- JPMorgan Chase CEO Jamie Dimon announced a commitment to $US10 million in long-term, low-cost commercial real estate loans for Chicago’s South Side and its West Side.
- The two parts of the city contain neighbourhoods with more crime and less development than average.
- The investment comes off a previous $US40 million commitment to underserved parts of Chicago and is part of the $US500 million AdvancingCities initiative.
- AdvancingCities also has a competition component, and it has received 256 applications from communities that want to work with the bank.
- This article is part of Business Insider’s ongoing series on Better Capitalism.
JPMorgan Chase announced Wednesday that it was committing $US10 million to Chicago’s South Side and its West Side as part of its five-year, $US500 million AdvancingCities initiative.
CEO Jamie Dimon made the announcement in Chicago and was joined by the Chicago Community Loan Fund’s president, Calvin Holmes, and Governor-elect J.B. Pritzker. JPMorgan’s investment will be through long-term commercial real estate loans with low interest rates, distributed by the CCLF. The goal is to promote development in underserved neighbourhoods where access to grocery stores and other retailers is significantly lower than it is elsewhere in the city.
When you develop these businesses, Dimon told Business Insider ahead of the announcement, “not only do they reduce the commute for people,” but “they reduce the price, they reduce the need for a car, and they also create local employment.” He added that “if it works, the best type of development is self-sustainable and self-reinforcing.”
An alternative to ordinary philanthropy
The Chicago investment, as well as the larger AdvancingCities plan, is an extension of work done in Detroit. In 2014, the year after Detroit declared bankruptcy, JPMorgan began working with Mayor Mike Duggan to find ways to distribute low-cost loans, finance affordable housing, and invest in job-retraining programs. The bank sent employees to work on the ground with community partners.
Dimon found the $US100 million investment to be successful enough to warrant a global expansion of the tactics used there, building on lessons around what worked and what didn’t.
“I think the biggest thing that we have concluded is that the only places that we can be really effective in is where you have real collaboration on the ground with the political leadership, the private sector, the nonprofit sector,” JPMorgan’s head of corporate responsibility, Peter Scher, told us around the announcement of AdvancingCities in September.
Up to half of the $US500 million will go toward low-cost loans, with the rest being pure philanthropic spending, and will be spent from 2019 to 2024. The bank made its first confirmed investment in November, committing $US30 million to fund job training and mentorship programs in greater Paris, particularly a struggling region expected to see more foot traffic in the 2024 Olympics.
The AdvancingCities team will continue announcing investments over the next five years and is also running a competition for communities to take part. So far, the team has received 256 applications from representatives across 143 communities, with 45 states represented.
As for Chicago, Dimon said, it just made sense to include it from the start. JPMorgan had already invested $US40 million in philanthropic spending over a three-year period to the city, had developed a relationship with Mayor Rahm Emanuel, and has a large presence in the city, including about 10,000 employees in the Chicago area.
“We have the same kind of forces aligning,” as in Detroit, Dimon said.
What this means for Chicago
President Donald Trump has used crime in Chicago as a rallying cry for strict criminal-justice policies since declaring his candidacy in 2015, and while violence in the city has become an abstract political talking point, there is indeed a blight of crime in the poorest parts of Chicago, particularly in the South Side and the West Side – where JPMorgan’s investment will be.
And though crime has been decreasing across the city for a few years, and there has also been the best job growth in decades, the South Side and the West Side are still far from seeing the benefits enjoyed by downtown. These areas, both of which primarily consist of people of colour, have been neglected over decades.
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For example, Target’s announcement last month that it was closing two locations in the South Side upended communities that had come to rely on it. Of the decision, the Chicago Tribune editorial writer Kristen McQueary wrote, “It’s no wonder underserved communities feel especially underserved by corporations, political leaders, and the media.”
CCLF’s chief operating officer, Bob Tucker, told Business Insider that JPMorgan’s investment was aimed at making deals that would bring retailers to communities like those, where residents won’t have to commute to buy basic necessities.
Dimon said AdvancingCities had nothing to do with his personal legacy and wasn’t typical philanthropy.
“We’re trying to use our capabilities to get a local economy growing beneficially for the people of the community,” he told us. “That is the goal. Anyone can throw around money and earn good will. But we don’t do it for good will – we do it because it’s the right thing to do. And we’re in the communities, so obviously it’s good for us, too, if we do that.”
While companies “doing good” is far from new, talk of incorporating philanthropic endeavours into a company’s overall mission, with the intended result of strengthening the business over the long term, has been especially popular in recent years.
Earlier this year, Larry Fink, the CEO of the world’s largest asset manager, BlackRock, wrote in a letter to CEOs that his company would do business only with companies that had a stated purpose beyond dedicating all resources to maximizing shareholder value. Large corporations like Danone are touting “B-Corp” status, dedicating themselves to environmental and sustainability goals, and JPMorgan’s competitors have their own corporate social-responsibility initiatives.
Dimon said he didn’t want to act as if the AdvancingCities plan were some “brand new thing,” but rather considered it a new, data-driven way of making the firm’s philanthropic investments into its communities more effective and efficient. And that, in turn, benefits his company. “We’ve got to earn our respect in every community every day,” he said.
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