If you have a lot of money, you can do a lot of good with it. There are plenty of areas where needs are genuine and deep, and some extra cash can make a big difference. If you are in a position to provide money to help meet some of those needs, and choose to do so, people will think better of you. Of course, there is still the question of, where did all that money come from?
Which bring us to JPMorgan Chase’s recent decision to increase its investment in Detroit’s revitalization by $50 million to $150 million. This is a company with a lot of money. It is also a company that was in the thick of the mischief that led to the 2008 financial crash, a company that has been called “worse than Enron,” a company that paid $20 billion in fines in 2013 alone, and was hit by a deferred prosecution agreement from the Department of Justice. In other words, it’s fair to say that JPM has some issues with its reputation.
It’s would be all too easy to conclude that this move is simply a case of whitewashing, or as some might say, greenwashing. But to do so would not only be oversimplifying, but it would also miss an important point about sustainability. That point being that it is infinitely easier to sell sustainability when it’s financially attractive, than to sell it on the grounds that it’s “the right thing to do.” It’s a simple fact of the game that while many people will choose the common good over self-interest a fair amount of the time, an equal, or perhaps greater number will choose self-interest first. Another way to frame the question is, do big companies now put more emphasis on “doing the right thing,” because they have undergone a conversion and are now true believers? Or are they doing these things because they recognize that doing so has become a necessity for any number of reasons? Perhaps that answer is not as important as their actions.
Getting back to Detroit, it’s worth noting that will JPMorgan Chase had its roots in the National Bank of Detroit, which was formed in 1933, in the aftermath of the Great Depression, jointly financed by General Motors and the Reconstruction Finance Corporation, the Federal agency put in place to stabilize the banking industry.
The second point is that Detroit, after declaring bankruptcy in 2013, with a 22 percent unemployment rate, is getting back on its feet, due to a combination of tops-down and bottoms-up efforts.
The leadership of Mayor Mike Duggan, who Fortune calls a “technocrat,” can’t be overlooked either. Duggan, who once said, “We don’t want charity. We want a plan, where you can come in and make money, and other people can notice and follow suit,” really set the tone for what people like JPMorgan Chase CEO Jaime Dimon and developer Dan Gilbert have done there, which was to invest large sums in the city.
Both will likely do well. In their press release, JP Morgan Chase said that “improving economic conditions in the city,” was an enabler for the increased level of investment. The funds will go towards grants and loans for: community development ($50 million), small business development ($9.5 million), workforce readiness ($10 million), neighborhood revitalization ($25.8 million), and economic growth ($6.9 million).
As the city’s economy grows stronger, these investments will grow in value. Beyond the money, a great deal of thought and planning have gone into this initiative.
Says Mayor Duggan, “JPMorgan Chase has been a true partner in our work to restore economic growth and opportunity in Detroit. The firm’s investments have enabled thousands of Detroiters to receive training, created new opportunities for entrepreneurs and revitalized neighborhoods. There is more work to do, and I hope our continued partnership will build a thriving economy for all Detroiters.”
This is broad-based, as opposed to trickle-down economics. Funds and opportunities are directed across the economic spectrum and not simply to those at the top. The effort is largely local in nature, with big employers like Quicken Loans being attracted back into the city where 3,100 employees now live. Microsoft has also just moved a Tech Center into 40,000 square feet downtown. According to JPMorgan Chase, their investments to date have created 1,500 jobs, 1,500 housing units, trained 15,000 people, and provided assistance to 1,800 small businesses. The engagement of more than 20 local organizations and over 100 employers in planning and implementing this effort contributes to its likelihood of success.
Whether JPMorgan Chase is trying to atone for past sins, or simply trying to make more money is not for us to say. The fact is, quite a bit of good appears to be coming out of this effort.
Image credit: RP Siegel