JPMorgan Chase plans to invest $40 million in Chicago’s historically underserved South and West sides in an effort to tackle the city’s poverty and violence through economic growth.
The three-year initiative by the nation’s largest bank is its second-biggest commitment to a single city, following an infusion of $150 million into Detroit. It amounts to a 50 percent increase in JPMorgan Chase’s philanthropic contributions in Chicago. The bank typically has invested $8 million to $9 million annually.
The challenge: turning that $40 million into meaningful changes in neighborhoods that have seen decades of decline and uncertain outcomes from previous philanthropic efforts.
Grants from Chase to community groups will fund job training, small businesses expansion, neighborhood revitalization and personal financial health programs through a variety of community partners already working in Chicago. To ensure the money is having an impact, it is funding third-party evaluations and has a local team of Chase experts monitoring the investments along the way to change course if necessary. Opening bank branches in the target communities is not part of the plan.
Chase is following the model it used in Detroit, where promising early results prompted the bank to add $50 million to its initial $100 million commitment. As in Detroit, the bank believes its funding initiative will succeed in Chicago because of the collaboration it sees between the public, private and nonprofit sectors.
“We’re not arrogant enough to think that we’re going to come in and solve a problem,” said Peter Scher, head of the bank’s global corporate responsibility initiatives. “But we do think that when you have that kind of collaboration on the ground, there are things that we can bring in terms of our resources and expertise that can help accelerate and catalyze a lot of that growth and opportunity.”
Most of the $40 million has yet to be allocated. The local Chase team plans to host a roundtable Thursday in the Little Village neighborhood with local business, nonprofit and community leaders to start to identify programs and specific neighborhoods to receive funding.
So far Chase has allocated $3.7 million, and those beneficiaries offer a sense of the work it may continue to promote.
The largest grant, $2 million, has gone to a new initiative from Heartland Alliance that with the help of community groups will identify individuals at highest risk of gun violence and pay them to work in 18-month transitional jobs, mostly in work crews doing tasks like neighborhood cleanup, paired with cognitive behavioral therapy and other support. The goal is to connect 400 people with transitional jobs in the first year.
The University of Chicago Crime Lab will measure whether the intervention is working by tracking if participants are involved in fewer shooting and homicides than a control group, as well as labor market outcomes. There’s no certainty the model will work on such a high-risk population, and “one of the reasons we have enjoyed partnering with (Chase) is that they’re in, they think this is really worth trying,” said Heartland Alliance President Evelyn Diaz.
Another $500,000 is going to the Brazier Foundation to help expand BSD Industries, a robotics technology training program designed to prepare Chicagoans for jobs in advanced manufacturing. BSD, which stands for Building Self Determination, launched a pilot in 2015 with money from Chase and this week started its second class of nearly 50 students.
A pillar of the 13-month program is a paid apprenticeship at BSD’s new plastics manufacturing facility in the Calumet Heights neighborhood on the South Side, which officially opens next month and already has clients lined up to buy its compostable plastic cutlery.
“I will be super excited when we get people working and we get people’s lives transformed and we really and truly get people empowered by this manufacturing opportunity,” said Trista Bonds, vice president of manufacturing operations and training for BSD.
Chase said 95 percent of the $40 million will be awarded in the form of grants, with a small slice set aside to fund programs like sending Chase employees to consult with nonprofits. Even when grants provide funding for partner organizations to provide loans, Chase doesn’t profit.
Still, Scher says there’s a business case to be made. “If the economy is growing for everyone, that’s a good long-term bet for our shareholders,” he said.
Chase’s Chicago and Detroit investments reflect a shift in the bank’s approach to philanthropic giving after a review five years ago revealed that writing big checks wasn’t having a proportionally big impact, Scher said.
Today, Chase takes a data-driven approach that more strategically allocates its annual $250 million in philanthropic investments. It also measures whether the projects it funds are delivering the promised impact — for instance, whether participants in workforce initiatives land and keep jobs and whether small businesses receiving investments can make new hires and pay off their loans.
In Detroit, Chase initially focused its funding on small business incubators, but ended up investing more in minority-owned businesses after discovering the real challenge for business owners was access to capital.
“The key is to have a learning agenda, always be evaluating, and if something’s not working, move on,” said Whitney Smith, executive director of global philanthropy for the Midwest region at Chase, who joined the bank after 10 years at the Joyce Foundation.
Chicago is rife with groups trying to tackle neighborhood development — but many residents are still waiting for results.
Just this year, the city made its first round of grants, totaling about $8.2 million, through two programs funding small-business renovation and expansion in specific South and West side neighborhoods. Benefit Chicago — a partnership between the MacArthur Foundation, Chicago Community Trust and Calvert Foundation that is building a $100 million fund to invest in Chicago-area nonprofits and social enterprises — invested $12 million in six projects, including an East Garfield Park vegetable farm and efforts to bring a mix of national and local retail to the Pullman neighborhood.
Four years ago, Mayor Rahm Emanuel announced a five-year drive to raise $50 million from the private sector to combat neighborhood violence, an effort led by the CEOs of Allstate and Chicago Loop Capital and managed by the private foundation Get In Chicago. In its 2016 annual report, Get In said it had awarded more than $33 million in grants to more than 60 nonprofits, and is concentrating its efforts on connecting “acutely high-risk” youth to service providers in seven community areas responsible for a third of the city’s violence.
But the project had gotten off to a rocky start. A 2015 Tribune investigation found only $3.7 million of the funds raised had been disbursed to youth programs and initial plans to measure outcomes through controlled trials had gone by the wayside.
Having that many groups already at work on the city’s problems — even where there’s a desire to work together — can present its own set of hurdles.
“What I see us struggling with in Chicago is how to get so many actors all working together and pushing in the same direction,” said Matt Bruce, executive director of the Chicagoland Workforce Funder Alliance. But Bruce is optimistic about the added value Chase brings to the effort, including the data that helps fuel its investment decisions.
There also is the question of how much is enough. When private investments are targeted at neighborhoods that are already at a tipping point, a few million dollars can make all the difference, said Meghan Harte, executive director of LISC Chicago, a nonprofit community development group.
“But there are a significant number of neighborhoods in Chicago that need investment well beyond a couple million — more like a billion,” Harte said.
North Lawndale, which has among the highest poverty, crime and unemployment rates in the city, still reels from the closure more than 40 years ago of the Sears, Roebuck & Co. catalog printing facility, which provided some 20,000 jobs in the area. Its needs are myriad after decades of disinvestment, said Zack Schrantz, CEO of UCan, which provides social services to youth and families in the neighborhood. But he recalls the three priorities residents asked for at his first community meeting: “jobs, jobs and jobs.”
There is a high level of skepticism in certain community toward outsiders bearing big checks, said Claude Robinson, executive vice president at UCan. Forging a long-term, mutually beneficial relationship, such as by having employees serve as volunteer mentors to youth in the community, tends to yield a stronger impact, he said.
But even then, corporate philanthropy can’t make up for thinning public budgets that make up the vast bulk of social services funding.
Even when investments help, they rarely make a dent in the big-picture challenges Chicago’s West Side neighborhoods are facing, said Marvin Austin, senior director of community economic development at Bethel New Life in the Austin neighborhood.
Entrepreneurs in the community have access to capital through initiatives like The PrivateBank’s microloan program. But loans don’t help community members get the education to prepare them to run a business, a network of mentors or in-community access to technology that can inspire businesses with the most potential to grow and create jobs, he said.
“There’s work taking place, but there has to be larger-scale comprehensive planning, with not just economic development but education, housing, environment and infrastructure,” he said. “You’re not going to have business development and investment in the community if the other domains and component parts don’t become healthy.”
Deputy Mayor Andrea Zopp agreed that business renovation grants alone won’t move the needle, but with more than 20 neighborhoods on the South and West sides, developing comprehensive, coordinated strategic plans for each area presents its own set of challenges.
“What we’re trying to do is at least be aware of where we’re putting those dollars, and be more strategic where we have the opportunity to do that,” said Zopp, the city’s chief neighborhood development officer.
The Englewood Whole Foods Market, now part of a larger shopping center development, brought retail jobs and a commitment from the grocery chain to source some products from local businesses.
In Pullman, Chicago Neighborhood Initiatives led redevelopment of a 180-acre, $125 million mixed-use site now occupied by Walmart, other retailers, a Method manufacturing facility and Gotham Greens. A Whole Foods distribution center is expected to open at the end of the year. Housing renovation accompanied the business development, and a community and recreational center is under construction nearby, along with a second retail area designed to combine national and local businesses.
That retail site, on 111th Street, will have a Potbelly Sandwich Works — community members had long been asking for a restaurant, CNI President David Doig said — and space for local businesses, including a dry cleaner and ‘Laine’s Bake Shop.
Separate from the $40 million, CNI last year received $1 million in Chase funding intended for its microfinance arm. The money doubled the size of its balance sheet and let the group increase the size of its loans — up to $50,000, from $25,000. About a third of the grant has been distributed in loans to 11 small businesses that created or helped maintain 30 jobs.
“I think we’ve all seen situations where you check back a couple years (after a big investment announcement), and what do you have to show for it? It’s just the opposite with this,” Doig said. “We’re getting the money deployed and putting it into businesses that have a meaningful impact on their neighborhood.”
Zopp said she hopes the bank’s investment will encourage other private donors to follow suit. “People pay attention when JPMorgan makes an investment,” Zopp said.
Those investments will be more likely to succeed when the private donor works in partnership with established community groups that represent a full cross-section of the community, not just better-connected nonprofits with access to the city’s movers and shakers, said Winifred Curran, associate professor at DePaul University.
Chase says it has those relationships in Chicago, where it is already an active donor.
Last year, for instance, it provided funding for a new Illinois Hispanic Chamber of Commerce startup incubator. The chamber partnered with Chicago’s 1871 startup community on the program, designed to help close the tech sector’s diversity gap.
Of the 25 businesses that have gone through the program so far, two have been accepted into startup accelerators, said Omar Duque, the chamber’s president and CEO.