February 4, 2022
At the end of January, JP Morgan Chase issued a press release proudly announcing “two of six winners to receive $5 million each in philanthropic capital as part of an annual competition to source innovative and sustainable ideas to advance equity in communities across the U.S… part of JPMorgan Chase’s $30 billion racial equity commitment to drive economic inclusion and builds on the firm’s initiatives to invest in solutions to drive equitable growth and community-based strategies across the country.”
Four years earlier, the bank had announced that it was creating “a $500 million five-year initiative that combines the firm’s lending capital, philanthropic capital and expertise to make investments in cities around the world. Operating under the banner of Global Impact, which they describe as working “on charitable ventures to inspire greater giving. We serve as a trusted advisor, intermediary and implementing partner across the private, nonprofit and public sectors. Through these partnerships, we have raised nearly $2 billion for causes such as disaster relief and global development.”
These are significant commitments, large enough to draw the eyes of the philanthropic world and get the bank favorable headlines. Are we correct to see their generosity as a sign of growing corporate responsibility and a desire to alleviate harms they may have previously caused? Or would we be wrong if we see this action more cynically, as a way to deflect criticism of the bank‘s role in building a world of greater inequity? Is this a welcome indicator of growing corporate responsibility that we should applaud and encourage others to emulate? Or is it just one more effort to paint over the greed and hubris of the corporate world?
The bank has said it sees wealth inequality, particularly racial wealth inequality, as its target. “To help address the challenges faced by many Black and Latina women across the U.S., we are investing in collaborations, drawing on the strengths of public and private sectors, to develop and test innovative and sustainable solutions. We know taking on these monumental issues will require a diversity of perspectives, areas of expertise, and skills,” said Demetrios Marantis, Global Head of Corporate Responsibility, JPMorgan Chase & Co. “Nearly two years into the pandemic in the U.S., we have continued to lose ground on the longstanding economic disparities that have disproportionately impacted Black, Hispanic and Latino people, especially women.”
Just days before the Bank announced these two gifts, ABC News reported that for 2021 it “had a record annual profit, nearly $50 billion. The total is significantly more than what the bank brought in during 2019, before the pandemic.” In the four years since it made that 2018 announcement of its $.5 billion philanthropic plan JP Morgan’s total profits were more than $460 Billion.
The bank’s commitment represents less .1% (yes that is one-tenth of a percentage point) of the bank’s gross profits.
Consider these acts of corporate generosity in the context of how it compensates its executives. JP Morgan’s CEO, Jaime Dimon earned $31.5 million in 2021 and will be granted another $50 million in stock options based on his remaining with the bank. His net worth is estimated to be $2 billion. Three other senior executives also earned more than $20 million last year. Weeks ago the Bank announced it had “increased its annual bonus pool for top-performing investment bankers by 30% to 40%…”
In this light, an announcement of a multi-year commitment of $30 million to 5 separate organizations begins to look a bit different.
When one considers the goal of these grants, focusing on closing the wealth gap, especially for the Black and Brown communities, one cannot help but think that their attention might be better placed inwardly when we note that the median salary for a JP Morgan Chase employee was about $80,100, that is 50% of all of the firm’s employees earn less than this amount. With his current salary, CEO Dimon earned more than 385 times the average JP Morgan chase employee.
JP Morgan is not alone. Individual mega-philanthropists and other large corporations have voiced similar recognition of the growing wealth gap as a problem. And they are not alone in ballyhooing their own philanthropic and investment strategy as signs that they are committed to being part of the solution.
As CEO Dimon told AXIOS at the end of last year, the Bank “ aims to break down systems that have propagated racism and widespread economic inequality, especially for Black, Hispanic and Latino people.”
But these systems exclude the structure of an economy that has allowed banks to earn without limit and for individuals to acquire unbounded wealth while so many struggle to feed their families or pay their rent. Dimon speaks for many when he defends this status quo, “We have a free market in this country, which … everyone should applaud…”
This the system that breeds the excesses he and his Bank say they are going to combat. A system that fellow finance executive Rich Handler saw so differently when he commented on compensation practices to Bloomberg Wealth. “Every one of us in our industry is overpaid. When you go home and look at yourself in the mirror, every one of us should count our lucky stars. It’s not just in 2021, I’ve said the same thing in challenging pay periods as well.” (Interesting perspective from another billionaire; wonder if he has taken it to heart and cut his own paycheck?)
The result of our existing economic system has been the growth of a small group of ultra-wealthy men and women. As the Institute for Tax Fairness concluded in a recently released study, “The explosive growth in recent decades of dynastic wealth—and the potential for even greater growth in the future—would not be possible if America’s wealth-transfer tax system worked the way Teddy Roosevelt envisioned it in 1910. The system is instead hobbled by loopholes and special breaks. The avoidance has become so routine that President Donald Trump’s economic advisor Gary Cohn declared in 2017 that ‘only morons pay estate tax.’”
This is the system that JP Morgan Chase says it wished to fix; the system that it proudly announces it is spending richly to remedy. We are left to question, as we have been about the work of the growing generation of mega-philanthropists, whether they are doing what they claim to be doing.
From my perspective, the current model of philanthropy is not the answer. It is another symptom of a very broken system. It reflects our buying in to a model of wealth equaling wisdom and nobility. It trusts that as the wealthy, individually and corporately, give away their fortunes, they are doing so wisely and without any consideration of their self-interest. We seize on individual examples where this may be true. We make heroes of those we identify breaking the traditional philanthropic mold, like Mackenzie Scott who has, using the wealth she now controls resulting from her divorce settlement with Amazon’s Jeff Bezos, been ready to make very large gifts with few strings attached; gifts that empower rather than control.
And, when we do this, we shift our attention away from the systemic problem of concentrated wealth in a nation with so many living in or near poverty and away from the need for systemic changes that move power from the individual to the people collectively. We stop fighting for fair tax policies that do not allow unlimited, multi-generational control of wealth. We stop fighting for policies that make our nation one with a strong, generous safety net that ensures no one is without food, shelter, access to health care and can pursue their dreams and potentials. We stop working for the policy changes that will address the past inequities that stole wealth from Black, brown, and Indigenous communities.
As the data show, the wealth to create an equitable and humane society exists within our borders. Jaime Dimon could live quite handsomely if his personal fortuned was reduced by half, or if his annual income were just one-tenth of what it is today. He would still be richer than most of the people in our nation. Would he, and his peers, work less hard? Given his wealth, there is little real meaning to what he is earning now, and yet he works on beyond his 65th birthday because he enjoys the work.
You be the judge. Will you praise Mr. Dimon for his leadership and his organization for their wise generosity? Or will you look past them and demand real, systemic change?
Which do you choose?