Mega-bank JPMorgan Chase has spent the past five years turning neighborhoods in a handful of U.S. cities into laboratories for economic revitalization, steering financing, training and expertise to cash-starved communities. On Wednesday, it will announce plans to scale up that experiment dramatically with the AdvancingCities program—a 5-year, $500 million campaign that could expand its model to as many as 30 metro areas.
The AdvancingCities funds will be split roughly 50/50 between philanthropic giving and long-term lending, the bank announced in a news release. The new program is closely modeled after its Invested in Detroit program, which has helped to jump-start small business and real estate development in the Motor City. (For a detailed look at that campaign, read “How JPMorgan Chase Is Fueling Detroit’s Revival.“)
The bank’s approach relies heavily on collaboration with local governments and on partnerships with local nonprofits called community development financial institutions (CDFIs), which can fund projects whose focus on low-income neighborhoods might keep traditional lenders away. JPMorgan Chase has introduced the “Detroit Model” in Chicago and Washington, D.C., over the past 12 months. Based on its experience in Detroit, the bank estimates that its $500 million could lure in another $1 billion in capital from other banks and bigger nonprofit foundations.
The main focus of the new initiative will be an “AdvancingCities Challenge,” in which local coalitions of government, business and nonprofit leaders will essentially compete for investments by submitting proposals for rejuvenating local economic growth. The bank will announce winners next spring. A second strand of the program will involve larger-scale investments by the bank in certain targeted cities; JPMorgan Chase says it will announce such an investment in a metro area outside the U.S. later this fall.
The bank said its decisions would be shaped in part by a panel that includes former mayors Marc Morial of New Orleans (now head of the National Urban League); Michael Nutter of Philadelphia (now a professor of urban and public affairs at Columbia University); and Ashley Swearingen of Fresno (now CEO of the Central Valley Community Foundation in California). The former civic leaders will help the bank identify which applicants for the Challenge will have the right combination of genuine economic need and readiness to deploy the money effectively.
AdvancingCities is the latest chapter in JPMorgan Chase’s effort to reorient its corporate social responsibility efforts around “inclusive growth,” with an emphasis on training lower-skilled workers for higher-tech 21st century jobs, steering capital and expertise to women and minority entrepreneurs, and helping distressed neighborhoods hatch their own plans for revitalization.
While that mission includes philanthropic giving, bank execs also see it as a long-term investment: Economic healthy cities, after all, foster plenty of stable customers for banks. “Opportunity is not shared equally across neighborhoods, [and] businesses can and must step up to help change the status quo,” CEO Jamie Dimon noted in a news release. “It is in our best interest and the right thing to do.”
