Letter From
The Chairwoman

The Kresge Foundation works to make measurable, positive change for those living in urban settings by expanding opportunities in America’s cities. We want people to have the tools they need to lead self-determined lives and to have the opportunity to join the economic mainstream.

I staunchly believe that we must deploy our resources responsibly and consistently over time. We do this as we weigh the ever-increasing needs of those struggling in our nation’s city centers against the sheer complexity of getting things done.

We regularly review and refine our foundation-wide strategy to make sure we are directing our resources at the intersection of greatest need and highest potential impact. Our focus on cities, first introduced in 2012, resulted from such a review. Our track record of grantmaking and social investing sharpened when we prescriptively trained our efforts on those places in the United States where high concentrations of the population live.

And every two years we review each program’s strategy. In 2014, for example, our Environment Program launched an initiative to fund climate-resilience planning, policy development and implementation efforts to advance the priorities and needs of low-income people in cities.

To responsibly aspire to boldness requires deep and ever deepening expertise. Kresge program officers are subject-matter experts. Their depth of knowledge enables us to carefully target responses based upon research, study and analysis. This knowledge informs our efforts to build the fields in which we work – arts and culture, education, environment, health, human services, and community development in Detroit.

We often use our resources to convene. Bringing people together can be the first step in tackling a seemingly intractable problem. Other sectors, dependent in part on donations or public funding, rarely have the resources to draw disparate groups together. This is a point of pride for Kresge. Getting around a table with people who have never had such an opportunity creates conditions for forward movement. And with forward movement comes new thinking and opportunities for positive change.

Our Social Investment Practice has the same goal – positive change – using different methods. It completed its fifth year of operations in 2014 and is now an established complement to our grantmaking. Through social investing, Kresge has 37 active commitments under management, totaling $76 million. We make low-interest loans, deposits, equity investments and guarantees to support projects and organizations that advance the strategic priorities of our programs. In doing so, we are able to help attract capital from other sources, such as financial institutions, private investors, other foundations, donors and government agencies. In each arrangement, we are willing to take more risk than private-sector financiers if and when there is commensurate opportunity to further our mission.

To be sure, what some might say was our boldest venture and biggest risk – with commensurate social good – was Kresge’s $100 million grant to the Foundation for Detroit’s Future, an $816 million fund known as the Grand Bargain that helped speed the resolution of the city’s bankruptcy. Was it a risk? Yes. Was it vital? Yes. Did it create conditions for social good? To us, absolutely.

I must publicly commend Rip Rapson and his able staff for their significant contributions to the conception and establishment of the fund. In Rip’s Letter From the President you will read about the lessons learned as a result of this historic and unprecedented commitment on Kresge’s part and how the foundation is applying those lessons to its future work.

We believe strongly that we can take action against complex problems rooted in urban areas. We have hope. We have a sizable endowment. We have a mission bestowed on us by our founder, Sebastian Kresge, to promote human progress. And we have sound strategies, precise in their focus and comprehensive in their approach. If Kresge is seen as bold, I am pleased: Our actions are aligning with our aspirations.

Chairwoman's signature
Elaine D. Rosen
Chairwoman of the
Board of Trustees


Is Unfolding
In America's

Bold is not a goal; it is a byproduct of collective effort.

Bold is the urban future that awaits us.

Annual Report

Letter From
The Chairwoman

Elaine D. Rosen
Chairwoman of the Board of Trustees

Our theme in this annual report is Bold Urban Future. One should approach using the term “bold” with some significant modicum of respect; most definitions, after all, imply confidence and courage. In our context, bold describes our aspirations – which should and do require courage.

A Treatise on the
Future of Philanthropy

Rip Rapson
President & CEO

In 2013, with $18 billion in debt, the city of Detroit entered the largest municipal bankruptcy in U.S. history. Rip Rapson, president and CEO of The Kresge Foundation, was on the front lines of efforts to bring about a speedy resolution, one that protected the pensions of city retirees and safeguarded the world-class art collection at the Detroit Institute of Arts, the city’s most valuable asset.

Rapson and 10 other philanthropic leaders, together with the state of Michigan and the Detroit Institute of Arts, created an $816 million fund, the Foundation for Detroit’s Future – what has become known as the Grand Bargain. The fund enabled the art to be sold to a nonprofit trust, with the proceeds nearly fully funding retiree pensions. Equally as important, it prevented litigation that would have delayed indefinitely the essential and imperative work of city building.

Over the yearlong negotiations, Rapson put Kresge’s six core philanthropic beliefs to the test. He found they served the institution well under the extraordinary circumstances of the bankruptcy. Here he offers the six beliefs as the building blocks for the philanthropic sector’s next generation of grantmaking and social investing.


Our Impact

Total Grants Made: 408

Arts & Culture: 33
Detroit: 125
Education: 65
Environment: 56
Health: 54
Human Services: 25
Special Initiative: 50

Grant dollars awarded in 2014: $242.5 million*

Arts & Culture: $21.6M
Detroit: $137.8M*
Education: $26.7M
Environment: $14.9M
Health: $14.2M
Human Services: $9.7M
Special Initiative: $17.6M
*Includes $100 million for the Foundation for Detroit's Future

Grant dollars paid out in 2014: $138.1 million*

Arts & Culture: $18.5M
Detroit: $32.1M
Education: $19.9M
Environment: $18.6M
Health: $20.2M
Human Services: $18.5M
Special Initiative: $10.3M
*Includes prior commitments

We also made 12 new commitments in our Social Investment Practice, totaling $20.4 million.


We believe neighborhoods and entire cities are stronger and healthier and residents have greater well-being when arts and culture are integral components of economic development and revitalization efforts.

Northeast Shores, a community development corporation in Cleveland, Ohio, has made artists and arts and cultural activities an integral part of its 10-year economic development plan for the city’s Collinwood neighborhood.

The plan, developed during a series of community gatherings, reflects the aspirations of local residents and business owners: to increase the neighborhood’s vibrancy and quality of life by creatively addressing the problem of vacant and underutilized spaces.

Vacant buildings are being converted into gallery, rehearsal and performance space for the artist/residents in this racially, ethnically and culturally diverse community, facilitating new business opportunities in Collinwood and providing an outlet for creative, cross-cultural expression.

With a $430,000 grant from Kresge, the organization will increase the number of low- and moderate-income rental spaces, support art projects focused on community health and facilitate manufacturer-artisan development partnerships.

In addition, business development services are available to artists working in music, crafts and design to help them achieve personal financial success and contribute to an overall rise in median household income.

Why it Matters

  • Nonprofit cultural organizations generate more than $61 billion a year in economic activity for American communities, creating jobs, drawing visitors and generating revenue for local businesses and governments.
  • People who attend arts and cultural events tend to be active in other aspects of community life and act as connectors for broader civic participation.
  • Low-income neighborhoods with high cultural participation rates are more than twice as likely as those with low participation to have very high rates of school attendance and achievement.


We believe Detroit is on track to regain its rightful position as one of the world’s great cities through initiatives to revitalize the city’s neighborhoods and Woodward Corridor, nurture arts and culture, bolster entrepreneurship, catalyze mass transit, support early childhood development and increase civic capacity.

M-1 Rail is the 3.3 mile streetcar route along Woodward Avenue, Detroit’s main artery, designed to fuel a local and regional transformation, stimulating business growth and development while creating reliable public transportation that will connect citizens with jobs.

Kresge has invested $50 million in the $170 million public-private project, which will go into operation in late 2016.

Following the 2014 groundbreaking, 2,000 construction jobs will contribute to the local economy; an additional 20,000 jobs are predicted once a full regional transit system is in place. M-1 Rail is considered the first leg of the regional system.

Why it Matters

  • 26 percent of Detroit’s households lack a vehicle, compared with 9 percent nationally. Light rail serves an acute need for transportation.
  • With separate city and suburban bus systems, the region has repeatedly failed to create a unified system.
  • A recent study found that communities see a $4 return in economic development, productivity and new jobs for every dollar invested in public transportation.


We believe local communities can help all residents reach their full potential and participate in the economic mainstream when they facilitate access to and success in postsecondary education.

The Talent Dividend competition charged 57 cities with increasing the number of residents receiving college degrees over a four-year period. The prize: $1 million from The Kresge Foundation.

The winner: Akron, Ohio, which increased its college attainment levels by 20.2 percent by improving the readiness of incoming students, supporting enrolled students through to graduation and helping those who had dropped out of school return and complete their degrees.

Partners responsible for driving the increase: Northeast Ohio Council on Higher Education coordinated 24 business, civic and higher education institutions to pursue the prize collectively for Akron, Cleveland, Youngstown and Canton.

Other awardees cited for advancing the college success agenda and proving city-level coalitions can help improve the college attainment levels of their residents:

  • Portland, Ore.
  • Houston, Texas
  • Buffalo-Syracuse, N.Y.
  • Los Angeles-Long Beach-Santa Ana, Calif.
  • Orlando-Kissimmee, Fla.

Why it Matters

  • A CEOs for Cities study found that 58 percent of a city's economic standing as measured by per capita income is tied to the percentage of its population with a postsecondary degree, making it virtually impossible to improve a city's economy without improving the education level of its residents.
  • By 2020, 65 percent of all jobs will require training and education beyond high school.
  • The white-black and white-Latino education gaps have widened rather than narrowed since 1990.
  • The Organisation for Economic Co-operation and Development ranks the U.S. 11th among industrialized nations for education of its young people.


We believe that residents of low-income communities can prepare for the effects of climate change, building collective resilience and social cohesion in the process.

West Harlem Environmental Action Inc. works to improve environmental quality and secure environmental justice in predominantly low-income communities.

With a $100,000 Kresge grant, WE ACT is working with groups from four northern New York City neighborhoods to develop a climate-resilience plan that takes into account the economic and health disparities residents already experience that place them at greater risk for heat mortality and climate-related health problems and economic hardship.

WE ACT’s planning process is expanding opportunities for residents to engage with climate experts and public officials and is enabling them to examine the issues facing their neighborhoods based on predictive data.

When complete, the multiyear implementation plan will reflect the priorities and needs of community residents and describe activities the organization will pursue to influence New York City officials on climate-resilience planning, policy development and implementation.

Why it Matters

  • The effects of poor air quality, heat waves and extreme weather fall disproportionately on minority and low-income communities.
  • Nearly 70 percent of African Americans and nearly 60 percent of Caucasians live within 30 miles of coal-powered plants, which are concentrated in urban areas. The resulting pollution causes higher rates of respiratory illness among these residents.
  • In drought-stricken California, low-income areas receive almost three times less water than wealthy areas of the state.


We believe all homes, neighborhoods and food systems can promote good health and that land and transportation systems can be equitably shared among residents in cities across America so that everyone, regardless of income, can enjoy healthy, productive lives.

Wholesome Wave Foundation Charitable Ventures in Bridgeport, Conn., works with partners to develop and implement healthy-food incentive programs for low-income individuals receiving federal nutrition assistance or prescriptions from their physicians so they can purchase affordable, locally grown fruits and vegetables at farmers markets.

Kresge funding over the years has helped develop and scale Wholesome Wave’s Double Value Coupon Program, which works to improve revenue for family farmers nationally by establishing farmers markets in inner cities.

The most recent $500,000 grant makes it possible for Wholesome Wave to partner with Fair Food Network, another Kresge grantee, to create the nutrition incentive program that will be used to deploy a feature of the 2014 Farm Bill: the $100 million Food Insecurity Nutrition Incentive program. Together the organizations will help the U.S. Department of Agriculture shape the program to increase access for SNAP (Supplemental Nutrition Assistance Program) recipients to healthy foods, pilot the program in two cities and identify and share lessons learned.

Why it Matters

  • 23.5 million Americans live in food deserts – areas without ready access to healthy and affordable food – and more than half of those, 13.5 million, have low incomes.
  • A high cost burden for housing can take a toll on health. Low-income households that spend more than half of their income on housing spend less on food and health care. This contrasts with similar households that spend 30 percent or less of their income on housing expenses.
  • Social and economic factors, such as access to healthy food, account for as much as 40 percent of the variance in health outcomes for Americans.


We believe the human-services sector can be transformed to focus on human development and progress, making it possible for those with low incomes to achieve well-being and economic mobility.

The Alliance for Strong Families and Communities places a priority on shifting the sector from its traditional “services” model to one that facilitates human progress – helping people transition from crisis to stability and economic security. The organization (formerly the Alliance for Children and Families) provides leadership and management-development services to 500 human-services agencies in the U.S. and Canada. Collectively, its members deliver $3.6 billion in services annually to more than 4.6 million people.

The alliance’s framework, Commitments of High-Impact Organizations, provides members with a method for shifting to an outcomes-based orientation that works with adults, families and communities to create individualized plans to improve quality of life and economic security.

The Center for Engagement and Neighborhood Building is an initiative to hasten the adoption and implementation of the framework; a $500,000 grant from Kresge supports this work.

Complementing this is a four-year, $5.4 million pilot project, Strategy Counts, that aims to increase organizational effectiveness at 20 sites by funding chief strategy-officer positions or extensive technical assistance and capturing and sharing lessons learned. One of those sites, the Opportunity Alliance in Portland, Maine, supports a community center in the Parkside neighborhood, whose residents are pictured here.

Why it Matters

  • There are 101,800 human-services organizations in the U.S., with annual combined expenses of $199.6 billion.
  • One in seven people – 45.3 million – lives in poverty, including nearly one-third of children in the nation’s largest cities.
  • More than 578,000 people are homeless on any given night.
  • One in seven young adults ages 17-24 do not attend school or have a job.
  • Only 6 percent of children born to low-income families will become high-earning adults.

Investment Practice

In 2014, our Social Investment Practice made 12 new commitments totaling $20.4 million.

Kresge’s investments aim to solve complex social problems with cross-sector solutions such as:

  • Integrating social services into affordable housing
  • Narrowing the digital divide in the health care safety net
  • Financing small-business development in Detroit
  • Supporting interventions to reduce juvenile recidivism.

Over the course of the year, three loans were fully repaid and several others partially repaid, returning nearly $3 million to the foundation for new investments.

Our 2014 investments bring active commitments to $76 million, which has attracted an additional $400 million from third-party investors to advance Kresge’s program strategies.

Financial Report

Year Endowment Annual Qualified Distributions as Percentage of Endowment
2010 $3.2 billion 5%
2011 $2.9 billion 5%
2012 $3.2 billion 5.5%
2013 $3.4 billion 4.8%
2014 $3.56 billion 5%