ADVERTISEMENT

JPMorgan's experimental investment in Detroit was so successful that it's decided to invest $500,000 in up-and-coming cities

JPMorgan Chase launched the AdvancingCities initiative, which will invest $500 million in cities through loans to entrepreneurs and investment in neighborhood rebuilding and workforce development.

  • Better Capitalism
ADVERTISEMENT

JPMorgan Chase announced Wednesday that it is now accepting applications to participate in its new $500 million AdvancingCities initiative, which will invest in cities that are overcoming years of hardship.

It's a major expansion of a plan that began in 2013, when JPMorgan CEO Jamie Dimon pushed for a way to help Detroit after it declared bankruptcy. Starting the next year, it began closely working with Mayor Mike Duggan in distributing low-cost loans, renovating affordable housing, and training workforces. Since 2014, the bank has invested more than $100 million into the city.

Following success in Detroit, the bank then began investing in a similar way in Chicago and Washington, DC, and expanded the Entrepreneurs of Color Fund from Detroit to Chicago, the South Bronx, and San Francisco. The AdvancingCities competition is a way to bring learnings from these prior experiences to a new set of cities.

ADVERTISEMENT

"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 Business Insider.

The $500 million will be split between low-cost loans offered through the AdvancingCities Investment Fund, and philanthropic spending.

Scher explained that Detroit has been an ideal case study for the new initiative, and that it only took off once JPMorgan started responding to specific requests from partners. "I think the Entrepreneurs of Color is a great example," Scher said, referring to the fund that offers loans to businesses owned by people of color.

The JPMorgan team set up quarterly meetings with Mayor Duggan to discuss its investments, and in one meeting about a year in, Duggan said, "The problem I see in the city is there are a lot of black, Hispanic, Asian entrepreneurs who can't get access to capital and want to start businesses."

ADVERTISEMENT

The bank then partnered with the W.K. Kellogg Foundation to respond to this. Scher said it demonstrated that his team had the capability to toss money around, but that to actually accomplish something it needed to have partners, like the city's mayor, identify a challenge and then find a solution.

Duggan told us that, "Pretty much everything's worked," in regards to JPMorgan's investments, noting that for both his city and others that will partner with the bank, "as long as you're disciplined in what you're doing, you can have a major impact."

Scher said that over the next five years, data suggests that conservatively speaking, the $250 million from the AdvancingCities investment fund will leverage a total of $1 billion in spending when factoring in outside investment attracted by JPMorgan's activity. He said the initiative can support "up to 30" cities, but that the number is less important than the potential for impact in a city, and that there will not be an equal portioning of investments to each winner.

AdvancingCities is overseen by Scher and his team, as well as an advisory council of former mayors and business leaders, and will utilize an estimated 200 JPMorgan executives working 3-4 week shifts in particular cities.

ADVERTISEMENT

Scher told us that if the program were solely about building goodwill, there were plenty of easier options to pursue, and that he considers AdvancingCities to be a business investment. "I would argue to our shareholders that if the economy of Detroit or Chicago or Washington is growing, and more people are getting jobs and more businesses are being created and you've got small business growth, that's a good long-term bet for JPMorgan Chase," he said.

He continued: "And so I actually think that this is kind of a new way of thinking about business investments and thinking long-term about the viability of success of our communities. And our general view is that if the economies of these cities is growing, JPMorgan will grow with it."

Manny Ocbazghi contributed reporting.

FOLLOW BUSINESS INSIDER AFRICA

Unblock notifications in browser settings.
ADVERTISEMENT

Recommended articles

Sony’s creators convention redefines the creative landscape for content creators

Sony’s creators convention redefines the creative landscape for content creators

Egypt, Nigeria, and South Africa ranked as Africa's most polluted countries in new report

Egypt, Nigeria, and South Africa ranked as Africa's most polluted countries in new report

10 African countries with the lowest life expectancy according to the World Bank

10 African countries with the lowest life expectancy according to the World Bank

Kenyan women are more obese than their men - here’s why

Kenyan women are more obese than their men - here’s why

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

Africa’s richest man Dangote stands between Europe and $17 billion in revenue

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

After months of exchanging blows, Kenya and Uganda takes steps towards resolution

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

Africa's first black billionaire could join $2.9 billion Vivendi bid for MultiChoice

10 most dangerous African countries in 2024

10 most dangerous African countries in 2024

Russia’s nuclear influence expands further north of Africa

Russia’s nuclear influence expands further north of Africa

ADVERTISEMENT