Costco Wholesale Corp. is committing $25 million to a new impact investment fund that will fuel Black-led financial institutions and community development efforts.
New York-based nonprofit Local Initiatives Support Corp. (LISC) rolled out the Black Economic Development Fund this summer, encouraging corporations to make investments designed to improve economic opportunity for Black Americans. The fund seeks to help close the racial wealth gap, which LISC notes could cost the U.S. economy as much as $1.5 trillion by 2028 if not addressed.
"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.," said Craig Jelinek, president and CEO of Issaquah, Wash.-based Costco, in a release. "With LISC, we are supporting a more inclusive economy, to break down race and class as barriers to opportunity and growth."
Costco is the second investor in the fund, following Netflix, which seeded the fund last month. LISC expects to expand the investor base and hold the fund's first closing this fall, with over $100 million in commitments from public and private corporations.
"This commitment from Costco illustrates how corporations can leverage their capital to both meet their own objectives and drive deep and lasting gains for American families," said Maurice Jones, president and CEO of LISC, in a release.
The fund has preliminarily identified $30 million in a potential pipeline of investments in urban and rural communities. The fund will focus on making deposits in Black-owned banks and offering financing to minority businesses, charter schools, affordable housing projects and athletic facilities. The fund expects to begin initial deployment of capital in the fourth quarter.
"This is about investing in vibrant small businesses and growing local incomes,” Jones said. “It's about directing capital toward a traditionally underserved population. At its core, this fund is focused on building a stronger future for Black communities and our country."