The Kresge Foundation in Troy, Michigan, has announced its plan to make $350 million by 2020 in social investments designed to expand opportunities for low-income families.
The foundation's Social Investment Practice will make mission-related investments and program-related investments using financial tools including debt, equity, guarantees, and deposits — through which Kresge aims to attract an additional $1 billion from other investors. To date, the foundation, which began exploring such tools in 2007, has made social investment budget and spending decisions on an annual basis. To be funded by investment returns on Kresge's $3.5 billion endowment over the next five years, the expanded social investments will be aligned with the foundation's six program areas — arts and culture, education, environment, health, human services, and community development in Detroit. The foundation expects to continue to award grants totaling nearly $140 million a year.
The $350 million funding pool includes $105 million in commitments made through the end of this year to expand access to health care and affordable housing and invest in technology-based services that extend the reach of the social safety net. For example, the foundation has pledged $6 million through its Social Investment Practice and $1.25 million in grants from its Human Services program for the $70 million Strong Families Fund, a pilot pay-for-performance project that combinesaffordable housing with on-site social-service coordination.
"The language of philanthropy is shifting, from grantmaking and social investing being seen as two disparate strands of investment, to a new model, where all types of social funding work in an integrated way toward the same end," said Kresge Foundation president and CEO Rip Rapson. "This solidifies the notion that we, as a foundation, cannot solve complex social programs through traditional grantmaking alone. By defining this funding pool, we are extending our hand to for-profit and nonprofit partners alike and are asking them to join us on the front lines to use more innovative approaches to this work."