All about the Kresge Foundation’s environmental program — Inside Philanthropy

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Spotlight on IP Funders offer quick overviews of funders who are on our radar, including some key details about how they operate and what they’re up to right now. Today I’m looking at the environmental program of the Kresge Foundation, the Troy, Michigan-based institution that funds cities across the country.

What is this program about?

The Kresge Foundation’s environmental program revolves around three axes: climate change, cities and equity. It aims to help cities reduce and adapt to climate change while ensuring that low-income communities and people of color are included in decisions and benefit from this work. Looking back, the goal of the program is to expand opportunities in American cities.

One of Kresge’s goals is to ensure that its climate change financing is “multi-solution” – that is, it simultaneously contributes to improving the quality of life, economic well-being and ‘equity. For example, last year it issued a series of $8.4 million grants to improve health and fight climate change in low-income communities.

To go along with its three areas of intervention, the program has three strategies. One is leadership development: building the capacity of urban leaders to support equitable climate approaches. Another is information: supporting leaders’ access to the evidence and tools they need to take equity-focused climate action. The third is systems change: transforming urban infrastructure, especially energy and water systems.

Why You Should Care

Of the country’s leading climate and environmental funders, Kresge is also one of the most staunchly committed to equity, whether through its funding, endowment investments or sector engagements. If this is the goal of your non-profit organization, or if you are in an urban and community organization that wants to start a program in this direction, the foundation could be your dream partner.

Where does the money come from

Sebastian Spering Kresge was born in Pennsylvania in 1867 into a family of farmers who came to the United States from Switzerland. He was able to work his way through college teaching and as a grocery store clerk before moving into selling hardware and other goods. He later opened a five and ten cent store in Detroit that would eventually become the international retail chain Kmart Corporation. In 1924, when he was 57, he established the Kresge Foundation, to which he gave more than $60 million during his lifetime. The foundation had $4.2 billion in assets as of 2020.

where does the money go

Of $110 million awarded in 2020, Kresge’s environmental program accounted for $18 million. (Data for 2021 wasn’t ready at press time.) There’s a sweet spot when it comes to how much Kresge is donating: Almost all of the program’s recent grants have been in the six figures, and more than half were for exactly $600,000, according to his grants. database. Grants went to organizations in metropolises like Atlanta, Los Angeles, and New York, as well as smaller cities like Fresno, California, Springfield, Massachusetts, and Port Washington, Wisconsin.

Many grantees were community groups, often working at the intersection of health and environment, but grantees also include national groups and intermediaries. Some have an organizational focus on climate, but many do not. Kresge also enjoys supporting networks and coalitions. Case in point: One of the program’s top recipients in 2021 was the Urban Sustainability Administrators Network, an organization for local government professionals, which received two awards of $750,000, based on the database .

Kresge doesn’t just give away his mandated 5% and call it a year. Through 12 “social investment” engagements dating back to 2013, the foundation has leveraged its endowment to provide investment capital, loan dollars or loan guarantees totaling $47 million, according to the foundation. These include green banks, such as Inclusive Prosperity Capital, and for-profit companies with a social purpose, such as PosiGen and Greenprint Partners.

who calls the shots

Kresge’s 14-member board has a wide variety of overlapping backgrounds in education, government and philanthropy, as well as finance and healthcare. Members from academia include the president of Drexel University, a dean of public policy and professor of law at the University of Michigan, and an adjunct lecturer at Harvard.

Board members with public service experience include a former director of the White House Domestic Policy Council, a former U.S. undersecretary of state, a former U.S. deputy treasury secretary, and the former president. of the Michigan House of Representatives. Philanthropy professionals include current or past leaders of the Draper Richards Kaplan Foundation, the Michigan Health Endowment Fund, and the Kipp Foundation. There are also at least three directors each with ties to finance or health, including the sole family representative on the board, physician Cynthia Kresge.

Many members are represented more than once in these sectors, as is the president of the Rip Rapson foundation. He’s served in government (as deputy mayor of Minneapolis), in academia (he spent six years at the University of Minnesota’s design center) and, of course, in philanthropy (he’s been with Kresge since 2006, and earlier, The McKnight Foundation).

Is diversity and inclusion tracked and shared?

Kresge tracks the gender and racial/ethnicity demographics of its staff down to the program level. Half of the six full-time members of the environmental program team are white and the other half are people of color. All are women. (The foundation also tracks staff who work with other departments, which have a similar makeup but with gender diversity.) Kresge calculates that 70% of program leaders are people of color. The foundation shares both its staff and board demographics on its Candid Guidestar profile, but not on its website.

The foundation’s efforts to track diversity and inclusion also extend beyond its own ranks. Kresge was the first of 40 major climate funders to commit to the Climate Funders Justice Pledge, which asks foundations to commit 30% of their climate funding to BIPOC-led environmental justice groups. It has committed 33% of its climate finance to these groups in recent years. Kresge also funds Green 2.0, which tracks diversity in NGOs and foundations, and until 2020 he publicly shared his internal demographics with the organization. (Green 2.0 moved to an anonymous format for foundations last year). And it’s one of more than 50 foundations that have signed the Disability Inclusion Pledge.

Open door or barbed wire?

The environmental program keeps the main door closed, but there is some sort of side entrance. In other words, although the program does not accept unsolicited grant proposals, but instead relies on invitations, the foundation maintains a list of open funding calls. A recent — not from the environmental program — called for neighborhood projects supported by residents by Detroit-area nonprofits. For grant seekers lucky enough to receive an invitation to apply, the foundation also maintains a very detailed how to apply page, with guidance on the process, specific programs, and comprehensive FAQs.

Sunlight or secret?

In line with its peers, Kresge has a grants database with filters by year, program, purpose, and location. This dates back to 2009. But why have only one public database when you could have three? Kresge has another for his social investments, with all the filters you could want, and a third for tracking his own fundraising initiatives, indexed by program, something I’ve never seen before. (I’d say that’s worth a few bonus points.) Likewise, it publishes its audited financial statements and tax returns from 2015. It even has a reader’s guide to tax returns. (More bonus points!)

What do we hope for next?

Kresge is somewhat known for his social investments. And from what I’ve seen, those individual moves are carefully chosen and weighed for their impact. That said, the foundation’s website says its commitment to mission-aligned investments is set at $350 million, just 8.3% of its endowment. (Kresge didn’t answer a question about whether that had changed.) With the world on fire, why hold back so much? It could also join the growing number of peers moving away from fossil fuels.

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