The old model of corporate philanthropy has begun to evolve. In recent years, several firms have abandoned the traditional strategy of writing checks for local organizations in favor of more strategic approaches that involve asking questions learn how to create a focused impact. A great example of this shift is JPMorgan Chase, which recently announced two major commitments to urban areas: a $40 million grant to Chicago and a $10 million gift to Washington, DC. Both of these announcements followed soon after the company invested $150 million in Detroit. All of these gifts reflect a fundamental shift in how JPMorgan Chase approaches its corporate philanthropy.
The Push for a New Way of Giving at JPMorgan Chase
In 2012, CEO of JPMorgan Chase Jamie Dimon began a review of the company’s grantmaking and found that the $200 million it spent a year was not actually making much of an impact. While the firm donated to a wide range of causes, it did not make a large enough commitment to any single issue to really effect change. Luckily, Dimon also recognized that the firm has an incredible amount of resources that it could strategically mobilize to make a real difference in a narrower area of focus. When company leaders began thinking about what areas it could affect the most, they turned to workforce skills. As a company that operates throughout the United States and in many other parts of the world, JPMorgan Chase has a unique insight into workforce challenges in different geographic areas.
Soon, the firm began looking at middle-skills jobs, which require a degree of competency but not necessarily any sort of college training. These positions are difficult to fill in virtually every market, according to Dimon. The firm also started to consider community development, an area with which it was already familiar as a provider of banking services to many small businesses. These small businesses face major hurdles in several markets, yet they are a key to driving overall economic growth. Thus, JPMorgan Chase started developing ways to bring down financial barriers, especially in urban areas.
The Transition to a New Approach to Philanthropy
To ensure that its transition to impact giving was successful, JPMorgan Chase made a number of strategic hires, such as Chauncy Lennon, who previously worked for the Ford Foundation, and Janis Bowdler, formerly of the National Council of La Raza. Several other hires rounded out the new staff and brought in people who had significant experience in the type of giving that the firm wanted to undertake. JPMorgan Chase also established its Service Corps, a program that deployed its skilled workers in the communities where they work to drive change efforts.
The firm began its new approach to philanthropy in Detroit with a $100 million commitment, half of which was designated for loans to small businesses and affordable housing construction efforts. The other half would benefit community organizations. Within three years, the firm upped its promise to $150 million. It now estimates that it has financed roughly 100 new businesses, trained 15,000 people in new skills, and created about 1,700 jobs, although a third party has not yet performed an analysis of the firm’s impact.
Encouraged by the results in Detroit, JPMorgan Chase began looking at new targets for its philanthropy. Eventually, the firm decided on Chicago, which has profound gun violence issues and high rates of unemployment. The city also struggles with significant racial disparities in employment, income, and housing. JPMorgan Chase decided to dedicate funding to Chicago because of the many promising programs focusing on the city, as well as its own strategic position in the city with 360 branch offices and 16,000 employees. Much of the $40 million commitment will be allocated on the biggest financial challenges facing Chicago residents and businesses according to data from the Urban Institute.
In addition, the firm plans to deploy new technologies to maximize its impact in Chicago. Over the years, JPMorgan Chase has invested heavily in the Center for Financial Services Innovation and especially its Financial Solutions Lab, which is the testing and scaling arm for innovation designed to improve credit, increase savings, and boost assets among people from underserved areas. The technologies his organization develops will be deployed in Chicago to increase opportunity among the city’s poorest residents.
Looking Forward to New Opportunities for Giving
At the end of September, JPMorgan Chase expanded its antipoverty reach even further with its $10-million commitment to Washington, DC. This gift is targeted specifically for inclusive economic growth in some of the poorest areas of the city. As with both Detroit and Chicago, a lot of collaboration is already in motion to address these issues in the nation’s capital, and the firm’s funding can have a real impact on progress toward the community’s economic goals. Clearly, the firm has adopted a common formula for identifying its target cities, but its focus on economic inclusion and opportunity puts the company in a position to make some real change with its annual giving.