JPMorgan Chase launched the Diverse Supplier Grant Initiative with two goals in mind. One is to help diverse businesses overcome the challenge of being cyber-ready, and meeting the minimum requirements for doing business with large corporations. The second goal is to grow the health of the communities in which diverse businesses operate. The Initiative Supports broader racial equity commitment the company has made to spend $750 million in new supplier diversity spend. This is a “walk the walk” Initiative, backed by JPMorgan Chase’s financial commitment and supported by a structure that brings other corporations into the effort as partners. The underlying principle driving the effort is JPMorgan’s belief that increasing supplier diversity is a major strategy for closing the racial equity gap, because it supports diverse business success, employment, and thriving communities. JPMorgan’s Ted Archer, Global Head of Business Partner Diversity, and Doug Roginson, Executive Director and Relationship Manager explain the financial institution’s commitment to the Initiative and the goals for driving measurable change.
BACKING UP A COMMITMENT TO RACIAL EQUITY
Too often, corporate leaders make public statements about their organization’s commitment to Diversity, Equity & Inclusion (DEI) but fail to make a measurable commitment of resources. Not so for JPMorgan Chase. The financial giant made a racial equity commitment and is backing it up with a variety of strategies that will drive positive change. The Diverse Supplier Grant Initiative grew out of this commitment, and is one effort among many to achieve racial equity in the company’s supply chain, but it does not stop there. The Initiative has broader goals that include leveraging diverse businesses to extend the reach into their communities of operation.
“As part of our racial equity commitment,” explains Ted Archer, “we have taken a closer look at how diverse business owners often face challenges to doing business with large enterprises. One of the challenges includes the cost-prohibitive financial industry requirements, particularly when it comes to cyber readiness and access to insurance and bonding.” Unless a business can satisfy those requirements, it is unable to bid on project proposals. Supplier diversity is the focus of the Initiative, because it is considered a major path to closing the racial equity gap and helping diverse businesses grow, through their transparent partnership with a major firm like JPMorgan Chase. The Initiative is designed to lower the barriers that diverse businesses face at JPMorgan Chase, and to create a broader mechanism for other diverse businesses facing industry challenges as well.
STRUCTURING A RISING TIDE INITIATIVE
The Diverse Supplier Grant Initiative is structured to attract new corporate donations, which JPMorgan Chase will match dollar for dollar. The firm committed to an initial $5 million corporate match in 2022, and so far, has received more than $1.2 million in pledges from 28 corporations. JPMorgan Chase partnered with a Community Development Finance Institution called the Local Initiative Support Corporation (LISC), a certified 501(c )(3) nonprofit. LISC manages the end-to-end program on the behalf of JPMorgan and other corporate donors, and will report on the capital assistance delivered to diverse businesses.
The main reason for starting the Initiative, according to Archer, is to create a funding mechanism that addresses a unique problem for diverse supply chain businesses. To access the insurance and bonding needed to do business with a company like JPMorgan, diverse businesses are investing $100,000 to $500,000 in their infrastructure, to create more effective cybersecurity protocols. As one of the architects of the Initiative, Roginson explains, “We are trying to help reduce some of the barriers to entry diverse businesses face, and that goal includes increasing the number of qualified suppliers for not only JP Morgan Chase but for the industry at large.”
Initiative progress is tracked via a set of metrics. They include the number of contracts that were awarded or will be awarded to diverse businesses; the number of proposals for which diverse businesses qualify; the number of jobs created and retained; overall top-line revenue growth in each business; and the impact on low-to-moderate income communities in which these businesses operate. Archer says, “For JPMorgan, success looks like the ability for more companies we work with to have the opportunity to access new contract opportunities which will result in growth for those businesses. By extension, we have a great partner in local initiative support through a CDFI that is dedicated to increasing access to capacity-building tools by small businesses across the country. The Initiative also supports the CDFI’s ability to do work in neighborhoods and communities where access is sorely needed. So we are seeing not only benefits to our business partners in our large supplier population but also to the communities they serve.” The expectation is that the Initiative will become a rising tide that lifts all DEI boats.
NOT A ONE-SIZE-FITS-ALL OR ONE-AND-DONE EFFORT
Through experience, Archer and Roginson knew that applying a single model for small and diverse business interventions and models means it will not fit some businesses. The Diverse Supplier Grant Initiative chose to work with partnering corporations through LISC to overcome this potential limitation. Providing resources to small and diverse businesses through the supply chain works over the long haul.
Not only is this not a one-size-fits-all model, but the Initiative is also not a one-and-done effort. JPMorgan has committed to multiple investments over the next five years to close the racial wealth gap. Each year, the Initiative will be reviewed to determine successes and areas needing changes. “We know we will have to make pivots and shifts based on what our suppliers, grant partner LISC, and colleagues at contributing corporations are learning along the way,” says Archer.
Eligible grantees are typically US-based, certified Black-, Hispanic-, or Latino-owned businesses with annual revenues above $5 million and a tangible business need. As a corporate partner or donor, each corporation becomes a referral partner to the Initiative. Diverse-owned businesses referred to the program by the corporate donor are prioritized for applicant review.
Some of the corporate partners are Fortune 500 companies. The corporations will be working within their own supply chains to identify diverse-owned businesses that could be potential supply chain partners and they will inspire these businesses, along with JPMorgan, to aspire to the Initiative, ultimately getting them corporate ready. Archer says, “For this to work and be sustainable and have an impact beyond this current moment, it will take partnership and building the capabilities of CDFIs and their corporate partners to do this work. For the Supplier Grant Initiative, LISC is instrumental in linking diverse suppliers to corporate capital today and down the road, helping the suppliers get the kind of technical assistance and capacity building support they need.”
LEADING FROM THE FRONT
“At JPMorgan and Chase, we like to lead from the front,” says Roginson. “We like to set the benchmark for creating a platform for initiative participation, adoption, and replication. We want to grow the diverse supply base in the industry, continue to create jobs, and grow wealth in communities where the diverse suppliers operate.” JPMorgan is a pioneer by structuring the Supplier Grant Initiative in a way that brings a positive impact across the industry to the company, suppliers, and communities. The Initiative is one part of a multi-part strategy to achieve racial equity. Companies are encouraged to join the Initiative and discover for themselves the power of a unified effort to bring substantial and enduring change.