Citi and the Citi Foundation announced Wednesday that they are investing more than $1 billion in strategic initiatives to help close the racial wealth gap in America.
The initiative, which is called "Action for Racial Equity," will focus on four key areas that relate to closing this gap including greater access to banking and credit for communities of color, increased investments in Black-owned businesses, expanded access to homeownership for Black Americans and an increased focus on anti-racist practices in the financial services industry.
"Addressing racism and closing the racial wealth gap is the most critical challenge we face in creating a fair and inclusive society and we know that more of the same won't do," said Citi CEO Michael Corbat in a statement, while adding that the company is committed to using its resources and influence to "combat the impact of racism in our economy."
Today, when looking at salary levels, White workers, on average, are paid more than Black and Latinx workers at almost every education level, according to a report by the Economic Policy Institute. This wage gap directly correlates with a family's ability to create wealth, with the median White family having more than 10 times the wealth of the median Black family in 2016, according to the Federal Reserve's most recent Survey of Consumer Finances.
When looking at housing, data shows that Black Americans and White Americans have a nearly 30-percentage point gap in homeownership today, which is actually larger than the gap that existed in 1960 when housing discrimination was legal. This lag in homeownership further robs Black Americans of the ability to build wealth; a report from the Federal Reserve shows that the average homeowner in 2016 had a household wealth of $231,400, compared to the average renter having a household wealth of just $5,200.
To do its part in helping to close these economic gaps, Citi is breaking down its more than $1 billion initiative in the following five ways over the next three years: $550 million will go toward supporting homeownership for people of color and helping minority developers build affordable housing; $350 million will go toward Black-owned business suppliers; $50 million will go toward investing capital for Black entrepreneurs; $100 million will go toward supporting the growth and revenue generation of minority-owned banks or banks that primarily service communities of color; and $100 million of Citi Foundation grants will go toward community change agents who are fighting for racial equality.
In addition to Citi's more than $1 billion fund, the Citi Foundation is creating a new $5 million grant that will go toward helping U.S. mayors access technical expertise, training and seed capital for pilot initiatives that address racial income gaps. The company is also creating a new three-year $100 million investment in its job-skills building program called Pathways to Progress in order to increase employment and entrepreneurship opportunities for Black youth.
In its newly released report titled "Closing the Racial Inequality Gaps," Citi found that if the U.S. had closed the racial gap for Black Americans in wages, education, housing and investments 20 years ago, then $16 trillion could have been added to the economy. If these gaps are closed today, the report finds that $5 trillion could be added to the economy over the next five years.
While many business leaders and companies have released public statements in support of Black Lives Matter and racial equity following the death of George Floyd, Citi's chief financial officer Mark Mason says "words are not enough" as we need "awareness, education and action that drives results."
He says Citi's more than $1 billion commitment is "just the starting point" and he knows that "by harnessing the central role Citi plays in local economies and the financial lives of Americans," they can "help close the racial wealth gap and help build an anti-racist economy and society."