Wall Street is going the extra mile to win hearts and minds on Main Street, plowing hundreds of millions into a wide gamut of community projects.
Bruised by election-year rhetoric and still suffering the fallout on its reputation from the 2008 crisis, Wall Street is going the extra mile to win hearts and minds on Main Street. The sector is plowing hundreds of millions of dollars into a wide gamut of community projects like youth employment and renewable energy.
Known more for their sizable financial bets than charitable giving, many big banks have supported the arts, education and community development through foundations for years. However, the last several appear to be busier than usual for the foundation arms of major financial institutions. Marquee names like Citigroup , Bank of America and JPMorgan Chase are plowing money into a broad range of nonprofit ventures that signal a new phase in corporate social responsibility.
One of the most active has been JPMorgan. The bank recently committed $125 million in an attempt to help revitalize low-income neighborhoods around the country. Called PRO Neighbors, the investment comes two years after the bank committed $100 million to help Detroit recover from bankruptcy, and just months after it pledged $75 million to tackle youth unemployment.
The PRO initiative is meant to "provide local leaders with the tools and flexible capital to bring healthy food, education facilities, affordable housing and small businesses to vulnerable communities," Janis Bowlder, JPMorgan's head of community development for global philanthropy, told CNBC in an interview.
Neighborhood organizations will work together to compete for grant money that will help "expand and pool resources for helping underserved neighborhoods," Bowlder explained. "From Colorado to Texas, we know this approach works because it's encouraging others to invest and help spur economic mobility in neighborhoods that haven't been invested in for a significant period of time."
Two years ago, the National Association for Latino Community Asset Builders received a $6 million grant from JPMorgan to create affordable housing, jobs and small business lending to Hispanic communities. Although big banks come in for frequent criticism for their lending practices, Noel Poyo, NALCAB's executive director, praised JPMorgan's efforts.
"The affordability of housing is perhaps the most significant factor that limits where a family chooses to live," Poyo told CNBC. "With the support of the JPMorgan Chase Foundation, NACAB and non-profit housing developers in the NALCAB Network have devised an innovative solution to this challenge."
Bank of America has also been active in community investment. The bank has been recognized by the White House for its support on the environment, and it recently upped the amount it commits to environmental business initiatives, from $50 billion to $125 billion.
The investment is designed to create a low-carbon economy by 2025 by financing projects that promote energy efficiency, renewable energy and transportation. BofA has also issued new "green bonds" worth $600 million to finance environmentally-sound projects.
The bank realizes "that we realize that this transition in society needs to take place and by delivering $125 billion in investments," Andrew Plepler, president of BofA's foundation, told CNBC.
"We think that we can play our part in addressing climate change," he added.
Toward that end, BofA works closely with companies in the renewable energy space, Plepler added.
"As a global citizen, we believe that we have a role to play in acknowledging the climate changes occurring," Plepler added. "We have capabilities in how we manage our own operation and how we deliver our capital in this society where we can play a role in this transformation into a lower carbon economy."
Meanwhile, Citigroup has made a big bet on young adults. In 2014, the bank pledged $50 million — the single largest commitment in Citi foundation history — to a three-year program that helps 100,000 youth. The Pathways to Progress initiative gives summer jobs, business training and civic engagement to low-income kids in 10 major cities, including New York, Chicago, Dallas, and Los Angeles.
"What we are trying to do by delivering a combination of work experience, financial education, leadership training, mentoring opportunities is really giving young people a jump start on the path to employment and self-sufficiency," Edward Skyler, Citi's head of global affairs and chairman of the initiative told CNBC recently.
"Even as a bank, it is still difficult to directly create jobs. But what we can try to do is reduce the job skills mismatch for young people," he added.
After working with community partners, government officials and Citi volunteers mentor participants, helping them develop the workplace skills and leadership experience needed to begin developing career paths. Within two years of the initiative, more than $35 million were invested and over 70,000 young adults were reached. The commitment achieved so much that Citi plans to expand its reach.
"We launched it in London with a program and now there is a program in India as well," Skyler said. "So we are building on the success and the track record in the U.S. to reach young people globally."