Robert Smith made serious waves last year when it was reported that he would be paying off all the student debt for the graduating class of 2019 at Morehouse College. The billionaire is now back in the news with a bold proposal that he believes will bring prosperity to Black communities.
Smith recently spoke to Forbes about the “2% solution” that would funnel 2% of corporate America’s annual net income into Black communities for 10 years. Smith has also called for big banks to make it rain on the smaller financial institutions that service Black-owned businesses and entrepreneurial ventures.
In a speech that Smith made at the Forbes 400 Summit on Philanthropy, he charged banks with leaving Black businesses high-and-dry from the free-flowing faucet of funds that irrigate the Anglo-Saxon economy. Thus, the “2% Solution”. It appears that Smith wants to take full advantage of the new climate in America that is more readily accepting of the fact that there are severe inequalities in this country’s operating system.
“Nowhere is structural racism more apparent than in corporate America,” Smith said. “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.”
The impetus for this plan, in part, came from the fact that the Payroll Protection Program that was implemented early in the COVID-19 pandemic was largely exclusionary to Black businesses via bureaucratic obstacles.
How would it work? Well…
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. Smith was also open to the idea that the capital could be donated in a tax-advantaged way to a nonprofit entity that could provide the core bank capital.
Urban One Chief Executive Officer Alfred Liggins III was so impressed by Smiths idea that he had this to say:
“What a brilliant idea and something that is very doable. It’s great to see leadership like this coming from the highest levels of the African-American business community”
What say you about Robert Smith’s plan to create economic equality?