As corporate philanthropy evolves, JPMorgan Chase has emerged as one of its leading players. The bank’s philanthropy, which we explored in a recent deep dive, already tops $250 million a year, putting it up there with many large foundations. Now, JPMorgan Chase’s corporate responsibility arm is poised for further growth, albeit along similar lines as it’s already been pursuing.
In a recent announcement, the company said it intends to increase its philanthropic investments by 40 percent, to $1.75 billion over five years. That averages out to an additional $100 million per year. Why is JPMorgan Chase suddenly getting more generous? Because its earnings have been rising and are expected to rise even further, thanks to the Republican tax bill’s breaks to big business, which are expected to net the bank $4 billion this year. A number of corporations have moved to defuse criticism of the tax bill by pledging that the huge gains they'll be receiving—in contrast to most ordinary taxpayers—will be put to good use to create jobs and expand charitable giving.
JPMorgan Chase has also been encouraged by the first few years of its new push to reduce poverty and spur opportunity in urban areas, an effort that it kicked off in 2014 with a $100 million commitment in Detroit. The bank's high command has been jazzed enough by its success there that it not only upped its commitment in Detroit, it rolled out similar efforts elsewhere, including in Chicago. It's hard to think of a corporate funder that's had quite such a run with its philanthropy in recent years. Now, the bank is looking to take things up a notch.
The expanded philanthropic funding is part of JPMorgan Chase’s broader five-year plan, made public in late January. The company plans to invest an extra $20 billion in a number of areas, philanthropy being one. In a press release, the bank summed up its “comprehensive investment” like this: “This long-term investment, which both increases and accelerates the firm’s current growth, is made possible by the firm’s strong and sustained business performance, recent changes to the U.S. corporate tax system and a more constructive regulatory and business environment.”
Note that the increased philanthropic commitment, though substantial, only makes up 2.5 percent of that $20 billion total. The rest will go to capacity-building endeavors like opening more branches in new markets (the company mentions Washington, D.C., Boston and Philadelphia), upping lending to small businesses, measured increases to employee pay, and greater investment in affordable housing.
In contrast to rivals like Bank of America, which intends to give the bulk of its tax gains to shareholders, JPMorgan Chase’s broad palate of investments lets the company build its business in a way that, frankly, looks good.
That’s not to deny the impact of the bank’s giving, which has become markedly more strategic since 2012. Back then, CEO Jamie Dimon initiated an effort to overhaul company philanthropy, setting corporate responsibility head Peter Scher to work. As we’ve written, the bank decided to focus on areas like workforce and community development—including by tackling racial wealth disparities in cities. Those areas align well with a national bank’s resources, employment needs, and wider business. It isn’t a coincidence that philanthropy from places like Citi and Bank of America looks similar.
So far, it seems like JPMorgan Chase will deploy its additional half-billion dollars to strengthen philanthropic efforts already underway. They include education and job training initiatives, which corporate givers are supporting to address the “skills gap” between high school graduates and a surplus of unfilled middle-skill, middle-wage positions. The new money also provides further fuel for its local economic development work, which the bank has sought to expand to more places beyond Detroit. Last fall, the company announced two new place-based investments, $40 million in Chicago and $10 million in Washington, D.C.
This work has come to include more interesting elements over time, and often involves collaboration with other funders. For example, JPMorgan Chase recently helped triple the size of Detroit’s Entrepreneurs of Color Fund, which it backed from the beginning. Located at the Detroit Development Fund, a local CDFI, Entrepreneurs of Color offers accessible loans to encourage equitable revitalization. The bank joined several funding partners to expand Entrepreneurs of Color, including the Kellogg Foundation, the Ralph C. Wilson Jr. Foundation, Fifth Third Bank, and the Kresge Foundation.
The bank is planning to expand the Entrepreneurs of Color Fund to San Francisco and the South Bronx in short order. The company also wants to expand the range of its Service Corps, a volunteer program that connects employees with nonprofits that could use their skills.
This is a funder with a lot going on in the critical equity niche. And now it's one with greater resources to work with.