Philadelphia, PA, April 14, 2016 (CDFI Connect)—This month, JPMorgan Chase & Co. launched Partnerships for Raising Opportunity in Neighborhoods (PRO Neighborhoods), a $125 million, five-year initiative to identify and support solutions for creating economic opportunity in distressed neighborhoods around the country.
This initiative is investing in collaborative partnerships between CDFIs in an effort to find innovative financial solutions to revitalize neighborhoods by growing small businesses, creating health and social service facilities, improving access to affordable housing and collecting better data to study changing neighborhood demographics.
CDFI Connect spoke with Daryl Shore, Vice President, Community Development, Global Philanthropy to learn more about this exciting initiative.
Why are neighborhoods the key to success per JPMorgan Chase?
JPMorgan Chase recognizes that thriving neighborhoods are critical to the long-term economic success of individuals, communities, and cities. At a time when commercial corridors and downtowns are experiencing a renaissance, many neighborhoods are being left behind. As we experience economic growth, we recognize that not everyone is benefiting from this growth. This work is an important step in making sure that everyone has a chance to rise up with the growing economy.
What can you share about the success of the pilot PRO Neighborhoods initiative, as well as your $100 million investment in Detroit?
In 2014, we launched the pilot program to support low-income communities. In this pilot we issued a $33 million philanthropic investment, ultimately investing in seven collaboratives of 26 CDFIs. The collaborative nature was new, but we wanted to see this work, and we wanted to see CDFIs leverage the funds across different areas of expertise and investment.
The collaborations allowed CDFIs to align their talent, technology, and balance sheets to address specific community development challenges, such as alleviating blight, lending to minority- and women-owned businesses, or bringing clinics and child care centers into disinvested neighborhoods.
We then engaged Harvard University to look at the impact of this investment. From this work, we saw that CDFIs were able to leverage additional public and private capital, bringing in an additional $226 million into their projects. That impact, and the ability to scale up, leverage, and drive capital into distressed communities showed what an incredible impact CDFIs make when they collaborate. We realized CDFIs really are the vehicles that are best positioned to drive change in communities.
Our $100 million, five-year commitment to Detroit’s economic recovery also helped inform our strategy. In Detroit, we found new ways to partner with CDFIs and support a group that has faced high barriers of access to capital. Specifically, we worked with a local CDFI, Detroit Development Fund, to create the Entrepreneurs of Color Fund and provide minority-owned business with access to the capital they need to thrive and grow.
How has this shaped the scope of the PRO Neighborhoods initiative?
First, the collaborations of 2014-15 demonstrated the incredible manner in which CDFIs leveraged funds. The impact includes over 2,000 affordable housing units preserved, more than $100 million in loans, and lending to over 130 small business that created or retained around 2,650 jobs. The work was incredibly impactful, and with this new model we understood that we have a real tool that can fulfill this critical role in communities.
Second—looking at the 2014-15 round and Detroit—these investments helped us position where we needed to go next with PRO Neighborhoods. Focusing on affordable housing, for instance: even with the subsidies that we have in the market, the units that the U.S. is creating are less than half of what is needed. So it was clear that we would need to create innovative financing tools that are viable with fewer subsidies or even without subsidies.
The third bucket is the data and research agenda that we have built in. We really recognize that cities may lack the analytical tools they need to predict and plan for the impact in their cities. That could be gentrification, blight, etc. We want to give cities the tools they need to make real-time as well as forecasting decisions.
Too often cities rely on historical trends to make decisions for the future. We want to provide analytical tools around real-time issues, as well as tools that look forward. How can cities interpret changes and opportunities to plan for housing and community development investments that meet the shifting demographic in the future? So we want the data to provide:
- Real-time analytical tools to allow cities to assess real time implications
- Forward-looking tools to determine community development strategies
- Documentation of the impact of our CDFI collaborative investments
Why are CDFIs the community development entities that are so crucial to this mission?
CDFIs are close to the ground. Understanding CDFIs in general, they are mission-focused and treasury designated. Solving challenges in community development is their purpose. What we’ve seen is they are also sophisticated entities that are able to leverage and gain additional capital, and drive it into the community where it is needed.
CDFIs have their fingers on the pulse of the challenges in their communities and are nimble in their work across multiple asset classes—for example some focus on small business, others on affordable housing, or healthy foods financing, or health centers and childcare. If you look at the 12 collaboratives that we funded thus far, they address a mix of challenges; so the sophistication they have to take the capital and successfully drive it into the communities is key.
Are there some specific cities/neighborhoods you are targeting as part of this RFP?
The competitive nature of the application allows us to touch multiple areas of the country. We will support the most innovative and impactful proposals. We want to see solutions that can leverage the collaborative partnership to provide the necessary resources and make sure people in the communities are getting opportunities to prosper.
What are you looking for from applicants that might not be obvious in the RFP?
The focus is on local and regional CDFIs. For example, the RFP requires that eligible CDFIs have net assets of $75 million or less. We realize that some of the smaller, and local, and regionally-focused CDFIs have had a hard time accessing greater and more sophisticated capital. So we really want to hone in on them and give them the opportunity to leverage additional private and public capital. Our past investment has enabled smaller or local CDFIs to tap more sophisticated capital streams.
We are looking for a clear explanation of the target populations that the collaborations will address. We want to make sure that the people who benefit are in neighborhoods that have been persistently poor, or predominantly of color. So it is important in the application process to make it clear who the end beneficiary of the work will be, and that the equity lens is applied.
Learn more about the RFP here.