Wells Fargo, the scandal-plagued financial-services giant, will pump $1 billion from its business and foundation into efforts to make housing more affordable. To lead the effort, the bank has tapped Brandee McHale, a corporate and foundation giving veteran who most recently led the Citi Foundation.
The billion-dollar bet on housing is an attempt to move from being “a check writer to a problem solver,” according to Wells Fargo Foundation President Jon Campbell, who had previously announced plans to retire. McHale, who also worked on low-income housing issues at the Ford Foundation, will take over on August 1, and Campbell will stay on until the end of the year to help in the transition.
Wells Fargo’s housing plan is the latest in a string of commitments by individual donors and foundations to address what Campbell sees as a crisis. Currently about 18 million people in the United States spend more than half their income on housing, according to a Harvard University study. The move also comes as more foundations are devoting high-dollar “big-bet” streams of cash to a single issue.
Going Deep
Wells Fargo’s housing commitment will include work to serve homeless people and offer transitional housing, increase the national inventory of affordable rental units, and increase homeownership. The bank will “go deep” in a few cities to be named later to try to address the lack of affordable housing in certain regions. And with Enterprise Community Partners, a nationwide affordable-housing nonprofit, Wells Fargo will offer a $20 million challenge grant to seek out innovative ideas to address the lack of affordable housing.
The flood of housing cash — Campbell said the $1 billion would be in the form of grants, not loans — coincides with a pledge the company made to donate 2 percent of its after-tax profits to charity. The formal pledge begins in 2020, but in 2018 the banking giant hit that target when it earmarked for philanthropy $444 million of its $22 billion in profits.
The company’s $287 million in giving in 2017 was more than each of the other nine financial-services giants the Chronicle surveyed.
Along with housing, as part of a revamped corporate-giving strategy Wells Fargo will make grants to improve people’s financial standing and help small businesses. Campbell said more information on those commitments will come in the months ahead.
The Environment and Diversity
Gone from the bank’s giving formula are specific commitments to diversity and environmental sustainability. Although those causes are no longer pillars of the company’s corporate social-responsibility plan, Campbell says they remain priorities.
Efforts to improve diversity and equity, he said, will cut across all of the company’s housing grants. For instance, he said, people of color, the elderly, and people with disabilities are about twice as likely to be renters, rather than homeowners, than the general population. Increasing the inventory of affordable rentals will help those groups, he said.
Many of the grants Wells Fargo has made in the past sought to increase diversity or promote economic equity by focusing on specific organizations. The new strategy aims to solve knotty systemic issues that have kept a disproportionately high number of people of color and members of other groups not fully served by the banking industry from achieving financial success.
Making progress against these systemic problems, which don’t have an isolated cause but become entrenched by broad social, political, and historical factors, often requires the cooperation of a variety of organizations across different causes, such as finance, health care, and education. Boosting the stock of affordable housing across the country will require close cooperation with public agencies and other private-sector organizations, Campbell said.
Wells Fargo also hopes its strategy will help convince policy makers and the broader public of the urgency of the issue, he said.
“We’ll move into the policy front not necessarily by us lobbying all by ourselves,” he said, “but by partnering with other organizations in that space.”
Looking at the Big Picture
In McHale, the incoming philanthropy chief at the banking giant, Wells Fargo has a leader that has stressed the need to take a “holistic view” of the problems faced by grantees and their beneficiaries. She wrote in a 2018 Chronicle opinion piece that grant makers need to understand that “making progress is beyond single organizations doing it alone.”
Philanthropy has taken a fresh interest in housing and homelessness over the past year.
When they announced their giving plans last fall, Jeff and MacKenzie Bezos said direct support of programs that help homeless people would be a top priority. The couple has since split. MacKenzie Bezos has signed the Giving Pledge, meaning she plans to give at least half of her estimated $34 billion fortune to charity, but she hasn’t given specifics.
Salesforce.com founder Marc Benioff and his wife, Lynne, have given more than $66 million to fight homelessness. In May, the couple gave $30 million to establish the Benioff Homelessness and Housing Initiative at San Francisco State University.
In May 2018, Kaiser Permanente announced a $200 million fund that will invest in affordable-housing projects. A few months earlier, nine grant makers, including the Bill & Melinda Gates and Annie E. Casey foundations, pooled $10 million to build a three-year housing-advocacy campaign.
Wells Fargo’s housing commitment follows several years in which the bank has paid billions of dollars in fines and settlements related to claims of fraud. Campbell has said that as the bank tries to re-establish consumer trust, philanthropy is playing a major role.
The redefined strategy is an attempt to sharpen the company’s giving focus, which previously had been “spread like peanut butter,” Campbell said. “We did a lot of things in a lot of places,” he said. “We were at a point where we had to narrow our focus. [Housing] is an area where we have strong expertise and can make a difference.”
