Behind a Wall Street Leader's Plan to Invest Big in Local Economies

Economists are cautiously optimistic about the state of the U.S. economy as more jobs are being added and household spending is on the rise. But JPMorgan Chase worries that the economic recovery is focused on commercial corridors and downtowns, bypassing areas that are still in deep pain. Low-income neighborhoods lack the resources they need to revitalize their communities, which is why the financial services behemoth is turning its philanthropic efforts toward this problem.

In a 2014 pilot program called Partnerships for Raising Opportunity in Neighborhoods (PRO Neighborhoods), JPMorgan Chase invested $33 million that disadvantaged areas leveraged into more than $226 million for economic and social service projects at the local level. The program involves Community Development Financial Institutions, or CDFIs, in common financial sector jargon. Those of us who faked our way through the mandatory econ requirements in college will be relieved to learn that we’re basically talking about community development banks, credit unions, and loan funds for people underserved by commercial banks and lenders. Not so complicated, right? The Treasury Department estimates that there are 1,000 CDFIs seeking to expand economic opportunity in low-income areas around the country.

After seeing the success of the pilot program, JPMorgan is now launching a five-year, $125 million PRO Neighborhoods initiative to help communities leverage additional capital for development. This program addresses challenges that will seriously improve neighborhoods’ quality of life by building affordable housing, investing in small businesses and charter schools, funding childcare centers and health clinics, bringing healthy food options into food deserts, and more.

The new initiative is focused on encouraging regional CDFIs to pool resources and scale projects. A request for proposals is open to CDFIs certified by the Treasury Department, which have until May 16 to apply for a three-year grant of up to $5 million. PRO Neighborhoods is also providing seed capital for affordable housing and funding research on data-driven neighborhood solutions.

We’ve speculated in the past about whether JPMorgan’s philanthropic efforts should be seen as atonement for lending practices that devastated disadvantaged communities, especially after the company was sued by the City of Los Angeles for predatory home loans. But we’ve often found ourselves writing about JPMorgan’s significant investments in rebuilding low-income communities, including a $250 million workforce development initiative and a $100 million commitment to economic expansion in Detroit.

The world isn’t black and white, and if watching Billions on Showtime has taught us anything, it’s that people are capable of both exploiting the financial markets and giving back to the community (and that Damian Lewis is a fantastic actor). An impact assessment conducted by the Harvard Joint Center on Housing Studies found that the $33 million PRO Neighborhoods pilot program resulted in $100 million in loans, over 2,000 units of affordable housing, lending to over 130 small businesses, and the creation and retention of 2,650 jobs. With the initiative nearly quadrupling to $125 million, we’re hoping to see a lot of positive change in American neighborhoods that need it the most.