Costco commits $25M to Black Economic Development Fund

Dive Brief:

Costco is investing $25 million in a new economic development fund that will invest in Black-led financial institutions and community development efforts, according to a press release.
The Black Economic Development Fund was introduced this summer by the Local Initiatives Support Corporation (LISC) to encourage corporations to invest in efforts that could reduce the racial wealth gap, which is expected to cost the U.S. $1.5 trillion if not addressed, according to the announcement. The fund has preliminarily identified $30 million in potential pipeline investments and intends to offer direct financing through Black-owned banks to businesses, charter schools, affordable housing projects and athletic facilities.
Costco is the second investor in the fund, following Netflix. The fund expects to have its first closing this fall with over $100 million in investments.

Dive Insight:

Costco’s decision to commit $25 million to a Black-owned economic development fund stems from the Black Lives Matter movement and the responsibility to the community that grocers and other retailers feel.

Many grocers have publicly taken a stand against racism, but Costco's investment in the Black Economic Development Fund stands out because of its size.

"We are thrilled to be a part of an investment strategy that will help some of the communities where we operate in the U.S.," Craig Jelinek, president and CEO of Costco, said in a statement. "With LISC, we are supporting a more inclusive economy, to break down race and class as barriers to opportunity and growth."

Earlier this summer, Albertsons announced $5 million in donations to social justice organizations, while Hy-Vee donated $1 million and one million volunteer hours to groups that support racial unity and equality. Smart & Final will also donate $100,000 to the NAACP Legal Defense and Education Fund, and Kroger created a $5 million fund through the Kroger foundation to improve diversity, equality and inclusion. Costco competitor Sam's Club donated $1 million to LISC in April.

According to Costco's site, the club retailer donated a total of $43 million to organizations in fiscal 2019.