JPMorgan Chase & Co. will commit $125 million over the next five years to help low-income neighborhoods nationwide that have missed out on the benefits of recent urban development.
The Wall Street giant planned to announce the grant strategy, called PRO Neighborhoods, at a meeting Tuesday in Washington with Jamie Dimon, the bank’s chief executive, and Detroit Mayor Mike Duggan.
PRO Neighborhoods comes two years after the bank’s $100 million commitment to help Detroit bounce back from bankruptcy. It also builds on a $33 million program it created in 2015 to test how it could help neighborhood groups secure access to credit and develop a larger inventory of affordable housing.
The effort will provide "local leaders with the tools and resources they need to ensure that opportunities to prosper are extended to distressed neighborhoods and the people who live there," Janis Bowdler, JPMorgan’s head of community development for global philanthropy said in a statement.
Often projects in low-income neighborhoods do not qualify for traditional loans because they lack a proven track record or significant cash flow. To overcome those barriers the company plans to offer grants to community-development financial institutions, which pool their resources to support the construction of health-care and education facilities, retail outlets, and community centers in those areas.
Testing Shows Successes
In its test of the program, the bank provided grants totaling $33 million to seven groups of community-development financial institutions. The grantees attracted $226 million in additional grants and loans, according to JPMorgan.
Citing a study by the Harvard Joint Center for Housing Studies, the bank said the project helped groups purchase, preserve or develop 2,000 units of housing for low-income residents, generated start-up support for more than 130 small businesses, and helped create or retain 2,650 jobs.
In addition to grants to the community-development groups, PRO Neighborhoods will provide seed capital for affordable-housing organizations to buy and refurbish properties in areas where rental rates have risen dramatically. The plan will also support research into how to address the negative impact of gentrification.
Urban-policy experts, including Henry Cisneros, former Secretary of Housing and Urban Development, and Angela Glover Blackwell, president of PolicyLink, a research and advocacy group, praised the plan in statements JPMorgan provided.
Through PRO Neighborhoods, Ms. Glover Blackwell said, JPMorgan is "empowering community leaders to collaborate, share resources, then identify and address the key drivers of inequality."
JPMorgan said the effort is unrelated to $13 billion settlement with the U.S. Department of Justice over the company's mortgage practices in which it agreed to pay $4 billion in the form of relief to aid consumers harmed by its conduct. In addition to loan modifications and principal forgiveness for homeowners, the bank agreed to work to improve neighborhoods by supporting community development organizations and clearing blighted properties.