'Change Who Gets Wealthy in a Country, You Change the Country'

Edward Powers, ’95, co-founded the now-$16 billion Bank of America Merrill Lynch’s BAML Capital Access Funds because women and ethnic minorities did not have adequate access to capital and might provide an untapped market in low- and moderate-income areas.

“Our very cynical economic theory was that we could buy low,” said Powers, New York managing director of the division, during the keynote at the Net Impact Conference, sponsored by student-led Chicago Booth Net Impact, at Harper Center on February 23. “If everybody else doesn’t look at it and is not that involved with it and there are economic opportunities there, you can buy things for cheap, grow them, and sell them in the traditional market.”

Furthermore, the founding team believed minority and female wealth creation was a good social outcome on its own, Powers said. “We were unapologetic about it,” he said. “If you help create income and wealth for women and ethnic minorities, you’d have a powerful social impact. If you change who gets wealthy in a country, you change the country.”

The four major forces that drove this development within Bank of America were culture, branding, regulatory dynamics, and demographic dynamics, Powers said. “The culture of Bank of America is based on founder Amadeo Giannini, who loaned money to small businesses and individuals for the first time without true collateral – the first character lending done on a mass scale,” he said. “His vision was to be the banker to America.”

Within corporate social responsibility, Powers said, Bank of America:

  • Practices philanthropy, including awarding $200 million in grants last year as part of its $4 billion foundation.
  • Focuses heavily on the not-for-profit sector, including providing operating support.
  • Funds financial literacy programs. “It just makes sense,” he said.
  • Strongly promotes associative engagement among its 300,000 employees. “The consistent theme every year in our associate surveys is that people want to feel good about the place they are working,” Powers said.
  • Performs program-related investments in community development financial institutions, including $250 million last year.
  • Provides affordable housing loans, including $600 million last year.

“Social responsibility has to be baked into the business,” he said. “In my opinion, it has to be a core competency of the business. There are other things you can do to make yourself better from a brand perspective and to make the company a better company. But for this stuff to work, it’s got to play to your strengths. For example, we’re one of the biggest players in private equity, which really helped me grow a little private equity business within Bank of America. With affordable housing, we were one of the biggest real estate lenders in the U.S.”

As a city planner, first-year student Maria Giesemann, a first-year student in the Full-Time MBA Program, wanted to hear Powers’s insights on urban development. “I liked how he talked about how a company as large as Bank of America can have amazing impact nationwide,” Giesemann said. “That can be applied to any large business in a way that maybe is not being applied now – to take what those large corporate entities do best and apply it in a socially responsible way.”

--Phil Rockrohr

Read views on funding underserved markets by Net Impact panelists.