is asking corporate America to do the same.
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This is how we turn outrage into action. Thank you @reedhastings & @Netflix. $100m into Black-owned banks is a giant step forward. If major U.S. companies invest 2% of profits in left behind communities, we can close the racial wealth gap in 10 years. https://t.co/EqwtkHx6UK
— Robert F. Smith (@RFS_Vista) June 30, 2020
“The deprivation of capital is one of the areas that creates a major problem to the enablement of the African American community,” Smith said during the summit. “The first thing to do is put capital into those branch banks to lend to these small businesses to actually create an opportunity set… drive it into these small businesses, which employs 60 percent-plus of African Americans.”
via Revolt TV:
According to Forbes, the net worth of the US’s largest companies over the last decade was $1.3 trillion, which — with Smith’s plan — would leave around $25 billion to be used for strengthening healthcare infrastructure in Black neighborhoods, funding STEM education at HBCUs and more.
Over the next 10 years, Smith believes corporate spending could provide billions of dollars to Black-owned businesses, banks and community development efforts.
Here’s more from mdba.gov:
In his talk on Thursday, Smith pointed out that the net income of the ten largest U.S. banks over the last ten years was $968 billion. He figured just 2% of that would amount to $19.4 billion, which could be used to fund the core Tier 1 capital of community development banks and minority depository institutions that primarily service Black communities.
See more from Smith’s message at the Forbes Summit here.