The Color of Money: A Top Bank and Nonprofit Take Aim at the Racial Wealth Divide

We started writing about the Corporation for Enterprise Development a year ago, when we talked to its founder, Bob Friedman, about how the organization got its start, and how it's addressing asset building and financial inclusion for low income Americans and people of color. Now, CFED has announced a new partnership with JPMorgan Chase & Co. to bring asset building initiatives to multiple cities across the country, starting with New Orleans and Miami this spring.

The idea, here, is that JPMorgan Chase will invest $2 million dollars in developing leadership in local nonprofit organizations, in order to address racial and financial equity issues.

This grant is significant, not just because it's a sizeable chunk of money that the bank is laying out, but because of the explicit racial framing of the effort. While the community of asset building nonprofits and experts has long highlighted America's alarming racial wealth gap, such talk is less common in the financial services sector. In fact, that sector has been strongly criticized since the 2008 financial crisis for helping widen the racial wealth gap through predatory lending practices that stripped wealth out of communities of color.

JPMorgan Chase itself was sued by the City of Los Angeles in 2014 for "a continuous pattern and practice of mortgage discrimination" that led to borrowers of color paying higher interest rates than they should have.

On other hand, JPMorgan Chase has been a longstanding funder of important work for asset building and financial inclusion in the U.S., and we've been tracking a number of positive things it's been doing in this space. The global corporation is also making restitution to the community as part of its settlements over fraudulent practices, which included robosigning and improper selling and collecting of consumer credit card debt. Under the terms of a settlement with the Obama administration, JPMorgan Chase is required to provide "consumer relief" to the community in the amount of $4 billion dollars.

Whatever the case, the bank's big grant to CFED is well targeted. “We know there is a significant gap in diversity between the people who rely on nonprofits for critical financial and social services and the leadership of those organizations,” said Jeremie Greer, CFED vice president for policy and research. “By investing in this initiative, JPMorgan Chase will ensure that local organizations of color gain the skills, access and impact they need to address the significant financial insecurity facing their communities.”

With CFED’s long history of providing technical assistance to asset-building initiatives across the country, it is well positioned to undertake this new work. By partnering with local organizations of color, CFED will work to increase understanding of the “intersection of income, assets and the racial wealth divide.”

The area of race and financial inclusion has been hot lately, as we've been reporting. One source of excitement is how new technologies, low-cost financial products, and financial literacy efforts can bring more low-income people of color into the mainstream banking world, which tends to be a precondition for building wealth. We've written several times about the Center for Financial Services Innovation, which is a leader in this area—and also heavily backed by JPMorgan Chase, as well as other banks and private foundations like Ford.

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But CFED is thinking bigger here, with an eye on systemic change and the larger conversation about economic inequality. It has a multi-pronged and ambitious agenda in this new initiative, including helping leaders of color become stronger voices advocating for public policy change. The nonprofit will partner with Georgetown University’s Center for Public and Nonprofit Leadership to cultivate the skills and strategies of “nonprofit leaders of color in five cities” and will provide coaching and training to build leadership “at multiple levels: individual, organizational and community.”

CFED’s Racial Wealth Divide Initiative, headed by Dedrick Asante-Muhammad, is “excited to partner with JPMorgan Chase and organizations of color across the country in strengthening capabilities to address racial economic inequality.” It will be interesting to watch this initiative as it rolls out, and see what measures they put in place to assess impact.

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