Wells Fargo will be putting $1 billion toward various affordable housing initiatives over the next five years.
As part of this commitment, the bank promised to address three key issues in underserved communities plagued by lack of affordable housing — housing affordability, financial health and small business growth between now and 2025.
The move comes just as Wells Fargo emerges from a scandal-ridden few years in which hundreds of people were foreclosed on thanks to an internal calculation error and employees were discovered to have opened as many as 3.5 million unauthorized bank and credit card accounts.
The pledge is part of a larger effort for the bank to overhaul its philanthropic strategy. As part of the commitment, Wells Fargo aims to donate 2 percent of its after-tax profits to corporate philanthropy concentrating on housing affordability, small business growth and financial health.
“Wells Fargo is focused on creating a path to stability and financial success for individuals and families that 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, in a press statement.
“Together, we can help spark systemic change and economic development for underserved communities. When people start businesses, build wealth and are able to afford homes in their neighborhood, communities thrive.”
Wells Fargo also announced that it is hiring Brandee McHale from Citigroup Inc. as head of the Wells Fargo Foundation. The role will begin on Aug. 1 and will focus on overseeing the bank’s new philanthropic strategy.
The bank’s announcement comes at a time of increased housing affordability problems in much of the country — as the average price of a home keeps rising, more than one-third of all households spend more than 30 percent of their income on housing while many spend even more than 50 percent of what they earn.
As the buyer’s market that many have come to anticipate fails to take place and home prices keep rising, corporations have been making pledges to fight the affordability problem — just last week, Microsoft pledged $500 million toward affordable housing initiatives.
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