Kresge’s Impact Investment Program Hits an “Inflection Point”

Impact investing isn’t a new course of funding action at the Kresge Foundation. It’s been exploring what it refers to as Social Investment Practice since around 2007. Like most other foundations that participate in impact investing schemes, Kresge’s overall goal for its Social Investment Practice program is to find ways outside of the foundation’s traditional grantmaking by which it can leverage its assets to accelerate change in its main areas of grantmaking interest.

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Unlike other impact investing foundations, Kresge rarely makes direct investments in social enterprises. Rather, its investments tend to come in the form of grants, equity, loan deposits, and guarantees to partner organizations such as community development finance institutions. The foundation approved over Kresge made 12 social investment commitments in 2014.

According to Kresge Trustee Maria Otera, the foundation has reached a “significant inflection point” in its Social Investment Practice, and recently announced a $350 million funding pool that it plans to invest by 2020. Aside from the major cash infusion, the foundation plans to go about its impact investment practices in much the same manner as it has since the mid-to-late 2000s by continuing to use loans, deposits, equity and guarantees as its main vehicles of support.

Likewise, Kresge will continue to invest in social enterprises working in its areas of grantmaking focus, which include Arts & Culture, Community Development, Detroit, Education, Environment, Health, and Human Services. While the goal of leveraging its assets to quicken the pace of change remains the same, the foundation has augmented its mission with the additional goal of attracting $1 billion from other investors to “accelerate positive impact on issues facing cities and low-income people.”

The foundation’s investment in the Strong Families Fund is a recent example of progress. Kresge combined two funding tools in its commitment to the fund: $6 million from Social Investment Practice program and $1.25 million in grant funding from its Human Services program. Doing so attracted additional investment for over $60 million from KeyBank, Goldman Sachs, the Robert Wood Johnson Foundation, and many others. From the looks of things so far, Kresge is already making decent headway in its $1 billion impact investment mission.