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An action plan for socioeconomic mobility

How Capital One links its philanthropic work to its business mission

An action plan for socioeconomic mobility
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Heightened awareness of the disparities tied to race and wealth have turned public attention toward innovative, collaborative solutions that will help level the playing field. Lately, corporations have played a larger role in driving these efforts, which include Capital One’s recently announced Impact Initiative, a $200 million, multi-year commitment to spur economic growth in low- and moderate-income communities. The effort builds upon Capital One’s core mission to change banking for good, and its priorities around racial equity, affordable housing, small business support, workforce development and financial well-being.

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It also reflects the financial company’s ongoing commitment to serving as an industry-leading community development (CD) lender. Since establishing its community finance line of business in 2007, Capital One has provided more than $13.2 billion in construction financing for more than 140,000 affordable housing units, creating more than 158,000 jobs. As the No. 1 CD lender nationally for the past three years, Capital One has also provided nearly $29 billion in loans since 2016.

“As a financial institution, we feel we have a vital role to play economically in the country and with the financial well-being of our customers and communities,” says Andy Navarrete, executive vice president of external affairs at Capital One. “Everything that’s occurred in 2020 has reinforced the need for socioeconomic mobility to be a focus of not just companies like Capital One, but of policymakers at all levels of government.”

Here, Navarrete discusses the firm’s commitment to making a meaningful social impact.

Capital One sees business and philanthropy as linked—that the company can simultaneously advocate for improved economic and social conditions and advance its own interests. How does that dynamic work?

Andy Navarrete: We’re operating in one of the few industries that’s actually required to give back, through the Community Reinvestment Act. We could either see this requirement as a tax on the business or as an opportunity to elevate our level of impact, and integrate this work into our daily business. We have a unique history and business model in banking. The notion of investing in people—taking a chance on them and then growing with them—is our North Star.

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Many of the community groups that we support are committed to the same goals that we are: financial well-being, workplace development, affordable housing, racial equity and small business incubation. If we’re successful in our community and philanthropic work, that helps our business because we are, in fact, creating future customers. And if we’re successful in our core business, then we’re helping the communities that we’re supporting through our philanthropic efforts.

What made this the right time to launch the Capital One Impact Initiative?

The convergence of our philanthropic efforts and our mission to change banking for good has pushed us toward a clearer, crisper articulation of that work. At the same time, the partisan divide means that government is no longer the engine of social change it has been historically. Corporations increasingly understand that if equity and opportunity are priorities for all Americans, companies need to address them far more aggressively and directly than they have in the past. Just this year, the pandemic has had a disproportionate effect on low- and moderate-income communities. Then the killings of George Floyd, Breonna Taylor, Ahmaud Arbery and other Black Americans underscored the continuing need for companies to focus on social justice and racial equity within the Black community in particular.

The initiative has three major pillars: advocating for an inclusive society, building thriving communities, and creating financial tools that enrich lives. How do you plan to tackle each of these?

Advocating for an inclusive society doesn’t mean being a silent, behind-the-scenes entity. We recognize the need to be front-footed in terms of engaging in public discussions about the need for change. We also have to be a voice in the policymaking arena and within community organizations, and we need to be declarative in terms of our views on matters of race and other social issues.

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When we talk about thriving communities, we are quite literal—our portfolio of affordable housing across the country is both sizable and integrated into our community and philanthropic work. We think about making communities thriving by bringing together community partners to provide education resources, workforce development, money coaching, and other services for residents that make the community sustainable. For example, we’ve invested in a property in Washington, D.C., that focuses entirely on grand-families, because we learned that if children were being raised by grandparents but hadn’t been formally adopted, they weren’t eligible for traditional public housing.

Creating financial tools that enrich lives is core to our mission of changing banking for good. Twenty-five years ago, Capital One was founded on the belief that no one should be locked out of the financial system. In serving the full spectrum of consumers, we are often the first experience an individual has with credit —be they a recent college graduate or a new arrival to this country—or a small business has with credit. If we see this relationship as an investment in our customer’s future, we see that we play a critical role in their building of wealth and their ability to improve the lives of those around them.

What outcomes are you hoping to see at the conclusion of this project?

The Capital One Impact Initiative is about the difference our efforts and the organizations we support can make in our communities. So, if it’s a workforce-development program, we want to make sure we’re not just training individuals, but also looking to employ the individuals we’re training. If we are helping to incubate small businesses, we want those businesses to become our customers and suppliers. For affordable housing communities that are usually very transient, we want to build stability and sustainability, all in an effort to create more opportunities for a person’s financial health and overall well-being. We want to see results that tell a story of tangible impact. The idea here is not to declare victory in five years. It’s to learn enough in those five years to decide what the following five years should be focused on.

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For more information about these efforts, check out capitalone.com/about