Wells Fargo Overhauls Giving Strategy, Commits $1 Billion for Affordable Housing
Wells Fargo said Wednesday that it’s overhauling its corporate philanthropy strategy to focus on three key issues hurting underserved communities: housing affordability, individuals’ financial health and small business growth.
The San Francisco-based bank (NYSE: WFC) said it’s committing $1 billion in philanthropy alone through 2025 to address issues tied to the “housing affordability crisis,” including homelessness, available and affordable rentals, transitional housing and home ownership.
“Wells Fargo is focused on paving a path to stability and financial success for individuals and families who lack access to affordable housing, tools to manage financial health, and capital for small business growth,” said Allen Parker, interim CEO and president of Wells Fargo. “Together, we can help spark systemic change and economic development for underserved communities.
“When people start businesses, learn how to build wealth and can afford a home in their neighborhood, communities will thrive,” Parker said.
Wells also said that it tapped Brandee McHale as the head of the Wells Fargo Foundation, effective Aug. 1. She’s currently a Citigroup Inc. executive and president of the Citi Foundation. She succeeds Jon Campbell who retires at year-end. He’s currently head of corporate philanthropy and community relations for Wells Fargo and head of the Wells Fargo Foundation.
Wells Fargo is also creating a $20 million “Housing Affordability Challenge” that will look for innovative ways to rapidly boost the availability of affordable housing. The bank hopes to find new ways to address challenges in construction, financing and support services tied to providing affordable housing to low- and moderate-income families, seniors and the homeless.
While housing affordability is the issue Wells is tackling first under its new philanthropy strategy, Campbell said the bank could one day work with some of the numerous fintech startups, many based in the Bay Area, that are trying to improve the financial health of more Americans. The Federal Reserve recently found that nearly 40 percent of adults would have trouble finding the money for a $400 expense without borrowing or selling something.
Wells Fargo’s sharper philanthropic focus comes as more companies, nonprofits and philanthropists appear to be upping their game to address problems long associated with the Bay Area and other high-cost areas, such as homelessness and high-priced housing. Such issues are reaching crisis levels in cities across the country.
And things could be even worse in rural America, which the Wall Street Journal recently described as suffering from poverty, crime and other problems that once plagued the nation’s inner cities.
“America’s housing affordability crisis isn’t restricted to a few cities on the East and West Coasts,” Campbell said.
As Wells Fargo steps up, others are doing more, too. Last month, the Glide Foundation said it recently had a conversation with long-time supporter Warren Buffett, CEO of Wells Fargo’s largest shareholder, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), on how to place the San Francisco-based nonprofit on solid financial footing for the next 50 years.
“Glide is seeing more people seeking help as they put off buying food or medicine so they can pay their rent,” said Glide President and CEO Karen Hanrahan.
In April, Salesforce.com (NYSE: CRM) CEO and homeless advocate Marc Benioff and philanthropist Lynne Benioff said they’re giving $30 million to UCSF to put data behind possible solutions to the Bay Area’s homelessness and housing crisis. The couple’s gift, running over five years, is the largest private donation ever to fund research on homelessness.
So Wells Fargo’s sharper focus is timely. The bank says its philanthropy nationally can be more effective by concentrating on the three areas where it can better leverage its money and expertise.
Two areas of focus that are expected to get less attention from Wells Fargo’s philanthropic efforts are environmental sustainability and diversity and inclusion.
The bank anticipates that it will still have a significant impact on environmental sustainability through its substantial lending power, Campbell said. He sees the bank’s three focus areas in underserved communities as benefitting those who have been helped by its diversity and inclusion initiatives.
How the bank’s sharper focus affects philanthropy in the Bay Area and other local markets will become more apparent over time.
Wells Fargo is a major player in corporate philanthropy, in both the Bay Area and across the country. It’s often among the largest Bay Area corporate philanthropists. The bank’s 2018 cash contributions to Bay Area charities totaled $22.4 million and $369.5 million nationally, according to San Francisco Business Times research.
Wells Fargo’s shifting priorities may spur concern in the nonprofit community, an issue Wells was eager to address.
“By sharpening our focus on housing affordability, financial health and small business growth, Wells Fargo aims to make a bigger impact on solving core societal problems,” said Wells Fargo spokesman Ruben Pulido. “As we align to the three priorities, some funding will shift, but it is a transition that will take place over time. And we may support the same organizations but in different ways.”
Wells Fargo has also consistently boosted its corporate philanthropy over the past 25 years, including a 55 percent jump in contributions after tax reform in 2017. Starting this year, Wells is targeting 2 percent of after-tax profits for corporate philanthropy.
“With this increase in funding, we are able to do more,” Pulido said.
