Starbucks pledges $100 million to help small businesses and Black communities
- Starbucks is starting a new fund aimed at investing in community development projects and small businesses.
- The initiative is part of its broader commitment to racial and social equity, particularly in light of the coronavirus pandemic and Black Lives Matter protests.
- The coffee chain has also looked inward to make its workforce more diverse by setting targets for its management roles and tying executive compensation to those benchmarks.
Starbucks is starting a $100 million fund aimed at investing in community development projects and small businesses in areas populated by Black, Indigenous and people of color.
The company's Community Resilience Fund is part of a broader plan to step up its commitment to racial and social equity, particularly in the communities where it operates cafes. In June, as Black Lives Matter protesters took to streets to push for an end to racism and police brutality, the Starbucks Foundation pledged $1 million in neighborhood grants, joining numerous companies that said they would give money to fight against racism. The foundation ultimately ended up giving out an additional $500,000 in grants.
The coffee chain has also looked inward to make its workforce more diverse by setting targets for its management roles and tying executive compensation to those benchmarks.
Starbucks plans to use the new fund to invest $100 million over the next four years in 12 U.S. cities with populations that are Black, Indigenous or people of color.
The cities are Atlanta, Detroit, Houston, Los Angeles, Miami, Minneapolis, New Orleans, New York, Philadelphia, San Francisco Bay Area, Seattle and Washington, D.C. Philadelphia was where police in 2018 arrested two Black men who were waiting for a business meeting to start before ordering coffee, sparking boycotts and leading Starbucks to close down its company-owned cafes nationwide for one day of racial bias training.
The money will go to impact-focused financial institutions, like community development financial institutions, which provide financial services to low-income people. Small businesses and neighborhood development projects are ultimately supposed to be the beneficiaries of the program.
The goal is to help bridge the gap between the public and private sectors. Last year, many small businesses missed out on federal funding from the Paycheck Protection Program, which was intended to help them stay afloat during the coronavirus pandemic.
"We know these communities. These are some of our business partners, and in some instances, they may even be a small supplier to Starbucks," Chief Operating Officer Roz Brewer said. "And so when you think about that, and you can't help but have empathy for them, you want them to thrive as well, but also we understand what they're going through."
In 2019, Starbucks pledged to invest $10 million in CFDIs based in Chicago. Brewer said the company is working with Chicago Mayor Lori Lightfoot to make sure the money goes to what matters most, and Starbucks is already talking to the local governments of the areas that will benefit from the new fund.
Starbucks' commitments to social causes, including racial justice and climate change, have made the company popular with investors who take into account environmental, social and corporate governance when picking stocks. Analysis from RBC Capital Markets found that Starbucks is the most popular restaurant stock on the S&P 500 with actively managed funds that are dedicated to ESG investing.
Shares of Starbucks have risen 16% in the last year as of Monday's market close, giving the company a market value of $123 billion.