Across corporate America, wallets are opening to support minority-owned businesses in the wake of continuing protests over racial inequality in areas from law enforcement to investment.
From PepsiCo to Lowe’s and Netflix, corporations are pledging to spend millions to support Black-owned companies to help address centuries of discrimination.
Organizations that have long worked to support Black-owned businesses see the moves as a step in the right direction. But those involved in that effort say more needs to be done about systemic issues that have led to a yawning wealth gulf between Black and white Americans.
“I think that there's been a light shining on the United States in terms of the disparity treatment of African Americans that is systematic, the economic lack of opportunity that exists, that creates the environment that we're in today,” said Larry Ivory, chairman of the National Black Chamber of Commerce. “I think America has to have a very serious conversation and take a look at his own history.”
In announcing plans at PepsiCo, Ramon Laguarta, its chairman and chief executive, acknowledged the need for broad change.
The snacks and soft drink giant plans to invest more than $400 million over five years to “lift up Black communities and increase Black representation at PepsiCo, specifically in leadership roles,” the company said.
“This is a holistic effort for PepsiCo to walk the talk of a leading corporation and help address the need for systemic change,” Laguarta said in a statement posted on the company’s website.
“We know that all people are not treated equally and that the problem of systemic racism is very real.”
Last week, Founders First Capital Partners, an investment firm based in San Diego, announced plans to recast its $100 million in debt funding as a "Racial and Social Economic Equality Initiative," designed to offer financial assistance for businesses led by underserved and underrepresented entrepreneurs.
Earlier this month, Lowe’s opened its first round of grant applications in a previously announced $25 million fund to provide much-needed relief to minority-owned businesses.
And the Rockefeller Foundation pledged $10 million to increase economic opportunity for minority-owned businesses in Chicago and nine other locales.
Because Black-owned businesses have been disproportionately affected by the economic impact of COVID-19 and “decades of systemic oppression,” the streaming giant Netflix announced plans to donate $500,000 in grants to Black-owned businesses in Los Angeles.
The Vermont Slauson Economic Development Corp., a nonprofit that delivers resources to communities in South Los Angeles traditionally underserved by banks, will disperse the grants.
The stream of cash now flowing toward black enterprises comes amid a wave of interest and concern about the centuries of injustice that have hampered the growth and development of black-owned firms.
Google trends show that the query “Black-owned” spiked after the May 25 slaying of George Floyd in the custody of Minneapolis police in a videotaped incident that sparked a global outcry.
In recent years, minority-launched businesses have represented one of the fastest-growing segments of the economy, particularly for Black women.
But the coronavirus pandemic and the attendant lockdowns and business closings have exacerbated a perennial problem for many small and minority-owned companies -- a lack of cash.
The government-enforced shutdowns have pushed some of those companies, many without hefty reserves, to the brink of bankruptcy.
From February to April, in the early days for the pandemic, the number of active business owners in the United States plummeted by 3.3 million, or 22 percent, the largest drop on record, according to a report by the Stanford Institute for Economic Policy Research.
In the early days of the unrest after the Floyd killing, as rage turned incendiary, some Black-owned businesses were heavily damaged or burned to the ground.
“The recent protests have put a spotlight on the chronic cancer of injustices and inequalities that have plagued this country for over 401 years,” said Kim Folsom, a co-founder and the CEO of Founders First Capital Partners. “As a black woman, I am horrified and demoralized to see the continuous violence that is [inflicted] upon black people, with minimal consequence.
Folsom her firm was trying to address “the huge ... economic, social and racial gap in urban communities, where the diverse business owners we support are becoming the leaders and largest employers.”
“The launch of this new initiative,” she said, “allows us to fund, grow and build wealth in communities that are underserved, undercapitalized, underresourced and most devastated by the global pandemic.”
Under the Founders First program, entrepreneurs pay up to 6.5 percent of their revenue for up to three years, for an investment that will average $250,000 but could go up to $1 million.
Because repayments are tied to revenue, those payments will decline if revenue drops, unlike payments on a fixed loan.
If sales drop, “that’s where we work with the companies to explore additional revenue opportunities to either offset and/or put them on the path of growth and revenue increases,” Folsom said.
Support for Black-owned businesses is one of three pillars in PepsiCo’s program, one of the largest announced to date.
The company committed to invest $50 million over five years to strengthen local Black-owned businesses. It also plans to more than double spending with Black-owned suppliers and expand its supplier pipeline.
It also vowed to use “our buying power to create more jobs for Black creators at our marketing agencies and [make] them part of our content development. We will implement a Creative Agency Diversity Policy modeled on our existing policy for the selection of legal services, including an annual audit.”
Lowe’s, headed by President and Chief Executive Marvin R. Ellison, had announced a $25 million commitment for minority-owned businesses.
The application process launched this month. Lowe's donation will offer emergency grants in historically underserved communities, as well as other assistance, to “help owners navigate business challenges during the pandemic,” the company said.
Assistance from the Rockefeller Foundation comes via the new Rockefeller Foundation Opportunity Collective, which aims to “catalyze public and private sector investment in places to promote more inclusive growth, both in the post-pandemic recovery and over the long term.”
The Rockefeller Foundation has pledged an initial $10 million, which it will allocate to government, business, faith-based and nonprofit “partners” in nine cities and one county over several years.
“In these 10 ROC places, the foundation will invest in partners, projects, and programs with two core goals,” the foundation said in a statement, “protecting communities from displacement, and eliminating barriers to access capital and credit among low-wage workers and small businesses operated by women, black and Latinx owners.”
Marvin Owens, senior director of economic programs at the national NAACP office in Baltimore, applauded the corporate announcements as a first step, but said there’s more to be done.
“They may feel like that's a really neat way to sort of give back,” Owens said. “But when you want to close the wealth gap and when you want to deal with economic inequity, you have to be talking about diversity in the boardroom. You have to talk about diversity in the C-suite. Talk about a real commitment to contracting with black businesses for vendor opportunities.
“You have to talk about these sorts of business relationships, that will help to move the needle,” he added. “As corporations are coming out, they're committed to combating racial discrimination. At the NAACP we’re ... welcoming them to the fight. But we're wanting to engage them in discussions around what they're doing, within their own corporate culture. As they talk about what's happening in the street ... you want to raise with them the question of looking internally at their own businesses and asking those same hard questions.”
Karen Robinson-Jacobs is a former editor and reporter at The Los Angeles Times. She is currently based in Texas.