Online customer review platform Yelp has deposited $10 million of its cash reserves into three minority-owned financial institutions that support Black and underserved communities, the company announced Tuesday.
The banks include Los Angeles-based Broadway Federal Bank, New York City-based Carver Federal Savings Bank and Citizens Savings Bank and Trust Company, which is headquartered in Nashville, Tennessee.
- The move follows an increase in banks and corporations earmarking funds for minority-owned depository institutions and racial equality initiatives following the May killing of George Floyd at the hands of police.
"We recognize that the distribution of financial capital is not equitable in the United States, particularly in Black communities, and know we have a role to play to support a more equitable financial system," David Schwarzbach, chief financial officer at Yelp, said in a statement. "We're committed to making financial capital available to low- and moderate-income communities and to Black business owners who have been hit particularly hard by the pandemic."
Schwarzbach said the San Francisco-based company chose to deposit $10 million of its cash reserves into the three community development financial institutions (CDFI) to support homeownership and local businesses across the communities they serve.
CDFIs are specialized organizations that are required to deploy at least 60% of their lending into low- to moderate-income communities.
The news comes as Los Angeles-based Broadway Federal Bank is set to merge with City First Bank in Washington, D.C., a combination that would create the nation's largest Black-led bank with more than $850 million in deposits and $1 billion in assets.
The banks said the deal, which is expected to close in the first quarter of 2021, will increase their commercial lending capacity for investments in multifamily affordable housing, small businesses and nonprofit development in financially underserved urban areas.
"This deposit by Yelp is an independent affirmation of Broadway Federal Bank's strong financial condition during a difficult economic environment," Wayne Bradshaw, CEO of Broadway, said in a statement. "Furthermore, it demonstrates Yelp's confidence in Broadway's ability to effectively originate loans that support Broadway's mission of serving low- to moderate-income communities in Southern California, many of which have been disproportionately impacted by the COVID-19 Pandemic."
Broadway Federal Bank received a $5 million cash deposit from Yelp, while Carver Federal Savings Bank and Citizens Savings Bank and Trust Company each received $2.5 million from the company.
Other major companies such as Twitter and Netflix have made similar deposit commitments this year.
Netflix pledged in June to allocate 2% of its cash holdings — up to $100 million — to lenders that serve the Black community, the company said in a blog post.
The streaming service said it will shift $25 million into the Black Economic Development Initiative, a new fund that will invest in Black-owned financial institutions serving low-income communities, and $10 million to Hope Credit Union, which has 1.5 million customers in five Southeastern states.
And last month, social media giant Twitter said it would invest $100 million in CDFIs in an effort to combat the racial wealth gap.