BlackRock, Inc. has made a charitable contribution of its remaining 20 percent stake, 15.6 million shares, of PennyMac Financial Services, Inc., with a market value of $589 million, to fund the firm’s social impact efforts to advance a more inclusive and sustainable economy. The contribution will provide long-term funding for the firm’s future philanthropic investments and partnerships focused on promoting sustainability and economic mobility, and building a financial safety net for underserved and underemployed people.
The BlackRock Foundation is a newly established corporate foundation, and the BlackRock Charitable Fund was established in 2013 with the contribution of a portion of its investment in PennyMac.
BlackRock originally invested $34 million in PennyMac in 2008 and made an initial charitable contribution of 6.1 million units to the BlackRock Charitable Fund, valued at approximately $125 million, following PennyMac’s successful Initial Public Offering (IPO) in 2013.
The charitable contribution will result in an operating expense of $589 million, which BlackRock expects will be offset by a $125 million non-cash, non-operating pre-tax financial gain on the contributed shares and a tax benefit of approximately $241 million.
“Society today needs companies to create economic growth that benefits all stakeholders,” said Larry Fink, Chairman and CEO of BlackRock. “The contribution we’re making – in line with our purpose as a firm – will support our commitment to creating greater financial well-being and advancing sustainability,” he said via a press release. “These funds will be strategically deployed to partners and programs aligned with this mission, helping catalyze new and innovative ideas that support social and economic progress for more people around the world. The BlackRock Foundation will support our conviction that the transition to a more sustainable economy must be inclusive, fair and just.”
The first phase of work has focused on tackling financial insecurity. Last year, BlackRock’s philanthropic funds committed $50 million to launch a new Emergency Savings Initiative to build, test, and pilot custom short-term savings tools and strategies for people living on low-incomes. The first group of participating organizations are working with experts from three leading consumer health nonprofits – Common Cents Lab, Commonwealth and the Financial Health Network – to establish a financial safety net for their employees, customers, students, and gig workers.
Other current partnerships and outcomes funded through BlackRock’s philanthropic efforts include:
- CodeDoor, a tech bootcamp and job placement program based in Frankfurt, Germany, where support will facilitate a new train-the-trainer model, projected to scale graduates to 20,000 by the end of 2021, up from 1,500 in 2019.
- Laboratoria, a social enterprise training underemployed women for tech jobs. Support over the past two years has helped graduate 895 developers across Peru, Mexico, Chile, and Brazil, with 80 percent of these women working in jobs in tech that on average triple their income.
- Upwardly Global, a U.S.-based organization that coaches foreign-born professionals to move from unemployment and severe underemployment to thriving-wage roles in high-demand fields. Some 85 percent of Upwardly Global participants experience poverty before entering the coaching program.
- RefuAid, founded in 2015 and based in London, creates access to interest-free loans for migrants with professional training to access re-credentialing and re-qualification.
- One Acre Fund tests and scales tree-planting as a backup source of income and savings device for smallholder farmers in rural Africa. In 2020, BlackRock will support One Acre Fund’s pilot program in India, and their goal of planting approximately 20 million trees.
In addition to funding solutions to promote a more inclusive and sustainable economy, the Social Impact team supports BlackRock’s employees to give back to their communities in ways that are meaningful to them. The team is responsible for BlackRock’s community-based investments as well as humanitarian and disaster relief. In the next phase of work, the group plans to expand their focus to include environmental sustainability.