Dear reader,
Welcome to the latest edition of The Forum File. In this edition, we are highlighting our firms’ work in advancing economic opportunities for women and minority entrepreneurs.
We hope you enjoy reading this edition and please do not hesitate to share your feedback.
Kevin Fromer, President and CEO, Financial Services Forum
Penny For Your Thoughts
Karim Assef, Chairman of Global Investment Banking at Bank of America Merrill Lynch
How is Bank of America investing in and supporting diverse entrepreneurs?
The challenges that minority and women entrepreneurs face, especially when it comes to securing capital to start or grow their businesses, are steep and universal. Despite record levels of venture capital investment over the past decade, only about 2% has gone to Black or Hispanic founders. Further, Bank of America’s 2021 Women Business Owner Spotlight found that 42% of women small business owners have never applied for a business loan or line of credit. Addressing this gap in resources requires significant change. That’s why, as part of our focus on advancing racial equality and economic opportunity, Bank of America dedicated $350 million toward investments in funds who share the mission of providing growth capital to these under-represented entrepreneurs.
Since our program began in late 2020, we have committed more than $300 million to over 100 investment funds across the U.S. These funds provide capital to Black, Hispanic-Latino, Asian, Native American, and other under-represented minority and women entrepreneurs to help them establish and grow their businesses. The intended impact is multi-tiered, as the funds themselves are managed by diverse investors, who in turn invest their equity in companies founded by minority and women entrepreneurs. The combination helps drive success and representation at both levels, which then hopefully leads to progress at a third level, the creation of better jobs for under-represented workers.
How does Bank of America allocate these funds to ensure they are reaching populations in need?
While our primary focus is reaching under-represented founders and companies in order to address the funding gap, the vast majority of the investment fund managers themselves are diverse. Of the funds in our portfolio, 67% are led by Black/African American managers; 24% are led by Hispanic-Latino managers; and 57% are led by women. Importantly, and while these funds are clearly addressing a societal need, they have the ability to reach and connect with entrepreneurs who are generally outside the scope of the mainstream venture capital industry. Most of these funds already boast impressive success stories among the companies in which they’ve invested. We hope to see many more over the coming years. We expect our growing portfolio of funds to invest in 3,000+ minority- and women-led companies over the next five years. Beyond providing capital, the funds also connect these business owners to new groups of potential advisors and mentors, as well as new customers and investors who ultimately help their businesses thrive.
What is the longer-term impact you hope to have as your investment program continues?
Investing our capital is only a first step and arguably the most straightforward one for a large institution such as Bank of America. We hope that others follow our lead such that the overall amount of capital available to under-represented founders continues to increase. But our greater hope is that the impact helps create opportunities over the long term. As these investment funds get established and scale in size, they have greater ability to catalyze the success of diverse founders and the growth of their companies, which in turn could create more jobs for diverse workers.
For example, in March of this year, Bank of America announced an investment in Overlooked Ventures, an Ohio-based fund that focuses on investing in diverse founding startup teams whose companies are comprised of one or more historically ignored founders. Its portfolio is comprised of 42% Black founders and 16% Hispanic-Latino founders, with the remaining 42% made up of Indian, Iranian, Syrian, and Ashkenazi Jew founders. As these companies grow, our hope is that they are more likely to hire and promote diverse workers, creating a multiplier effect.
As the funds in our portfolio continue to build their portfolios of companies, we hope to provide further support to both the founders and their companies through our traditional banking services as well as by providing mentorship and advice. Capital is only the first step and certainly not the only area in which the under-represented face challenges. Our plan is to help support the growth of the funds and their companies over the longer term.
Value Add
Bank of America Institute for Women’s Entrepreneurship at Cornell Program Expansion
In March of this year, Bank of America announced a further expansion of the Bank of America Institute for Women’s Entrepreneurship at Cornell University, doubling the number of program seats to 100,000 and further enabling women entrepreneurs to gain critical knowledge to drive their businesses forward. Since its launch in 2018, the Bank of America Institute for Women’s Entrepreneurship at Cornell has enrolled individuals from the U.S. and 120 additional countries, primarily women, of whom 90% identify as women of color. Registration is open to anyone worldwide, regardless of gender, educational background or business stage.
As the only Ivy League program offering a certificate in women’s entrepreneurship, at no cost, the program offers enrollees courses focused on areas such as finance, product development, marketing, leadership, communications, and legal and compliance requirements, as well as opportunities to build professional networks. The instructor-led classes and limited class sizes provide women the opportunity to learn new skills while connecting with a vibrant network of entrepreneurs and social innovators. Additionally, the Institute has developed a Spanish language curriculum and hired Spanish-speaking teaching assistants to more effectively reach Hispanic/Latino entrepreneurs.
This expansion is just one way the bank is continuing to advance racial equality and economic opportunity in the communities it serves. In order to drive real progress, we recognize that we share in the responsibility to do more. We also know we can’t solve these challenges alone, so we’re partnering with other corporations, local nonprofits and community leaders across the country who share our vision for creating meaningful change. Bank of America’s long-standing partnerships with the Tory Burch Foundation, Vital Voices, the Cherie Blair Foundation and Kiva have helped an additional 75,000 women from more than 140 countries grow their businesses.
Capital Gains
What we’re doing in Washington
The Forum and other trade associations sent a letter to SEC Chairman Gary Gensler highlighting the need for meaningful public input in the SEC rulemaking process and expressing concern that the SEC’s “overlapping and serially short comment periods simply do not provide the public time to fully analyze, consider, and comment on these rule proposals, including the time that it takes to study and analyze the market and economic implications of the proposals and identify possible unintended, negative consequences.” The letter further points out that “The Commission’s current approach to setting the comment periods for its numerous rule proposals not only deviates from case law, federal standards, and guidance on appropriate rulemaking procedure, but also, significantly veers from the Commission’s recent approach to this process.”
We highlighted the significant contributions that Forum member institutions made across the country over the past year.
The Forum and the Bank Policy Institute authored a letter to the House of Representatives urging the passage of H.R. 5911, the “Fair Hiring in Banking Act,” which makes improvements to Section 19 of the Federal Deposit Insurance Act to allow banks to provide employment opportunities for rehabilitated job seekers with criminal records.
Our Two Cents
Research from the Forum
The BankNotes Blog Spotlighted:
- The need for regulators to address the GSIB surcharge to ensure the capital requirements of large banks accurately reflect systemic risk.
- The unprecedented rulemaking agenda from the SEC that could compound current challenges and result in adverse consequences for the real economy in terms of output, employment, investment, and prices, in part one of a two-blog series with SIFMA.
- Recent research on the impact of uncertainty on the economy, incorporating the impact of regulatory uncertainty, in part two of a two-blog series with SIFMA.
Checking the Balance
Members in the news
Bank of America invested nearly $43 million directly impacting economic and social opportunity in Southeast and Southwest Washington, D.C. The investment, which is aligned with the bank’s commitment to advance racial equality and economic opportunity in local communities, is aimed at improving the area’s long-term economic growth and stability. Through affordable housing projects and partnerships with local nonprofits – including Building Bridges Across the River (BBAR), the Washington Area Community Investment Fund (Wacif), and Bread for the City – the funding and grant package addresses housing, workforce development, healthcare and small business efforts across the District.
BNY Mellon has been named one of the most admired companies in the world, according to a study published in FORTUNE magazine. This is the 25th time BNY Mellon has been included on the list since it originated in 1997. The annual “World’s Most Admired Companies” report surveys top executives and directors, along with financial analysts, to identify the companies that have the strongest reputations within their industries and across industries.
Citi was recognized as the number one affordable housing lender in the United States for 2021, according to Affordable Housing Finance magazine’s annual ranking. This marks the 12th consecutive year that Citi has earned this distinction.
Goldman Sachs was recognized as a top company in Equileap’s 2022 Gender Equality Global Report for its commitment to equality and investment in opportunities for women around the world.
JPMorgan Chase recently announced six winners to receive $5 million each as part of an annual competition to source innovative and sustainable ideas to advance equity in communities across the U.S. This year, the firm sourced proposals for projects designed for and by Black and Latina women to address racial and gender wealth gaps. JPMorgan Chase awarded six winning cities—Washington, DC., Baltimore, Minneapolis, New Orleans, Miami, and Los Angeles— $5 million each over a period of three years, for a total of $30 million in philanthropic commitments. The winning proposals aim to address challenges faced by Black and Latina women across several sectors, including early childhood education, entrepreneurship, and real estate development.
The Morgan Stanley Institute for Inclusion’s Equity in Education and Career Consortium launched a multi-year program focused on eliminating barriers to degree completion and career readiness for Community College students from underserved communities nationwide. College Possible and CUNY ASAP will receive $5.5MM in grants to scale their programs building on a previously announced commitment of $20MM to address the education and career achievement gap for young adults from low- to moderate-income backgrounds.
Reflecting State Street’s commitment to increasing diverse representation in the financial services industry, the firm announced that it has issued $500 million of senior unsecured debt. The offering was structured in keeping with State Street’s ongoing inclusion, diversity and equity efforts, with R. Seelaus & Co., LLC and Siebert Williams Shank & Co., LLC acting as bookrunners, and MFR Securities, Inc., Stern Brothers & Co., and Tigress Financial Partners, LLC acting as co-managers. These five broker-dealers are women-owned.
Wells Fargo announced support to help increase the growth of women-owned small businesses, including a $1.5 million grant to How Women Lead to disrupt the unequal venture capital system for women founders. The grant will help inspire 10,000 women to invest with venture capital for the first time, ultimately building a $1 billion fund. In addition, the company is sharing new data and an interactive toolkit on closing the economic gaps facing women entrepreneurs.