Detroit's improbable comeback has provided a blueprint for banks to reinvigorate other cities and communities that are on life support.
JPMorgan Chase, for one, plans to spend $125 million over five years to spur development in disadvantaged neighborhoods around the country, the $2.4 trillion-asset banking giant announced Tuesday during an event in Washington. The PRO Neighborhoods initiative includes seed capital component to support affordable housing and cash to fund research about land use, housing and demographic trends.
The program will also feature a competition offering grants of up to $5 million to community development financial institutions that partner to address problems in the neighborhoods they serve. JPMorgan Chase, which plans to announce the first awards in October, posted a request for proposals seeking applications on its website.
JPMorgan Chase found its inspiration for the program in the Motor City. There, the New York company — in the midst of a $100 million commitment to help Detroit recover from its 2013 bankruptcy — has pursued neighborhood-based projects, rather than wide-ranging national initiatives.
"I want Detroit to be an example of government, businesses and not-for-profits working together, not scapegoating, not finger-pointing to get the job done," Jamie Dimon, JPMorgan Chase's chairman and chief executive, said during the event.
"There's no question our ability to go into Detroit and test out our ideas was significant," added Janice Bowdler, Chase's head of community development. "By working together, CDFIs can make flexible capital available to support the variety of investments that a neighborhood needs to grow and thrive."
The competition announced Tuesday is intended to build on a $33 million pilot launched in 2014 that provided $33 million to 26 CDFIs that collaborated on a number of projects. Participating CDFIs leveraged the funds from JPMorgan Chase to raise another $226 million.
About half of the program's $125 million would be devoted to funding the annual competitions; JPMorgan Chase expects to award about three to five grants per year.
"We ask local leaders to tell us what are the biggest challenges facing them in their local community to promoting greater economic mobility and then we ask them to tell us what the most promising solutions are," Bowdler said. "That's how we target our investments."
To spur affordable housing, Chase will distribute grants on a noncompetitive basis to CDFIs, affordable housing developers and national housing organizations.
The initiative's overarching goal is combatting income inequality, said Peter Scher, Chase's head of corporate responsibility.
"The times that we live in, and the challenges we face, require companies to step up and do even more," Scher said. "For all the benefits the economy is creating, for all the progress technology is driving around the world, there's still tremendous work to do to help those being left out."
The move makes sense because CDFIs are "uniquely well-positioned" to squeeze the most benefits from Chase's capital, Mark Pinsky, president and chief executive of Opportunity Financial Network, a trade group that represents more than 200 CDFIs, said. A partnership between CDFIs and the nation's largest bank would "exponentially increase [the] impact" of the PRO Neighborhoods investment, he added.
Chase is one of several banks spearheading high-profile, high-dollar philanthropic campaigns.
The $93 billion-asset KeyCorp, which is looking to secure approval to buy First Niagara Financial Group in Buffalo, N.Y., last month announced a five-year, $16.5 billion commitment aimed at boosting lending in low- and moderate-income communities. The $71 billion-asset Huntington Bancshares, meanwhile, agreed to commit millions of dollars of support for Flint, Mich., as part of its agreement to buy FirstMerit.