Revitalizing America’s urban communities takes grit, persistence, imagination and a willingness to apply innovative combinations of tools to help unlock the potential of people in disenfranchised neighborhoods.

Throughout the country, Kresge’s Arts & Culture Program is pioneering new models of embedded creative placemaking — integrating arts and culture as an essential component of comprehensive community development — in low-income communities.

The support we provide our partners to carry out this work has aided many places where art, expression and creativity create a synergy with traditional community development tools to help energize neighborhoods.

In 2015, we expanded our toolkit through a unique partnership with Kresge’s Social Investment Practice to help unlock alternate forms of capital for creative placemaking projects in New Jersey. Support for the New Jersey Community Capital’s (NJCC) $12 million revolving loan, Creative Placemaking Fund, will enhance technical assistance services to arts and creative businesses.

The Arts & Culture Program awarded NJCC a $300,000 grant as a complementary investment to a $2.5 million program-related investment (PRI) from Kresge’s Social Investment Practice. It is our program’s first combined grant and PRI. The goal: Stimulate economic investments in the character, diversity, art, culture and livability of low-income communities in New Jersey.

Projects in the NJCC’s Creative Placemaking Fund pipeline will range from large-scale cultural districts — which include mixed-income artist residences, education centers, nonprofit arts organizations and arts-based small businesses — to individual anchor enterprises such as community theaters, outdoor spaces for performances and creative production and learning spaces for music and visual arts.

We are particularly excited because the NJCC’s pipeline has the potential to include a number of existing Kresge grantees, providing tremendous learning opportunities moving forward. With our Social Investment team, we look forward to evaluating and sharing what we learn from the new venture and using it to inform and refine our work and that of our grantees.

We continue to remain on the lookout for opportunities to collaborate in unique partnerships — internally and externally — that will unlock and unleash the creativity that catalyzes community building and a better quality of life in our great American cities.

Located across from Philadelphia on the Delaware River, and surrounded on three sides by water, Camden, N.J., was once a thriving industrial hub. After the factories that dotted the waterfront began to close in the 1950s and in subsequent decades, vacant and contaminated lands remained.

In 1984, the owners of those properties came together to form what would become the Cooper’s Ferry Partnership. The goal? To find new purpose for abandoned and underutilized property.

“We’ve come a long way,” says Meishka Mitchell, vice president of Neighborhood Initiatives at Cooper’s Ferry. “Today we have about 3 million visitors per year on the downtown waterfront, which now has an aquarium, concert venue and other cultural attractions.

“Over the last 10 years, we utilized the same expertise we used on the downtown waterfront to look more into the city’s neighborhoods.”

Cooper’s Ferry is all about making Camden into a place people want to live, work, visit and invest. The Kresge Foundation’s Arts & Culture team is supporting this ambitious work.

Elevating the Narrative

“Most community development projects don’t include arts and culture,” says Regina Smith, managing director of Kresge’s Arts & Culture Program. “Our belief is that by including arts and culture, there is an opportunity to lift up a distinctive narrative about a place that residents will both own and tell.

“Often, low-income residents don’t have a voice or aren’t given the opportunity to tell or share stories about their community.”

When they are provided meaningful opportunities to engage, the community benefits, she says.

In identifying grant applicants that merit support, the Arts & Culture team looks for projects and organizations that engage in cross-disciplinary and cross-sector approaches, exhibit strong leadership, empower residents, benefit all stakeholders — particularly low-income residents — and have distinctiveness of place.

For example, Kresge awarded the city of Fargo, N.D., a three-year, $900,000 grant to transform large stormwater basins into public common areas. While the basins continue to function for drainage collection, the transformed spaces will help to connect and engage the city’s artists and residents.

The unrelenting efforts of Cooper’s Ferry to build a healthy and strong community through the integration of arts and culture parallel the goals of Kresge’s Arts & Culture team. 

“Cooper’s Ferry really serves as a vital partner for the city of Camden,” Smith says. “They not only have an awareness of the integrated approach to stabilize a lot of the neighborhoods in Camden, but they also hear directly from residents what they desire for their communities.”

At just 9 square miles, the city is home to some 77,000 residents who Mitchell describes as resilient, spirited and sharing great love for their community.

“We see that every day in the work that we do,” says Mitchell, who was born and raised there. “It’s a small city with big-city problems.”

Engaging the Community

Many of Camden’s low-income neighborhoods border shuttered factories. There are 114 known contaminated sites and two federal Superfund sites in the area, according to the Environmental Protection Agency. Poor air quality has contributed to high rates of asthma and other respiratory problems among residents.

There is also grave concern over stormwater management. Much like many older industrial centers, the city has a combined sewer system; when t rains, runoff and sewage mix. And when capacity is reached — often after just one inch of rain — sewer backups and overflows occur in homes, parks and streets. When the team at Cooper’s Ferry spoke with residents regarding concerns in their neighborhoods, the sewage backups emerged as a pressing issue.

That resulted in the Stormwater Management and Resource Training Initiative. Through infrastructure improvements, the initiative helps mitigate those problems. Among the projects: capturing rain before it hits the sewer system to help keep water and sewage from overwhelming storm sewers.

Cooper’s Ferry has also invested in parks as a way to engage the community on multiple levels.

“We were doing these enhancements in some of the neighborhoods and investing in parks,” Mitchell says. “For instance, in North Camden there was a park that had just been overrun by drug dealers. We were able to rehabilitate this park and create a nice, well-kept area, safe for people to play.”

Still, residents were staying away.

“Once people stop going to a place, it doesn’t become part of their routine,” Mitchell says. “The park was still seen as a place that was off limits to them to play in.”

From that grew the Connect the Lots program. With a two-year, $1.1 million grant from Kresge awarded in 2013, Cooper’s Ferry revitalized vacant spaces within the community through the lens of creative placemaking. These empty lands became the center of structured activities like free yoga classes, a skateboard park, an afternoon concert series, community dinners — even a musical theater workshop for the city’s youth.

“When we were doing the Connect the Lots initiative and talking to residents about how they wanted their parks programmed and what activities they wanted to see in their vacant spaces, among the things that were mentioned included active living, active lifestyle, healthy initiatives and free fitness classes,” Mitchell says.

Cooper’s Ferry listened.

“All of those activities had the goal of really getting the community out in a way that maybe they hadn’t been engaged in a long time,” Mitchell adds. “There were a lot of residents who would say they couldn’t believe something like this was happening in their neighborhood. They are used to going elsewhere for these kinds of activities.”

That’s what appealed to The Kresge Foundation.

“It’s more than just arts interventions on vacant lots,” Smith says. “It’s a comprehensive and integrated approach to stabilize neighborhoods that have been disinvested for decades.”

Outside the Box

Until recently, the city had no gym or other spaces designated for exercise. High childhood obesity rates and sparse access to fresh food were among related challenges.

In response, in 2015 Kresge awarded a new, $900,000 grant over three years to support the new Camden Healthy Places Initiative. With the success of the Connect the Lots program and establishment of a platform for community engagement through arts and culture, Cooper’s Ferry proved its ability to seamlessly blend sectors.

“This is a strategic opportunity for Cooper’s Ferry to bring its experience and expertise to bear in integrating arts and culture into a broader, comprehensive community framework that includes health and the environment,” Smith says.

Healthy Places falls under a larger umbrella of the Camden Collaborative Initiative, a partnership among roughly 50 government, nonprofit, private and community-based agencies that Cooper’s Ferry helped launch in 2013. Its goal is to help create and implement projects that lift and improve the environment and quality of life for Camden residents. 

“We are really putting a collective impact spin on how we tackle health in the city of Camden,” Mitchell says.

For Valeria Galarza, vice president of Public Health Initiatives at the YMCA of Burlington and Camden counties, the Camden Healthy Places Initiative is vital.

“The city of Camden has many opportunities to transform unused space to connect the community to activities,” she says. “We need to demonstrate that exercise and physical activity can happen anywhere.

“Outdoor play fulfills basic needs for exploring, exercise, socializing and connecting with nature. Urban cities, like Camden, lack many opportunities for such needs to be met, which is why this initiative is important.”

Galarza and her team at the YMCA worked on the Connect the Lots program, administering outdoor yoga classes at Johnson Park downtown. Not only was that effort a success, it was among the catalysts that led to creation of the Healthy Places Initiative.

“The program was successful in attracting local residents and partners to take our classes in a park not usually used for exercising,” Galarza says. “The park is small, but conveniently located in the downtown area with consistent foot traffic near the school district administration building and Rutgers University’s Camden campus. The classes were visible to passersby, making it a go-to place to get active.

“Outdoor family yoga was not a common activity to see in the city. Now it is an opportunity to connect with others in a green space to be active, which should be the norm.”

Community education is among the top objectives of Healthy Places. Activities in the works include a mini Camden Olympics, a fitness loop, aqua Zumba classes in a revamped pool and assorted bike-related events — each with the dual goal of increasing fitness opportunities while providing a safe environment.

“Kresge has been instrumental in helping us think outside the box, to really consider the interconnectivity of social networks and the natural fabric of the community,” Mitchell says. “A lot of foundations are focused on funding one aspect of the work, but not interested in much overlap or collaboration between different sectors, say, between the arts and environment.

“Kresge has really allowed us to push ourselves and think internally about how we can bring all these pieces together, and has given us the opportunity to work with community residents and really bring them together.”

As holiday gifts go, moving into the Karcher Artspace Lofts in Waukegan, Ill., on Christmas Day 2012 might have been one of the best yet for artist Evelyn Larsen-Ford.

“It is an artist’s haven for creativity,” says Larsen-Ford, who works in multiple media — from textiles to jewelry and painting to soap making. “I am able to create, network and enjoy my life as an artist. I am just as excited today about living here as I was three years ago.”

Established in 1979 by the City of Minneapolis, Minn., Artspace Projects Inc. began as a result of the gentrification of the city’s warehouse district.

“Artspace’s mission is to create, foster and preserve affordable space for artists and arts organizations,” says Colin Hamilton, senior vice president of national advancement at Artspace. “At the time (in the late 1970s), many low-income artists were being displaced. It took a little while, but ultimately Artspace recognized that to advance our mission in a meaningful way, we needed to control property, so we evolved from an arts advocate to an arts-centric real estate developer.”

Today, Artspace is a leading developer of affordable live-work spaces for artists, with 40 “art spaces” across the United States. These facilities are most often abandoned and historic structures that have been reclaimed and renovated by Artspace. They are home to nearly 1,400 artist families and offer space for 298 creative enterprises. There are also about 15 additional projects under development.

These affordable live-work residences promote the prosperity of the artists, community pride and economic growth within the neighborhoods.

“We want to help the neighborhoods around our projects evolve in ways that are consistent with the community’s vision, whether that means rapid growth or anchoring a distinct cultural heritage,” Hamilton says.

Artspace has been partnering with The Kresge Foundation’s Arts & Culture Program on projects for more than 20 years, says Regina Smith, Arts & Culture managing director. That relationship took a new turn in 2011, when Kresge’s Social Investment Practice structured a deal to provide Artspace with a $1 million unfunded guarantee that made it possible for two new projects to move forward.

Kresge’s guarantee substituted for Artspace’s cash reserve, required by equity investors for two mixed-use affordable housing projects under development at that time: The Harvester Artspace Lofts in Council Bluffs, Iowa, and the Karcher Lofts where Larsen-Ford lives and works.

“The opportunity for us to have a different relationship with Artspace was triggered by the economic downturn,” Smith says. Like many commercial real estate developers at the time, Artspace was having difficulty leasing new apartments and commercial space.

The Kresge guarantee “allowed the organization to continue to progress during the downturn when it was difficult to access traditional forms of capital,” she says.

Trying to close the financing transactions for both projects without the guarantee would have been nearly impossible. Today, the developments in Council Bluffs and Waukegan are fully occupied and flourishing. Smith says it was an important, groundbreaking deal.

“Providing permanent, affordable housing to artists and affordable office or community space for nonprofit organizations helps us meet our goals,” she explains. “And the impact is that artists are a part of the community, an integrated element of the neighborhood and they can contribute to the stabilization of the neighborhood.”

In 2010, Artspace Projects Inc. was faced with a challenge made more difficult by the ongoing financial crisis. The organization was seeking to redevelop two properties in largely abandoned downtown areas in Waukegan, Ill., and Council Bluffs, Iowa.

Their financial partners were comfortable financing the affordable housing portions of the live-work projects, but hesitant when it came to the developments’ ground floor commercial units. These retail spaces often house nonprofit organizations and other cash-strapped creative and locally based enterprises.

For that reason, investors were concerned about Artspace’s ability to attract commercial tenants and therefore required Artspace to set aside significant cash reserves as security. Doing so would have forced Artspace to tie down its modest cash flow; investments in new projects would have ceased.

Artspace approached Kresge for help meeting those reserves. Kresge’s Social Investment Practice crafted a deal that put up a $1 million Kresge guarantee.

Here’s how:

• The challenge aligned with the goals of the Social Investment Practice to leverage the foundation’s assets in ways other than traditional grants, as well as the goals of the foundation’s Arts & Culture team to support affordable live-work spaces for artists.
• The relationship between Artspace and Kresge’s Arts & Culture team was well established. Kresge had been providing grant support for years and “had confidence in their leadership, their product and their ability to successfully manage projects over time from both a community and financial perspective,” says Kresge’s Kimberlee Cornett.
• The guarantee was the right tool at the right time. “We were trying to build up our capacity to make these guarantees because we thought it was a way for us to have significant impact without requiring cash resources from the foundation,” Cornett says.
• Cornett was able to lend her familiarity and expertise in the tax credit equity market. “The market was retreating from almost every degree of risk, putting a lot of strain on developers,” Cornett says. “We believed Artspace had the real estate chops to know and manage that risk.”

At the end of 2015, Detroit was fiscally stronger than it had been in many years. The previous December, the city emerged from a bankruptcy that could have mired it in legal-fiscal limbo. There was an immediate moment of optimism, followed by the unavoidable question of whether it could last.

Many months later, the answer is a qualified “yes.”

There is a palpable sense now that further progress is at hand. We can cite the leadership of Mayor Mike Duggan and partners in Washington and Lansing. We can cite Detroit residents, old and new, working in their neighborhoods. Across that spectrum, Detroiters are forging a culture of confidence — a belief that this place can offer an opportunity-rich future for everyone.

Kresge works to advance this vision by working in multiple areas. Looking back at 2015, a signal neighborhood initiative and our transit work seem to capture the breadth of our ambition and hopes.

By November, we saw the Downtown Boxing Gym Youth Program in a new home, new pocket exercise parks in the Piety Hill neighborhood, other projects emerging and plans being drawn. When we opened applications for the second round, it was to more than 80 new proposals. We look to increasingly light up the map of Detroit with the reality of positive change through this initiative.

Meanwhile, on 3.3 miles of Woodward Avenue, Kresge’s $50 million investment in the M-1 RAIL streetcar line is taking shape. We can already see economic development along the route where the first passengers will ride in early 2017. M-1 RAIL’s role as the catalyzing first leg of a regional system is solid, with the promise of major benefits for residents of Detroit’s 139 square miles — and beyond to the metropolitan region that includes Wayne, Oakland, Macomb and Washtenaw counties.

To that end, our 21st century regional transit focus in 2015 included grants for crucial public education about the need for — and promise of — high-quality regional transportation through the Detroit Regional Chamber Foundation and the grassroots organization, Transit Riders United.

The northwest Detroit, Mich., neighborhood near the intersection of Livernois Avenue and Six Mile Road was a vibrant place during Lauren Hood’s youth.

But Hood says the transformation that occurred there since has been heartbreaking.

“When I was growing up, there were no vacant homes on our street,” Hood says. “Everybody knew each other. It is really sad to see on my street in particular houses slated for demolition. I didn’t grow up with that.”

Commercial strips have fared even worse than residential streets. Where Hood can still recall rows of businesses whose owners she knew by name, there are now stretches of vacant and under-maintained storefronts — especially along the mile-long section of Six Mile Road between Marygrove College and the University of Detroit Mercy (UDM).

Jevona Watson, who has lived in the neighborhood since 2005, says there’s nothing to draw locals to this stretch — even less for students attending the two colleges.

“Why would they ever leave their gated community?” Watson asks. “There’s nothing enticing them. I’m from here and I’ve lived here my entire life, but as an outsider — meaning a visitor, someone from out of state — I wouldn’t venture outside on my own.”

Reviving a Neighborhood

In 2015, The Kresge Foundation joined other funders in an effort to start bringing the neighborhood back. The Live6 Alliance is a new community development organization aimed at revitalizing Six Mile between the two colleges, as well as the stretch of Livernois running roughly from Six Mile to the shopping district a mile north at Seven Mile Road.

Laura Trudeau, managing director of The Kresge Foundation’s Detroit program, says the Live6 concept arose from research the foundation funded that examined ways for UDM and Marygrove to better engage with their neighborhoods. One key conclusion was that the schools and the community could work together to strengthen the Six Mile-Livernois area as a whole, and better connect the colleges and the shopping district.

“We just saw this confluence of assets in the neighborhood that we could be helpful in supporting,” Trudeau says.

Kresge committed $400,000 over two years to support Live6, augmented by commitments of $100,000 from UDM and $50,000 from Living Cities. (Kresge also supports technical experts U3 Advisors to assist revitalization in both Midtown and the Live6 area.) Shortly after Live6 was announced in the summer of 2015, Hood was hired to serve as
acting director.

“I think the most important thing is it sends a beacon out to the rest of the philanthropic community that says, OK, this place is worth investing in,” Hood says. “It can become a self-fulfilling prophecy. If one organization says, ‘This is worth investing in,’ then other organizations start to invest.

“Somebody’s got to be the first, though.”

In the months since Hood has been at work, she has solicited a variety of opinions from neighbors and community leaders regarding a future vision for the area. Hood says residents most frequently request a coffee shop. But she’s also heard interest in entertainment venues, more food options and gathering places. One elderly woman requested a biergarten.

“People in general are just excited to see something happening,” Hood explains. “These are really organized communities, so they’ve been contacted over the years many, many times by people saying things are about to change.”

But little did. Today, residents can see action, including potential investors and tenants out and about, scouting locations and exploring the possibilities.

“I think people really believe it now,” Hood says. “People are like, ‘OK. Something’s about to change.’”

Midtown as Model

The Live6 Alliance is one of many projects that are supported by Kresge’s Detroit Program, which is focused on six integrated areas to advance opportunity and quality of life:

• Fostering green, healthy and active neighborhoods
• Enhancing the corridor along Woodward Avenue, Detroit’s main artery, from the Detroit River through downtown, Midtown and the North End
• Advancing 21st-century regional transit
• Improving early childhood education
• Supporting the city’s arts and culture
  ecosystem
• Enhancing civic capacity

“We really want to be holistic,” Trudeau says. “We try to work across those priorities. If there’s an investment that we can make that achieves multiple objectives, we’ll do it in a heartbeat.”

The Livernois-Six Mile area was a clear fit for the focus area aimed at strengthening neighborhoods, but Detroit Program Deputy Director Wendy Jackson says the Live6 project “cuts across several strategies.” For instance, engaging citizens and neighborhood groups in the process of renewal enhances civic capacity for a variety of future projects. And, Jackson notes, the area is a good fit for evolving efforts to support early childhood education and arts and culture.

In shaping Live6, Kresge took inspiration from Midtown Detroit, an area where the foundation had already invested considerable resources with remarkable success. Kresge has supported numerous initiatives in Midtown, notably forming a strong partnership with community development corporation Midtown Detroit Inc., one of the key players in the booming district. The Midtown neighborhood is situated around Woodward Avenue just two miles north of the central business district, where Kresge has also funded major projects like the RiverWalk that runs along the Detroit River.

Trudeau says Midtown’s revitalization was empowered by other longtime resident institutions like Wayne State University, the College for Creative Studies and the Detroit Medical Center. The foundation saw parallels to those institutions and UDM and Marygrove.

“They’re smaller anchors in a smaller district, but they still have an important role to play,” Trudeau says. “In some ways, their success is tied to the success of the surrounding area.”

‘Planting the Flag’

Benjamin Kennedy describes the Livernois-Six Mile area as having “Woodward-like qualities” because of the surrounding institutions and the importance of the two corridors in the neighborhood. As managing director of Kresge’s American Cities Practice, Kennedy also supports the foundation’s Detroit Program.

“We are extremely proud of the work we’ve collectively done in Midtown and downtown, but we know we aren’t finished,” Kennedy says. “It is important to resuscitate the core of the city, but a city is only as good as its neighborhoods — all of its neighborhoods.

“We knew we had to take some of the experiences we had in the Woodward corridor, some of the things we’d learned, and certainly some of the things that have worked, and see if we could translate them to some of our neighborhoods.”

Kennedy says Kresge applied two key takeaways from Midtown in its approach to Livernois and Six Mile. The first was what Kennedy describes as “planting a flag,” or creating a “very visible project that suggests to folks that investment is forthcoming and work is being done.”

In Midtown, that project was the long-planned 3.3-mile M-1 RAIL streetcar system now under construction and slated to begin passenger service in early 2017 with Kresge’s pivotal support.

At Livernois and Six Mile, it was the Livernois Streetscape Enhancement Project, which began in 2014 with beautification of the Livernois median. Kresge contributed $200,000 to that program as a co-funder with UDM, the Michigan Department of Transportation, the City of Detroit and the Detroit Economic Growth Corp.

The second main strategy was to invest in what Kennedy calls a “district steward,” a person and/or organization based in and invested in the future of the district. In Midtown, that steward was Midtown Detroit Inc. led by Sue Mosey; at Livernois and Six Mile, it’s Live6 and Hood.

“If you want to transform a place, you need someone who wakes up and goes to bed worrying about tangible changes in that geography,” Kennedy says. “You need someone who really is looking out for the collective interests of the folks in that neighborhood.”

Enthusiasm is Contagious

Although Midtown has been a major inspiration for Live6’s launch, its district steward will tell you that the two are still very different projects. Asked if Live6’s intention is to make the Livernois-Six Mile area the next Midtown, Hood’s answer is an emphatic “no.”

Although she’s currently a Midtown resident and proponent, Hood is set on working with the residents of the Livernois-Six Mile area to drive their neighborhood’s revitalization.

“The businesses should be carefully curated and cultivated by what residents have said they want,” Hood says. “The people that live (in the Live6 area) have been up here 20, 30, 40, 50 years, so their community has different needs from Midtown; Midtown’s a little more transient.”

According to UDM President Antoine Garibaldi, early discussions with Kresge about revitalization efforts at Livernois and Six Mile envisioned an economic development organization aimed at attracting new businesses. However, Garibaldi says Detroit’s municipal bankruptcy filing in 2013 slowed the planning process and caused organizers to reevaluate their priorities. Garibaldi says he and the others realized that Live6 needed to start by engaging the neighborhood, and work back from there.

“We felt that focusing on the people was much more important than focusing on how we can attract more businesses and retail to the area,” Garibaldi says. “We felt that if we didn’t do something that could really stabilize the neighborhood, some of the areas that needed the assistance the most would probably get worse.”

With that in mind, Hood has held nearly 100 meetings with neighborhood business owners, block club leaders and other stakeholders. She’s recruited members from all of those groups to form a community advisory committee, which began meeting in March 2016.

One of the community members Hood met with was Watson, who was rehabbing a deserted storefront on Six Mile into the strip’s first coffee shop, Detroit Sip. Since she started working on the store last year, Watson says she’s received “nothing but positive feedback” from her neighbors. Passersby ask when the shop is opening; people drive by and honk horns. Watson describes a “contagious” sense of enthusiasm for bettering the neighborhood that she expects to translate to the Live6 planning process.

“Live6 hasn’t really fully been defined yet, which is the beauty of it,” Watson says. “We’re getting to participate in something that is not already established.”

Still, there’s plenty to solidify in terms of Live6’s specific vision for the neighborhood, Hood says. Increasing the area’s walkability, cleaning up alleys and encouraging more exchange between the area’s college students and neighborhood residents are all potential projects for Live6. But the overall plan will be shaped by what Garibaldi describes as “coordinated thinking” among neighborhood stakeholders.

“Everybody has some different thoughts about what we should do first,” he says. “By being able to bring everyone together, we will really be able to prioritize as a group. That’s really important.”

The turnaround leaders have in mind for the Livernois-Six Mile area can be difficult to imagine given the neighborhood’s current condition. As Hood chats about her plans for Live6, she stands in a mostly empty parking lot on Six Mile. Across the street is a stretch of dilapidated and vacant buildings. Just down the road, a liquor store is the block’s main source of activity.

But Hood sees beyond that with her vision of a lively, vibrant cultural corridor. It isn’t just as good as the neighborhood she grew up in — it’s better.

“I see people on the street,” she says. “I see green alleys. I see people riding bikes. I hear music. I smell different kinds of food. It’s just a culturally rich and vibrant place.”

Detroit’s Midtown has been one of the brightest examples of the city’s revitalization over the past decade as business, nightlife and cultural activities have exploded in the neighborhood just north of downtown.

ABut even with its uptick in popularity, residential developers have faced challenges building there.

After the financial recession of 2008, property values failed to keep pace with increasing demand for new, amenity-rich housing in the neighborhoods. Traditional investors had serious doubts about whether they could make money there and were slow to provide developers with the capital needed to build, even as vacancy rates soared over 90 percent.

Detroiters seemed eager to live, work and play in the up-and-coming neighborhood, but they couldn’t find places to live, says Benjamin Kennedy, managing director of The Kresge Foundation’s American Cities Practice.

Enter the Woodward Corridor Investment Fund (WCIF). In 2013, with a $5 million low-interest loan, Kresge helped roll out the $30 million initiative that offers long-term, fixed-rate loans for multifamily and mixed-use developments in the Midtown area. It pools $15.25 million in senior capital from PNC Bank, Prudential, MetLife and the Max M. and Marjorie S. Fisher Foundation with $15 million in subordinate capital from Kresge, the Calvert Foundation and Capital Impact Partners, the Virginia-based community development financial institution also serving as fund manager.  

Scott Sporte, Capital Impact Partners’ chief lending officer, says it’s an innovative approach due in no small part to Kresge’s growing focus on social investing. Kresge was willing to go deep using both grants and social investments — a strategy that is still new to many foundations.

Laura Trudeau, managing director of Kresge’s Detroit Program, says WCIF simplifies the “capital stack” of financing — tax credits, foundation grants, traditional senior debt — that developers often need to assemble to fund a project in a disinvested community.  

“The goal really is to try to continue to use this fund to get things done that overall lift the values in the neighborhood, so that ultimately, you don’t have to use as much subsidy,” Trudeau says. “Eventually we want Detroit to be able to be rebuilt using conventional forms of financing. That’s the ultimate goal.”

So far, Trudeau says, WCIF has been an “extremely effective model.” The fund’s first project, the renovated Regis Houze, opened in November 2015. The six-story building, connected to the St. Regis Hotel on West Grand Boulevard, had been vacant for many years.

After a $4 million renovation, it houses 58 apartments, along with retail space on the ground floor. Sporte says five more projects are currently under construction. Most involve renovating a vacant or blighted building.

Since the fund launched, it has demonstrated that investing in Detroit doesn’t have to be too risky. Similar initiatives and funds have formed that cite WCIF as their model. The fund opened the door, showing the possibilities.  

“Detroit’s ready for investment. Detroit is open for business — a place of opportunity,” says Kennedy. “And oh, by the way, if you wait too long, you’re going to miss out.”

The WCIF partners’ goal is to raise a second fund soon, this time possibly with less subsidy from Kresge and more from other subordinate lenders.  

“It took a lot of creativity and willingness on the foundation’s part to take some risk,” Sporte says. “They’re making a bet in Detroit that appears to be paying off.”

Kresge Foundation’s Kimberlee Cornett says it became evident in 2011 that Midtown Detroit was in need of amenity-rich, multifamily housing. But no one was building it.

“We wanted to really spur the pipeline of projects,” says Cornett, managing director of the foundation’s Social Investment Practice. “But at that time, banks had all but stopped lending in Detroit, and we needed money that would allow for a high loan-to-value ratio. The appraisals were low and out of whack. The cost of construction was high.”

So Cornett led the creation of the Woodward Corridor Investment Fund (WCIF), a $30 million fund offering long-term, fixed-rate loans for multifamily and mixed-use developments in the Midtown area.  

Here’s how:

• An unofficial first step in the process came in 2009, before Kresge began considering ways to stimulate housing development in Midtown. While the financial markets were in turmoil, Kresge’s Detroit Program was providing grants in Midtown for projects like repairing streetlights and making building façade improvements — “basically just trying to stabilize the area,” Cornett says. “This fund would not have materialized had the foundation not invested the grant funds earlier. It’s a good example of how grant funds often are the first money in to stabilize the environment, to build the capacity with local partners and then you can come in with the investment capital to really scale it.”
• In November 2012, Kresge helped manifest a $30 million fund to invest in development of the Midtown area. The foundation invested $5 million of subordinate debt in the fund, and secured an additional $5 million in secondary debt from both the Calvert Foundation and Capital Impact Partners. Kresge also provided a guarantee capped at $1.5 million to the Calvert Foundation. In addition, the foundation secured senior debt from MetLife ($5 million), Prudential ($5 million) and PNC Bank ($5 million). The Max M. and Majorie S. Fisher Foundation contributed $250,000.
• Capital Impact Partners, which had recently opened a Detroit office after a decade of providing funding in the city, became the fund manager. “We had relationships with them, they were an experienced CDFI, and they were willing to bring their own money to it,” Cornett says. “They were a natural partner to be a fund manager for us.”
• The fund was publicly announced and began accepting proposals in 2013. Cornett notes that JPMorgan Chase largely replicated Kresge’s WCIF model with its own $100 million Detroit investment fund one year later. Several projects have now closed deals with WCIF, and one of them has been completed. “Now we’re getting ready to raise a second fund on the back of the first because demand for financing has been so high,” Cornett says.

Arts and culture contribute to an essential quality of life that is vibrant, diverse and self-enriching. For that reason The Kresge Foundation has invested more than $3.5 million over the last eight years in the Kresge Arts in Detroit (KAID) initiative, which continues to influence the metropolitan region’s creative economy with its Artist Fellowships and Eminent Artist awards to artists living and working in Wayne, Oakland and Macomb counties.

“There are very few philanthropic organizations that support the individual artist,” says Richard Rogers, president of the College for Creative Studies in Detroit, which administers KAID. “The fellowships have really changed the artistic practices of these people and given them opportunities they didn’t have before.”

Iconic textile designer Ruth Adler Schnee, right, was named the 2015 Kresge Eminent Artist. The award, which includes a $50,000 prize, honors Schnee’s pioneering work in revolutionizing textile design in the post-World War II era. Schnee became the seventh artist recognized in this manner since 2008.

The 2015 Kresge Artist Fellowships awarded 16 metro Detroit artists and two collectives with unrestricted $25,000 prizes for their commitments to the fields of literary and visual art. In addition, artists also received a year of professional development support from Creative Many Michigan, a statewide organization dedicated to developing creative people, places and economies through research, advocacy, professional practice and communications.

In 2015, KAID also launched the Gilda Awards in commemoration of the late artist Gilda Snowden, beloved for her work guiding emerging talents. The two-year initiative will support the work of four artists with an unrestricted award of $5,000 to each recipient. Sacramento Knoxx (visual arts) and Maia Asshaq (literary arts) received awards in 2015.

In Memory: Marcus Belgrave
2009 Kresge Eminent Artist

June 12, 1936 — May 24, 2015

Detroit jazz trumpeter and 2009 Kresge Eminent Artist Marcus Belgrave died May 24, 2015, at the age of 78.

Active and influential on the world music stage, Belgrave proudly embraced Detroit and its musical community as his own.

“I think I helped to reestablish the cause of music in the city and to continue the quality of music Detroit has had in the past,” he said in 2009. “In the late 1950s, music became segmented, but Motown took the jazz musicians who remained and molded them into an entirely different industry in the 1960s.

“I kept the grassroots aspect of music together by working with youths in the schools and helped to rebuild Detroit’s music culture.”

With too many notes in him to pass so soon, he is missed by Detroit and the world.

In philanthropy, we seek to address many difficult social problems, from climate change to growing economic and social inequality to access to health care. Many perceive these problems as intractable and impossible to fully solve. For some, America’s flat college attainment rate falls into that category. Some see it as being as immutable as the First Law of Thermodynamics in physics. They believe no amount of investment or reform can have any meaningful impact.

We disagree.

That’s why in March 2015, we invited our Board of Trustees to Austin, Texas, a center of educational innovation. We wanted them to see firsthand the type of change that is possible and to hear directly from low-income college students about their struggles and breakthroughs. At the University of Texas and at Austin Community College, we spoke with national leaders — experts on improving student success through the use of Big Data, reworking developmental education, addressing both on- and off-campus barriers to student success and fostering a growth mindset that can build the resilience students need to complete a degree. Low-income students described the challenges they face as they try to attend college while juggling family and work demands.    

At that meeting, Kresge’s board approved our education strategy for the next three to five years. In addition to continuing our existing focus areas (Supporting Pathways to and Through College and Building the Capacity of Institutions that Serve Low-income, First-generation and Underrepresented Students), we added a third focus area: Strengthening and Aligning Urban Higher Education Ecosystems.

While higher education policy generally focuses on the federal or state level, for most low-income people, college is very much a local activity. Low-income students typically go to college in or near their hometowns. But K-12 systems, community colleges, four-year universities, businesses, nonprofits and local governments rarely coordinate or align their programs, credits or activities, leaving students to navigate complex environments alone. By encouraging community-based solutions, we believe we can have a positive impact on college attainment.

Communities need to address problems holistically, but colleges also need to use new tools to solve time-worn barriers to student success. I don’t use this word lightly, but as you will see in this annual report, Georgia State is revolutionizing higher education through data analytics. By using Big Data to identify problems, address ineffective practices and adopt a student-centered environment, this urban institution, once a bastion of Jim Crow segregation, now graduates more African-Americans than any other public or nonprofit university in the country. 

We can’t disagree that improving college attainment is tough. But the barriers low-income students face are not impossible to knock down. As Georgia State and our other partners demonstrate, with smart solutions, change is possible. 

You won’t find Georgia State University (GSU) in the top tiers of the most well-known academic rankings. Yet this urban institution, located in the heart of Atlanta, Ga., has emerged as a national leader when it comes to student success.

In the last decade, GSU has significantly boosted enrollment and graduation rates among minority and low-income students with the kind of innovative, student-centered solutions The Kresge Foundation’s Education Program likes to nurture. Most students at GSU come from disadvantaged socioeconomic groups, particularly people of color and children of immigrants. Many hold jobs and have children.

Yet, GSU graduates about 1,700 more students each year than it used to and now awards more degrees to African-American students than any other public or nonprofit university in the U.S.

In 2015, the 30,000-student university received a $981,000 Kresge grant that will allow it to expand its Summer Success Academy (SSA), a program for incoming freshmen who might otherwise struggle in college or skip it altogether. The program is one piece of GSU’s broad strategy to eliminate barriers to a college education.

The grant will also help smooth the transition as GSU absorbs Georgia Perimeter College, a community college in Atlanta that is also struggling with retaining and graduating nontraditional students. While Kresge’s Education team typically funds large networks and multi-institution partnerships, it considers GSU’s work on its own to be both vital and measurably successful.

“They are unique, sui generis, one in a million,” says William F. L. Moses, managing director of Kresge’s Education Program. “That’s why we wanted to work with them. We want to break down the idea that significantly improving college attainment is a quixotic goal.”

Hedge Against Poverty

Moses and his team look for opportunities to expand two- and four-year college access and success for low-income, first-generation and underrepresented students nationwide — with a special focus in a handful of states (California, Florida, Michigan and Texas) and in South Africa. To that end, the foundation helps support the systemic, managerial and curricular infrastructure that will make it possible for more low-income, underrepresented students to prepare for college and overcome barriers toward a degree — a hedge against poverty.

Consider the statistics:

• According to the U.S. Census Bureau, about 40 percent of Americans over age 25 held an associate or higher degree in 2014. That means 60 percent either did not go to college or failed to graduate.
• Since 1970, graduation rates among students from the lowest household income quartile have increased from 6 to 9 percent, while students from the top quartile saw rates increase from 40 to 77 percent.

Failure to earn a postsecondary degree or credential of any kind is an obstacle to joining the middle class in America. It dooms many to a life of part-time and low-paying jobs.

“In the U.S., we’re trying to ensure public higher education remains a public good, not a private good,” Moses says.

Yet, Moses says, many colleges and institutions aren’t taking seriously the low graduation rates of their least privileged students. In fact, most college students in the U.S. are not the stereotypical, fresh-faced 18-year-old living in a dorm.

“The majority of today’s college students are older, poorer and many are people of color,” Moses says. “Think about the resources they have wasted when they don’t finish, all the books they’ve bought, time spent, the tuition and fees they’ve paid.”

Today, Kresge is among the most influential higher education grantmakers in the nation. As it awards grants, it also puts a priority on engaging deeply with grantees.

“We seek to be thought partners,” he explains. “We work very closely with grantees to help them think about solutions to problems they’re seeing on the ground.”

Yes They Can

GSU has implemented a variety of interventions that have reduced the dropout rate and saved students money, all while bolstering revenue. At a glance:

• The university provides microgrants to help college seniors who are at the finish line, but who have run out of financial assistance. The average grant is $900 – paltry considering both the value of a degree to a student and the tuition loss it would mean for the school if the student left (about $10,000).
• GSU doubled the size of its advisory staff and put counselors on one floor in the same building. They are versed in all majors, so students don’t need to spend time searching for a specific adviser.
• The university uses predictive analytics based on 10 years of data on student achievement patterns to track each student daily to make sure he or she is on course academically.
• Freshmen are counseled and steered into majors early so they don’t waste time and money taking the wrong courses or bouncing around between majors.
• Freshmen take introductory math in “flipped” classrooms, meaning they pace their own learning in computer labs, with instructors available when needed. Since that change was implemented about eight years ago, the number of students who pass the course has increased. Previously, only 57 percent of students made it; now it’s more than 80 percent.

“These types of interventions have had a much more positive effect on at-risk students who lacked familiarity with college,” says Timothy Renick, Ph.D., GSU vice provost and vice president for Enrollment Management and Student Success.

Because students aren’t wasting credit hours on classes that don’t meet their major’s requirements, they are graduating more quickly, too, he says. A side benefit to student success? GSU’s revenues have increased as more students are able to stay in school.

“We are not financially motivated,” Renick says. “We’re nonprofit. We have an aspiration to do what is right for the students and right for society. In a time of constant state funding cuts — we lost $40 million between 2008 and 2013 — helping students succeed is not only the right thing to do for students, but the right thing for higher education.”

Moving the Needle

GSU’s initiatives over the last decade exemplify practical changes that can truly move the needle. Enrollment grew from 27,000 to 32,000, and the percentage of minority students rose from 46 percent to 63 percent. Nearly twice as many GSU students now receive Pell grants — federal money available to economically disadvantaged students.

The Summer Success Academy is one of GSU’s success-related interventions. The four-year-old program has served some 1,000 freshmen, acclimating them to campus life before the semester starts in September. Students participate in seven weeks of skill-building workshops and credit-earning classes, enabling them to carry a lighter load during the regular school year. They may also live on campus.

Gunawork Wondimneh, a 19-year-old freshman and daughter of Ethiopian parents who is majoring in marketing and risk management, says the summer academy provides “all the information you need to have a successful, smooth start to college.” She’d been apprehensive about making her way around campus; living there for the seven weeks helped assuage those fears.

Earning credits before the fall semester meant her year got off to a calmer start, too. “Because we had the seven credits coming into the fall semester, we only had to take four classes,” she says. “People I know who were taking five and six classes were stressed out and tired.”

The SSA also provided her with invaluable information about applying for loans and scholarships. That put her in a position to help friends who came to campus later and had questions about financial aid.

“We’re kind of leaders to our peers coming in the fall,” she says. “We’re using the opportunity for our own benefit, but we’re able to advise our friends and peers.”

For 21-year-old Fortune Onwuzuruike, the SSA provided a head start. The health informatics major says he had access to a variety of campus organizations and mentors during the summer. Today, Onwuzuruike is a peer mentor with a strong GPA.

“The school reached out to me and was really screaming about opportunities,” he says.

By providing at-risk students with the opportunity to participate in the SSA, GSU has boosted retention rates to 90 percent and given many of those students the confidence to persist.

“If I had started in the fall with everyone else, it probably would have been another culture shock,” says Keyshawn Hoyte, an 18-year-old freshman who has spent much of his life in Trinidad. “I would have had a heavy workload and my performance would not have been as good as it is.”

Students receive tutoring help, meet with advisors, do team-building exercises and take classes that they can apply toward course requirements for their major.

“These students have been performing better than their freshmen peers,” Renick says.

Kresge’s grant will help GSU open the summer program to more students in 2016 — and perhaps house them on campus, he says.

“That would be ideal,” he says. “Once fall begins, many of these students will live at home.”

Targeting Success

Kresge’s education partners range from colleges and universities to networks of college access nonprofits — institutions that affect a student’s ability to enroll, persist and succeed in college.

Other 2015 grants were awarded to the University Innovation Alliance, a consortium of 11 research universities working on solutions to help students from all socioeconomic tiers graduate at a lower cost; the Michigan College Access Network; and Achieving the Dream, a nationwide reform movement that is dedicated to student access and success in community colleges.

In South Africa, until eight years ago, Kresge mainly funded capital projects. As Kresge’s grantmaking shifted to a more strategic focus, the foundation saw that South African universities didn’t have experience cultivating and securing private funds. Kresge stepped in to provide grant assistance that helped them triple private contributions.

It didn’t stop there. Post-apartheid South Africa is experiencing the same challenges that public universities do in the U.S.: Fewer students are college-ready and fewer graduate. Kresge provided a grant to the South African Institute for Distance Education to create Siyaphumelela (“We succeed” in Xhosa, one of South Africa’s official languages). The initiative has encouraged the use of data analytics to manage student progress — much like GSU is doing — at five universities.

In fact, Moses says GSU’s “iconic role in the student success movement” serves as a role model for other Kresge grantees.

“It’s important to overcome the sense that you can’t fix these problems, that there’s some sort of natural law that only 40 percent of people can earn a college degree,” Moses says. “Georgia State is proving that’s not true.”

From medics and caregivers to cooks and technicians, many adults have life experiences that can translate to college credits, saving them time as well as thousands of dollars in tuition and fees.

However, there’s no universally accepted tool for the country’s higher education institutions to measure what students already know and how many credits they deserve for that knowledge.

That’s why in 2015, The Kresge Foundation, working with other funding partners, made a $2 million low-interest loan to the Chicago, Ill.-based Council for Adult and Experiential Learning (CAEL) through its Social Investment Practice in partnership with Kresge’s Education Program. The loan helped to fund the expansion of CAEL’s online Prior Learning Assessment platform, called LearningCounts.org, in Michigan and Texas.

“At Kresge, we work with community colleges all over the country, and a lot of them do prior learning assessment on their own,” says Caroline Altman Smith, deputy director of Kresge’s Education Program. “It’s very fragmented and inefficient because colleges rarely have a full-time person committed to it. It would be impossible for any one college to be able to review and assess the many types of knowledge and skills that can be gained outside of a classroom.

“That’s why a national, standardized high-quality platform was so attractive.”

CAEL President and CEO Pamela Tate says LearningCounts.org was launched in pilot form five years ago and went national in 2013. Adult students use the site to create a portfolio that documents their work experience and knowledge; the portfolio is then evaluated by a college faculty member. Credit is awarded when students can demonstrate a level of comprehension or skill equivalent to what they would have learned in a college course.

CAEL hopes colleges will subscribe to the program and accept the staff training and other support that LearningCounts.org provides, and then make the platform available to their students. However, adoption has been slow as individual campuses juggle multiple demands.

“You have a lot of community colleges working at the edge of their capacity, with initiatives left and right, so it’s been difficult to get their attention focused on one thing,” says Scott Campbell, CAEL’s vice president for higher education.

Now selected colleges in Texas and Michigan are participating, with Kresge’s grant support. That includes covering implementation and annual fees; training for faculty members, advisors and admissions staff; and marketing or promotional assistance.

“The time and effort to get this in place in those two states has been just astronomical — incredibly labor intensive,” says Tate, adding that with Kresge’s support, CAEL has been able to expand LearningCounts.org to 42 colleges across the country.

Smith acknowledges there is some repayment risk for the foundation should LearningCounts.org not become a profitable business. But Kresge was willing to make the investment because it has the potential to break new ground and effect meaningful, long-term change.

“CAEL is spreading its wings and flying now with this new product,” she explains. “It will hopefully be self-sustaining as more colleges and students use it and pay to do so.”

As that happens, students will benefit.

“We were helping create something that had not been done before, that we thought would be very useful to the field and help tens of thousands of students finish their degrees,” Smith says. “We know people will be in a much stronger position if they get that degree  — in terms of what they can contribute to the workforce, how much they earn in their jobs, their overall economic stability, and all the other good benefits that come with a college degree.”

In 2015, Kresge made a low-interest loan to the Chicago, Ill.-based Council for Adult Experiential Learning (CAEL) through its Social Investment Practice to expand the organization’s -— and dynamic leader Pamela Tate’s — ambitious LearningCounts.org program. The loan capital followed a series of Kresge grants to CAEL totaling more than $2 million since the inception of LearningCounts.org in 2010.

”Pam Tate for many, many years has been viewed as a true national leader in adult learning,” says Kresge’s Caroline Altman Smith. “She and her team are passionate about helping adults get connected to postsecondary opportunities and get into the workforce.”

Here’s how the Social Investment Practice invested in the platform:

• Kresge chose to provide loan funds to support the expansion of LearningCounts.org, which was critical for the organization’s growth.
• The loan to CAEL had a 2 percent interest rate and an eight-year term.
• Half of the loan was made available in June 2015, following CAEL’s development of an updated business plan for the LearningCounts.org platform; the second $1 million will be released in June 2016 if certain benchmarks related to student enrollment and college participation levels are met by that time.
• If CAEL qualifies for the second disbursement, it will be applied to finance further scaling of LearningCounts.org.
• The loan will be repaid from revenue earned from colleges that use the online platform. Principal repayments will begin in 2021.

Climate change notably rose to the forefront in 2015. Temperatures tracked so far above average that the year claimed the title of hottest on record. Global carbon dioxide levels were at their highest in recorded history. Drought, record-setting storms and other weather extremes have become the norm.

Amid justified alarm, 2015 also brought encouraging developments on climate action. Scientists and statisticians confirmed that it remains possible to keep warming below the 2° C threshold considered essential for planetary safety.  The limiting factor is not technical know-how, but political will.

In June, the Vatican released a papal encyclical on climate change, with a message of moral responsibility to address this grave danger. Pope Francis reinforced that climate change is not a niche technological or political concern, but rather, a pervasive threat with immense implications for human rights and social justice.   

International climate change negotiations in Paris also offered hope. For the first time, the proceedings included a series of events focusing on the role of cities in accelerating climate solutions, and Kresge was in attendance. More than 1,000 city and regional officials convened to showcase the leadership cities are providing in addressing climate change and to demand more support at the national and international levels.

Kresge grantees are playing a critical role in helping build political will for more aggressive climate action. They provide leadership in elevating the social justice implications of climate change mitigation and adaptation policies. They also support cities in developing approaches toward reducing greenhouse gas emissions and achieving carbon neutrality goals.

Our work focuses on helping communities build resilience in light of climate change. We support innovation in cities, ensuring they consider the needs, interests and knowledge of low-income residents as they develop and implement climate change strategies.  

A signature accomplishment for Kresge’s Environment Program in 2015 was the launch of our Climate Resilience and Urban Opportunity Initiative. Through the initiative, a group of nonprofits with extensive experience in low-income communities began to deepen their engagement in local and regional efforts to reduce the pollution that causes climate change, prepare for its unavoidable impacts and strengthen social cohesion and inclusion — each essential to building climate resilience.   

The Program’s Urban Energy Resilience work also made important strides. Research undertaken by the Carbon Neutral Cities Alliance served as the foundation for an international exchange of senior sustainability staff from cities around the world. They shared best practices on urban climate action and deepened relationships that will help their cities achieve climate goals more quickly.  

While climate change broadly threatens human well-being, individuals living in poverty are most at risk. Kresge’s Environment Program seeks to ensure that their pathways of opportunity are strengthened in the face of climate change.

A few years ago, La Keisha Davis was working two waitressing jobs, going to school and raising her son on her own.

“I was just staying afloat,” says the 31-year-old from Covina, Calif. “I was making it work, but it was such a juggle. I don’t even know how I did it when I look back. My son was my major inspiration. I wanted something better for him — a better life for him and for me.”

Davis’ path to stability came from an unlikely source: a job training program expanded due to the efforts of RePower LA, a coalition of Los Angeles-area advocates working to accelerate investments in energy-efficiency programs at the Los Angeles Department of Water and Power (LADWP).

RePower LA is a project of the Los Angeles Alliance for a New Economy (LAANE) — an organization working to promote equitable economic approaches that benefit all residents. Kresge’s funding helps support LAANE and its RePower LA coalition as they address climate resilience in Los Angeles through adaptation and mitigation strategies that create skilled jobs for low-income residents.

RePower LA helped ensure the effectiveness and expansion of the LADWP job training program, which aims to direct more clean energy resources to low-income neighborhoods, develop pathways for low-income residents to obtain the resulting jobs and reduce greenhouse gas emissions in Los Angeles. Once Davis completes LADWP’s Pre-Craft Training Program, she expects to take a skilled union job with the department.

The LAANE/RePower LA work dovetails with Kresge’s belief that communities need to simultaneously address three fronts to achieve meaningful climate-resilience results: reduce greenhouse gas emissions, plan for the effects of climate change that are underway or anticipated, and foster social cohesion and inclusion.

Building Capacity

In Los Angeles, LAANE was eager to build on the success of the pre-craft training program by finding additional clean energy and water efficiency investments that reduce climate change pollution, help the community adapt to climate change and benefit low-income residents. They’ll be able to do that with a recent $660,000 multiyear grant from Kresge’s Climate Resilience and Urban Opportunity Initiative.

The initiative aims to strengthen the capacity of community-based, nonprofit organizations to influence local and regional climate change planning, policy development and implementation to better reflect the needs and priorities of underrepresented communities in America’s cities. Low-income residents disproportionately live in areas most exposed to hazards like flooding or extreme heat, yet have the fewest resources and support systems to prepare, respond to and recover from resulting shocks and disruptions.  They also are less likely than affluent residents to enjoy the cost-saving and quality of life benefits of energy efficiency upgrades and renewable energy development.

The initiative supports better inclusion of the perspectives and concerns of low-income communities in local and regional climate-resilience planning and implementation efforts. Those include approaches to manage precipitation from intense storms; efforts to address the health ramifications of heatwaves; and the deployment of reliable, clean energy technologies and other interventions that seek to tackle climate change both by reducing heat-trapping greenhouse gas emissions and creating infrastructure and policies to minimize the impacts of extreme climate-driven events.

The goal of these efforts is better preparedness for climate events, reductions in climate pollution and policies and plans that deliver co-benefits addressing the economic and social vulnerabilities that low-income communities face. Health outcomes improve as residents are better protected from high heat, social cohesion is strengthened and jobs — like the one Davis has lined up — are created.

Los Angeles has a host of climate and sustainability goals designed to reduce energy usage, increase deployment of renewable power and boost water-use efficiency. With Kresge’s support, the RePower LA coalition is building a campaign to hold the city accountable for meeting its climate and sustainability goals and to ensure that its climate-resilience investments benefit all city residents.

The coalition also helps provide community leaders with skills and training to ensure robust participation in local and regional decision-making. Ultimately, RePower LA aims to ensure that low-income communities share in the benefits of a more climate-resilient city.

From the Ground Up

In New York City, another Kresge Climate Resilience and Urban Opportunity Initiative grant recipient — the Alliance for a Greater New York (ALIGN) — is working to reduce that city’s contribution of heat-trapping emissions, prepare for the impacts of climate change and ensure that the city prioritizes low-income, climate-vulnerable communities in its work.

ALIGN and LAANE were among 17 organizations that received planning grants through the initiative in 2015, and among 15 Kresge grantees awarded multiyear implementation support.

“Very few organizations are working on climate resilience in this country with explicit attention to the interests of low-income communities and issues of racial justice and equity,” says Lois DeBacker, managing director of Kresge’s Environment Program. “Through this initiative, we want to grow the number of organizations that are adept at both climate resilience and low-income inclusion and benefit.”

Supporting community-based nonprofit organizations is a critical strategy for doing that.

“Because climate resilience is a relatively new concept, and approaching it with intentionality around low-income inclusion is also very new, we wanted to launch an initiative that went beyond supporting mainstream environmental organizations and provided funding to organizations that had strong track records of successful work in low-income communities,” DeBacker says. “We wanted to help them build on their previous work by adding a climate change lens.

“For us, climate resilience means not just withstanding climate stresses, but having the capacity to prosper under a wide range of climate-influenced circumstances. In the long term, resilience is possible only if society reduces greenhouse gas emissions and avoids the worst impacts of climate change.”

For ALIGN, that means working across a broad spectrum of interventions relevant to climate resilience. ALIGN’s Climate Works for All campaign is a coalition of 47 organizations tackling climate mitigation and adaptation through policy-making, educational outreach, civic action and relationship building. They focus on advancing equitable climate change policies, spurring investment in infrastructure and supporting communities through job creation, education and protection from climate change-fueled disruptions.

Uniting “unlikely allies” — community groups, labor unions, environmental justice organizations, businesses and municipalities — is key, Daisy Chung says.

“People are brought together by solutions, not by opposition,” says Chung, Climate Works for All campaign director. “Folks feel like they can come together and envision and create new possibilities. That’s where people feel truly empowered.”

For example, the Alliance for a Just Rebuilding (AJR), a coalition anchored by ALIGN in 2012, brought together labor unions, community, faith-based, environmental and policy organizations to address relief and rebuilding issues for communities devastated by Hurricane Sandy. The hurricane was truly an “Aha!” moment for those who previously felt they weren’t connected to or couldn’t be threatened by climate change, Chung says.

“Hurricane Sandy was the realization that whatever people win on the economic front is put in jeopardy by (extreme climate events),” Chung says.

ALIGN and its partners expanded the work of the AJR to design the broader initiative — Climate Works for All — a 47-group campaign that is partially funded by Kresge’s Climate Resilience and Urban Opportunity Initiative. The new, broader set of coalition partners helped move New York City’s focus beyond Hurricane Sandy disaster recovery efforts to long-term climate resilience planning and implementation, with equity front and center.

Now with multiyear grant support of $660,000 from Kresge, the Climate Works for All coalition is working to ensure that New York City invests in comprehensive efficiency and clean energy programs for public and private buildings, and sets a clear path to achieve the city’s goal of 80 percent greenhouse gas emissions reductions by 2050. The coalition has organized a network of community and labor leaders to ensure that the city’s commitment is met, that low-income neighborhoods are prioritized for climate-resilience investments and that residents of these communities share in the jobs and other benefits that are generated.

‘A Game Changer’

The potential for ALIGN’s and LAANE’s approaches to become a template for similar efforts in cities across the nation “made them a perfect fit” for Kresge, says the foundation’s Environment Program Officer Shamar Bibbins.

“By making climate change an explicit consideration in their work, we think these organizations have the opportunity to have an even greater impact in their communities. They understand that climate change is a game changer.”

Bibbins explains that the foundation’s hope is for these organizations to strengthen the climate-resilience field, with new models that benefit low-income people, and that they become part of a more visible set of leaders who are both advocates for low-income communities and experts on climate resilience.
“They know how to bring people together, how to build diverse coalitions, and how to deepen those relationships. They have the capacity to respond quickly, and they understand the people in their communities. They talk to them and know what their needs are.”

To understand what Bibbins means, look no further than Davis. She’s a prime example of how seemingly intractable problems like climate change can be addressed locally, while creating additional benefits like jobs and energy cost savings for low-income households.

As an apprentice, Davis went into her neighbors’ homes to evaluate energy efficiency and implement changes. For many customers, such changes had been inaccessible because of income limitations or simply not knowing the suite of options available to them.

“You’re going into a lot of individuals’ homes, and you’re seeing the struggle,” Davis says. “You’re seeing people who want to have a fair chance as well, just like the people whose homes are already energy efficient and up to date. They deserve it. And you see they care about the environment, too.”

“Ensuring that a city’s or region’s climate-resilience investments are informed by and benefit all residents within a community, including those living in low-income neighborhoods, is critical and requires concerted efforts on multiple fronts,” DeBacker adds. “When people have the opportunity to engage in the decision-making process, they become an active part of the solution.”

Conserving energy is not only good for the environment. It saves money.

That dynamic is helping the nonprofit Cathedral Square in South Burlington, Vt., keep its affordable housing for low-income seniors and individuals with special needs within financial reach. Cathedral Square, which operates 30 housing communities serving more than 1,100 residents across Vermont, is now able to make once-unaffordable energy-efficiency upgrades thanks to Commons Energy. And with support from The Kresge Foundation’s Social Investment Practice, Commons is now empowered — and backed with funding — to help other nonprofits reduce utility bills and channel more resources to direct services for their constituents. They are also doing their part for the environment.

“There is no such thing as a cash cow in affordable housing,” says Cindy Reid, Cathedral Square’s director of development. “The bottom line is pretty lean, so energy savings is a very critical piece of keeping things affordable for our residents.”

The launch of Commons Energy was supported by several funders including Kresge, which in 2012 awarded a $180,000 grant through its Environment Program to Commons’ parent company, Vermont Energy Investment Corp. (VEIC), to develop Commons’ business model. After seeing great potential in Commons’ work, Kresge’s Social Investment Practice in early 2015 provided the organization with a $2 million loan guarantee that supports the creation of a $20 million fund providing capital to qualifying projects. As the nation’s first Public Purpose Energy Services Company (PPESCO), Commons is dedicated to reducing the economic and environmental cost of energy and the greenhouse gas emissions of small- and medium-sized buildings.

Investors and lenders have historically supported energy services companies (ESCOs) and efficiency projects that target large buildings owned by for-profit companies. They have generally avoided smaller public purpose facilities such as schools, health clinics, city halls and recreation centers, tending to perceive low investment return and high loan default.

Kresge’s guarantee and other financial backstop measures have opened the way for such entities to qualify for funding to enhance energy efficiency and to repay the investments from savings generated by the upgrades. Kresge’s Environment Program also provided an additional $300,000 grant to support Commons’ expansion into the education and health care sectors and create a small loan loss reserve for projects it finances.

Commons has worked with Cathedral Square to secure loans and guaranteed energy savings to cut debt payments on three energy retrofits. One project, an upgrade to LED lighting in common spaces and hallways, was completed at the 82-unit Heineberg Senior Housing in Burlington.

A second project is currently under construction. Elm Place in nearby Milton will be the first certified Passive House multifamily building in Vermont. Passive Houses are ultra-energy-efficient buildings that cut energy use 60-80 percent compared to that of structures built to standard building codes.

A third project involving a complete energy retrofit at Bradley House, a Victorian mansion for low-income elderly in Brattleboro, Vt., begins in fall 2016.

Cathedral Square illustrates how energy-efficiency investments in buildings owned and operated by nonprofits can generate a monetary and social return, says Kim Dempsey, Kresge’s Social Investment Practice deputy director.

“This is very much a learning investment,” she says. “It’s a new, untested model, but one we believe has the potential to accelerate adoption of deep energy retrofits in public-serving buildings.”

A key element of the partnership between Commons and Kresge, Dempsey says, is sharing the successes and failures of the Commons model with others who want to start their own PPESCOs.

“Ultimately, the model needs to be widely replicable if we are to ensure these kinds of projects will positively impact low-income people in cities across the country,” Dempsey says.

Meanwhile, Kresge’s support and offer of loan guarantees “has opened doors and led to tremendous opportunities with several interested investors,” says Scott Johnstone, Commons Energy general manager and VEIC executive director. Potential borrowers include a school district and a network of temporary shelters in Vermont, with at least 10 contracts in the works. The goal is to sign 300 projects worth $55 million in investment by 2021.

Johnstone and his staff are focusing initially on Vermont, Maryland, the District of Columbia, Virginia and Ohio. True success of the PPESCO business model will come, he says, when there is “no need for a Kresge default backstop — when banks and other investors have data on the energy and cost savings these projects can generate and are willing to provide financing directly.”

Kresge program grants combined with a social investment loan guarantee helped enable Commons Energy to bring deep energy savings to public-serving buildings.

Here’s How:

• The relationship with Vermont Energy Investment Corp., Commons Energy’s fiscal sponsor, began in 2012 with a $180,000 grant from Kresge’s Environment Program to create a business plan for Commons Energy, the nation’s first Public Purpose Energy Services Company (PPESCO).
• The Environment Program flagged Commons Energy as a socially conscious business concept worth testing and proving out.
• After completion of the business plan, the Environment Program worked with the Social Investment Practice to understand funding roadblocks and help Commons Energy flesh out a financing plan that would yield the best chance for success.
• A critical element of the Commons model is to confirm that such projects will generate sufficient cost savings to repay the financing necessary to complete efficiency upgrades.
• The High Meadows Fund and the MacArthur Foundation saw the promise of Commons Energy and added their financial support.
• Ultimately, the Social Investment team determined that a $2 million loan guarantee could unlock critical capital from both nonprofit and commercial sources for new Commons projects.
• The Kresge Board of Trustees acknowledged the deal as risky but approved the investment for its high social and environmental returns, as well as its alignment with the foundation’s focus on climate resilience in low-income communities. Financial terms included Kresge providing credit enhancement of up to $2 million to support a $20 million fund to finance energy-efficiency upgrades.
• The deal also included $300,000 in additional grant funds from Kresge’s Environment Program to allow Commons’ expansion into the new sectors of education and health care — promising targets if the PPESCO model is to succeed and scale up.
• Because of the seasonality of energy cost savings, a portion of the grant can also be used as a revolving reserve fund that will make payments to lenders if borrowers are late making their payments to Commons Energy.
• In addition, the deal included guiding principles such as signing projects that allow for a lower return on investment but yield deeper energy cost savings (30 percent or more) compared to an average of 15-20 percent for traditional energy services companies. The deal also calls for greater transparency in project pricing.

The tragic story about the city of Flint’s contaminated water dominated the headlines in Michigan for a good part of 2015. While this was certainly a story about the failure of government to protect its citizens at a most elemental level — assuring access to clean and safe water — it was first and foremost a story about health.  

Thousands of people were exposed to dangerous levels of lead, a highly potent neurotoxin with particularly pernicious effects on children. Lead poisoning in young children can cause lifelong and permanent damage to mental and physical development.

Unfortunately, childhood lead poisoning remains a concern for many other communities across the nation. Resources at the federal and state levels for lead testing and remediation have declined significantly over the last several years. Through our early investment in Get the Lead Out, an initiative to raise public awareness of this environmental hazard, and most recently with the Advancing Safe and Healthy Homes Initiative aimed at eliminating home environmental and safety hazards, Kresge’s Health team observed the struggles of many urban communities as they sought to galvanize resources and influence housing policy to secure safe and healthy homes. Some communities have been effective at keeping lead exposure at the forefront of civic priorities, but many others are still struggling to garner sufficient support and policy concern to eliminate this preventable problem.

However, lead is but one of many environmental health challenges facing urban communities. These settings are characterized by a chronic disinvestment in capital and social infrastructure, a decline in the capacities of local leadership and the fragmentation of resources and systems needed to promote health and well-being.

For example, the Kresge-sponsored Moving Forward Network, a national collaboration among community advocates, scientists and public health, launched a Zero Emissions Campaign in 2015 to call attention to the impact of diesel pollution on working-class communities adjacent to ports and railyards. Diesel exhaust is a toxin that has been tied to cancer, asthma and heart disease. These communities have struggled historically to raise their voices against the rush of industry.

Such initiatives remind us that our efforts to move toward upstream approaches are essential to setting the stage for long-term solutions. We have learned the importance of context, and how opportunity is fundamentally influenced by the social and environmental conditions within homes, neighborhoods and communities.

Public health is fundamentally multidisciplinary and multisectoral. As we move forward, the value of and prospects for cross-sector investments become increasingly clear. The complexities of the issues to be addressed require partnerships within and outside of The Kresge Foundation to arrive at solutions that will be meaningful in the long term.

For much of the last 25 years, the national conversation around health has focused on the need for greater access to affordable, quality health care.

There is good reason for that. Many Americans have lacked such access, with often devastating consequences.

But achieving good health requires more than access to health professionals. Our health is largely determined by what happens outside the doctor’s office — the air we breathe, the food we eat, the stresses we face and educational and job opportunities.

“The health care system comprises, at most, 20 percent of what constitutes good health in the United States, and it may be more like 10 percent,” says Chris Kabel, deputy director of The Kresge Foundation’s Health Program. “Much of our health is determined by the infrastructure in which we live, work and play, and things like educational attainment, early childhood education and transportation.”

For individuals in low-income communities, those social determinants are often well outside the realm of personal choice. It’s hard to go for a jog around a violence-plagued neighborhood or buy fruits and vegetables when the neighborhood lacks a grocery store, for example.

Confronting barriers to good health is part of the mission of Kresge’s Health Program. By recognizing that health is strongly influenced by the places people live, the foundation’s Health Program focuses on creating conditions that promote healthy communities.  Through the program’s Accelerating Community-Centered Approaches to Health focus area, Kresge encourages health systems to share resources and responsibilities with community partners, and looks for ways to promote wider adoption of programs, practices and policies that advance community health. 

“The United States has significant health disparities, particularly by racial identity and socioeconomic status,” Kabel says. “Everybody should have the opportunity to achieve optimal health.”

Developing Healthy Places: Common Market

Eating locally produced food ought to be the easiest, simplest way to consume daily calories. In fact, eating local is often very difficult. Grocery stores and institutions that serve food want to do it as economically as possible, which often excludes small farmers. Consumers lose, too — especially those who lack easy access to farmers’ markets and grocery stores that sell a selection of fresh produce.

“The U.S. food system, basically since World War II, has been built around scale: large-scale production, 1,000-acre farms that are growing one crop, large-scale processing and large-scale retail,” Kabel says. “As that process happened over decades, it became very difficult for small- to mid-size producers, aggregators and retailers to be economically viable.

“This dynamic affects low-income communities because the local corner stores are often the primary food retailer. If they can’t make a profit selling local foods, they’re not going to, even if they want to. There needs to be an aggregation and distribution system on scale for smaller retailers, and affordable so they can sell healthy food.”

A Kresge Health Program grantee, Common Market, developed a solution to bring healthy food to communities that need it most. The Philadelphia, Pa.-based nonprofit organization works to provide healthy, nutritious food to local residents, especially those from low-income communities. Common Market facilitates connecting wholesale customers like schools, hospitals, grocers and workplaces with farmers in New Jersey, Pennsylvania and Delaware.

Kresge’s Health Program recognized the value of Common Market’s work and its ability to positively affect opportunities for health and promote health equity in the communities it serves.

“You could fill a room with the list of worthy projects out there,” Kabel says. “So we try to decide, what adds the most value and most impact to the field? Does the proposal really reflect community priorities? Does it break new ground, and can it be used as a case study in other cities?”

Common Market’s trucks pick up food from about 75 regional producers. It’s gathered in a warehouse and delivered six days a week to about 150 schools, colleges, hospitals, workplaces and grocery stores throughout the Delaware Valley. Customers order food by the caseload from Common Market’s availability list. In 2015, Common Market received a two-year, $500,000 grant from Kresge to expand this model to Atlanta, Ga.

“Common Market ties together disparate components of the food system in a way that I haven’t seen other organizations do,” Kabel says. “There are many organizations that are working to improve access to healthy, affordable foods in low-income communities, but it’s very difficult to reach this goal in a way that also economically benefits producers and retailers.

“Common Market spent years developing its model to create value for everyone up and down the food-system continuum.”

‘A Light Bulb Moment’

Common Market was founded in 2008 by Haile and Tatiana Johnston. Soon after finishing graduate school, the couple moved to Strawberry Mansion, a low-income Philadelphia neighborhood, and began running community programs focused on gardening, healthy cooking and physical activity. 

“The idea for Common Market came from the need to create infrastructure to deliver the good food being created in our area,” Tatiana says. “One of the most popular things we did with our community programs was healthy cooking classes.

“That was a light bulb moment. Here we are teaching kids to make broccoli and corn and salad, but there’s nowhere in the neighborhood to (buy) healthy food.”

“We were also thinking about the efficacy of our work,” adds Haile. “We started to think about launching an intervention at a systems level that could have an impact on our communities. We had to engage different markets and communities, and it had to be about our whole region.”

The couple began a three-year planning process in collaboration with local organizations. They decided early to focus on institutions like schools and hospitals, both to ensure that healthy food would get to people who often don’t have access to it and to be able to operate on a scale that would benefit farmers.

“It’s that focus on the institutional context that has really become the platform for our national expansion,” Haile Johnston says. “We’re one of the few organizations that successfully implement a mission focused on both sides of the value chain.

“There are many food hubs that focus on the well-being of farmers — their financial viability. Many focus on food access. There are very few that sincerely work to promote goals on both sides and have the financial viability within their own organization.”

Ed Weaver, a third-generation farmer in Berks County, Pa., grows a variety of fruits, primarily apples, on about 100 acres. Common Market became a customer shortly after the organization got started. Previously, he’d been selling to local farm stands and to visitors to his orchard.

“Prior to working with Common Market, there was a lot of times when we would have to take our surplus to a local auction or the Reading Terminal Market to sell it,” Weaver says. “A lot of times, especially with the auctions, prices sometimes went really high, sometimes really low; there wasn’t any type of pricing structure you could be guaranteed.

“That’s one of the big benefits to us of working with Common Market — we can charge a fair price that’s consistent. And for Common Market, it’s hard for their customers to know what the price will be if they have to buy at auction. Working with us, there’s more consistency.”

Weaver says his farm’s revenues have grown because of the partnership. Customers sometimes come to the farm and tell him they found out about it because Common Market’s produce is served in their workplace.

“It helps to provide a bit of stability and security for us moving forward, knowing there is going to be a need and outlet there for the produce that we’re growing,” Weaver says. “Common Market helps to fulfill our own vision for being able to get healthy local food into a greater area.

“We can serve the people pretty well in our own community within a half-hour drive. It’s outside that area, especially as you get into the metropolitan, more urban setting, where there aren’t sizeable farms that can provide a large amount. Common Market is helping to fulfill our vision at the same time we’re helping them to fulfill theirs. It’s a good partnership.”

‘A Trusted Source’

Common Market’s model is also a boon to the institutions it serves. In addition to stable prices, organizations looking to provide better-quality food can find themselves struggling to source it.

Shelley Chamberlain, a registered dietician who retired from Thomas Jefferson University Hospital in Philadelphia as its director of retail operations, helped craft a partnership with Common Market. The university had signed the Healthy Food in Health Care Pledge in 2007, and was looking at holistic ways to improve care for patients. Initially it pushed its vendors to increase provisions of local fruits and vegetables, but sometimes the produce still came from as far away as California.

“We had ups and downs,” Chamberlain says. “When we got connected with Common Market it was like, ‘Oh my gosh, we have a trusted source.’ They believe what we believe in.”

As the hospital began relying on seasonal produce, it posted signs listing the sources for the food it was serving.

“No one was used to asparagus being in season for three weeks and then it’s not anymore,” Chamberlain says. “At first, people would miss certain things. But then, it was like, ‘What are you going to do next? What’s coming next?’

“We started a farmers market. You could buy tomatoes from two different regions and taste the difference. So we were educating at the same time.” 

Dishes with trans fats and heavy sodium were replaced by roasted vegetables and meatless Mondays.

“We always felt that the hospital is the place you should be providing food that is healthy for patients, for customers, for the environment,” Chamberlain says. “Once we got that going and into a rhythm, it became our culture and second nature.”

Common Market in Philadelphia is paying for itself, which proved to Kresge that it had a model that could work elsewhere.

“It’s natural to require philanthropic subsidy on the front end, but what’s exciting is that Common Market has gotten to a point where their operations are self-sustaining without subsidy,” Kabel says. “We’re supporting them to establish their operation in Atlanta, but if there are regions looking for a replicable system that can serve low-income communities, they can look at Common Market. They don’t have to reinvent the wheel.”

In fact, the Johnstons hope Kresge’s grant helps them build capacity to implement their model in other regions around the country.  

“One of the things we’re trying to demonstrate is how we can document daily consumption of fruits and vegetables in people who have access to our product,” Haile Johnston says. “We know that if people consume more fruits and vegetables, their incidence of chronic disease is lower. We’re looking at, especially in the institutional context, the regional economic impact of changing from non-source-identified, opaque procurement to local-source-identified procurement and the impact on local economies.

“It’s recognizing that health and wealth are inextricably linked in communities.”

For individuals at high risk of developing type 2 diabetes, making all of the dietary, fitness and lifestyle changes necessary to achieve and maintain good health can be daunting.

Omada Health Inc., a San Francisco, Calif.-based provider of digitally based therapeutic programs to help individuals reduce their risks for chronic diseases, has an innovative tool that helps.

Omada’s first online lifestyle intervention is called Prevent. It’s based on a successful national diabetes prevention program that has reduced the risk of developing type 2 diabetes among those with pre-diabetes by 58 percent over three years.

Prevent helps individuals reduce their risk for chronic diseases such as diabetes and heart disease by combining smart technology like a wireless scale pre-synced to a participant’s account, for example, with health-related curriculum, on-demand access to a personal health coach and an online peer support network. More than 50,000 people have used the program, with results demonstrating that this virtual intervention works as well as in-person prevention programs.

Omada first marketed Prevent through private insurance providers to help reduce health care costs for their members. Eventually, Omada turned to social investors like Kresge when it became clear that lower-income people, many lacking insurance or regular access to comprehensive care, could benefit from the program. That’s especially true as the risk for diabetes is disproportionately higher among low-income populations and Medicaid recipients. 

Because Omada is a for-profit company with a steady income stream, Kresge determined that a social venture investment offering a modest financial return was a smart fit. So the foundation worked with the California Health Care Foundation, each contributing $500,000, to provide a $1 million low-interest loan to Omada that would extend Prevent’s reach and increase access among patients served by the safety net. This investment is part of Partnering for Impact, a joint initiative of the two foundations. 

“The goal of Partnering for Impact is to make the innovative practices, services and technologies emerging in the health care sector more accessible or effective for low-income patients,” says Kim Dempsey, deputy director of Kresge’s Social Investment Practice. “Through support for Prevent and programs like it, we’re bridging the increasing digital divide in health care for those individuals and families who rely on clinics and other safety-net providers.” 

Omada recently launched a year-long pilot and clinical trial in three medical facilities serving uninsured and Medicaid patients with pre-diabetes. Up to 300 participants are receiving access to self-paced weekly lessons offered in English and Spanish that focus on such topics as nutrition, exercise and changing habits. They are also placed in groups of eight to 18 peers who interact online to provide support, ask questions and share resources. A trained health coach is available around the clock via text, email and phone and regularly checks in with individual participants.

“We’re trying to make sure everybody in the United States has access to this program,” says Mike Payne, Omada’s chief commercial officer. “Once we were confident of the commercial side, we thought, ‘Now we have the bandwidth and can invest in and support Medicaid and the safety net.’

“We believe this health intervention is so good that everyone should have access to it.”

Kresge invested in Omada Health Inc. as part of a collaboration with the California Health Care Foundation (CHCF). The two pooled resources to create a venture fund called Partnering for Impact. Their goal: to increase the capacity of community health centers and other safety-net organizations by making early-stage investments in technologies and companies that have the potential to improve health care access, efficiency and patient experiences.

“Investments in the safety net are an opportunity for foundation capital to drive innovations to underserved markets,” says Kimberlee Cornett, managing director of Kresge’s Social Investment Practice. “Our investment terms are more favorable than what commercial lenders offer, giving social-good organizations more flexibility and the ability to focus more of their time and resources on achieving positive social outcomes.”

Here’s how the deal came together:

• In 2014, CHCF introduced Kresge to Omada, giving Kresge the opportunity to learn more about the company and its mission.
• Later that year, the two foundations each provided a five-year $500,000 loan so Omada could further develop and make its diabetes prevention platform, Prevent, available to low-income patients.
• In 2015, Omada hired a licensed clinical social worker to manage the deployment of Prevent in underserved communities.
• In early 2016, Omada began a clinical trial of Prevent in three health care organizations serving Medicaid and uninsured patients. CHCF and Kresge also contributed grant dollars to support a third-party evaluation of the effectiveness of Prevent among these populations. 
• The company’s goal is to demonstrate the financial viability of implementing Prevent in underserved markets — in part through the significant cost savings resulting from prevention versus treating chronic diseases — while also achieving beneficial health outcomes for participants.
• Between commercial clients and the safety-net pilot, Omada expects to have a large enough data set within three years to make the case for Medicaid funding of Prevent.

Kresge’s Human Services team thinks a lot about “expanding opportunity for low-income people in America’s cities.” Our grantees in the human services field have seen the pathways to opportunity become more challenging. Over the last 40 years, opportunity has stalled, with the greatest impact on both the working class and those living in poverty. 

The changed opportunity landscape means that despite personal drive, determination and talents, a high-performing child living in a low socioeconomic status will fare worse than a low-performing child from a high socioeconomic status when it comes to college completion. This means that where you live can determine whether you have a chance to move up the ladder of opportunity.

Human services organizations have also encountered increasingly greater challenges over the last decades. Beyond the growing inequality of opportunity, these organizations have had to adjust to the changing face of America, which is rapidly diversifying. At the same time, government funding for safety net programs has not fully recovered from the Great Recession. Despite these challenges, many human services organizations have been able to creatively approach their missions.

In 2015, we increased our focus on these innovative organizations — the ones who are changing the game when it comes to human services. We’ve worked with traditional organizations implementing out-of-the-box strategies, such as Crittenton Women’s Union in Boston. We’ve also supported nonprofits that operate nontraditionally, such as Community Solutions, which functions in cities across the country.

These bright spots represent the next generation of human services organizations. By combining the forces of strategic grant making with our expanded social investment toolbox, our program seeks to support these organizations’ work in a way that creates more opportunity for vulnerable populations. We identify and fund creative solutions that can be scaled and replicated for maximum impact, ultimately bringing vulnerable people into the economic mainstream.

These next-generation human services organizations are teaching our program team about what is possible when innovation is embraced.

To solve the opportunity problem, human services organizations must shift their focus from pure transactional delivery of services and instead engage in a multisector, multidisciplinary and multilevel approach to bring people out of poverty. By adapting their modus operandi, human services organizations can rebuild an ecosystem of opportunity that offers people living in poverty the essential supports required to achieve well-being and lead self-sufficient, self-determined and productive lives. The Kresge Human Services team is eager to support this transformation.

Almost five years ago, LaShauna* lived in subsidized housing in the Roxbury Section of Boston, Mass., with her three children. As a single mother, she couldn’t work, go to college and take care of her kids at the same time. She was on the edge of poverty with seemingly no way to stabilize her life.

On a train, LaShauna found a flyer about Crittenton Women’s Union. A Boston nonprofit dedicated to breaking the cycle of poverty, the organization offers a new and cutting-edge Career Family Opportunity program built around intense mentoring and coaching designed to help single parents organize their lives and move from poverty to self-sufficiency.

With the aid of her mentors at Crittenton, LaShauna embarked on a customized five-year plan. Along the way, she learned to set goals, prioritize and make progress.

Expanding Opportunity

President and CEO Dr. Elisabeth Babcock describes Crittenton as “an economic mobility action tank” dedicated to helping low-income women and their families reach economic independence. The organization will soon expand its services beyond Boston with the support of a $400,000 grant from the Kresge Human Services Program.

“In addition to serving 1,400 clients a year with transitional housing, job readiness training, parenting and other programs, we also do research and development designed to create new programmatic pathways out of poverty and use our applied learning to make backward change through public policy and new approaches to inform the field,” Babcock says.

The work — and the science it’s based on — is relatively new, she says. Crittenton’s efforts have proved that supporting and guiding parents as they develop skills to obtain economic and personal stability “gives them the tools to break their families free from the powerful grip of poverty and its imprint on children.”

Each person who enters Crittenton’s Career Family Opportunity program is evaluated based on individual circumstances and assigned a mentor who provides coaching through what Babcock says are “pillars” on the bridge to success. Those include family stability, well-being, money management, education and career path.

The mentor helps participants steer through bureaucratic mazes and makes referrals to social services specialists in the same way a primary care physician might send a patient to medical specialists.

“It’s a very different model than case management,” says David Fukuzawa, managing director of Kresge’s Health and Human Services Programs. “The mentor becomes an active advocate, advisor and supporter.”

Because some single parents lack family or community support, Crittenton encourages single moms to connect with others in similar circumstances.

At any given time, Crittenton might be counseling 400 people. Some newcomers may need “a lot of support — three or four times a week,” says Sarah Bellemore, a Career Family Opportunity program coordinator. Others might check in by phone weekly.

Since the program started in 2009, 98 percent of those enrolled have stayed with it. In addition, 71 percent of participants have experienced income gains and 83 percent have earned college degrees.

Bellemore says the program matches participants’ savings at a rate of two-to-one. A single parent who saves $4,000 over five years would exit the program with $12,000. That incentive alone is enough to help participants come on board and stay the course — even those like Pam*, who are intimidated or doubtful that they have it in them to make it through.

“It was mind-boggling,” Pam says, recalling her orientation to the program. “They covered everything: job readiness, computer skills, college prep.”

Before long, “everything started rolling in a positive way for me,” she says. “Crittenton brought out the strong points in me and gave me the support I needed.”

As for LaShauna, she now has a college degree and a job to support her family. She has saved for a down payment on a house. One of the program’s objectives is that each participant have $10,000 in the bank by the conclusion of the five-year program. She is also working toward a master’s degree in business administration.

“It’s remarkable when you look back,” LaShauna says. “I didn’t know what to do. There were huge barriers. You have to crawl before you can walk.”

Really Reducing Poverty

With successes like that, Crittenton Women’s Union is a model for the type of change that Kresge’s Human Services grant-making program area aims to effect.

“We’ve been supporting these kinds of organizations — we call them ‘exemplars,’ ” Fukuzawa says. “They are really reducing poverty as opposed to only providing a safety net. A lot of people would say, ‘Isn’t that what everyone does?’ But it isn’t.”

All of Kresge’s program teams actively seek to support innovation in their respective fields, and to use all of the tools of philanthropy as they do, Fukuzawa says.

“In Human Services, for example, this means being more influential on policy and regulatory changes that can improve the delivery of services and create more flexible environments and institutions to help individuals with low incomes thrive,” he explains.

That coincides with what Fukuzawa says has been dramatic change in the human services sector in recent years.

“There’s a heightened emphasis on adaptation, resilience and connectedness in the sector, which is moving from a focus on volume to an eye for value — from process-driven production to human-centered performance, from siloed approaches to those that are more collaborative and integrated,” Fukuzawa says. “The pioneers in the human services sector are confronting the multiple challenges of demographic change, increasing inequality and polarized politics by focusing on outcomes, through the use of science.”

As Fukuzawa explains it, people living in poverty or close to it often find that one problem cascades upon another to create a situation that is worse than the sum of its parts.

“Their car breaks down. They can’t get to work. They lose their job. They lose their home,” Fukuzawa says. “That’s what happens to a lot of good people.

“They get sick. Or their child gets asthma because they’re living in a terrible, drafty, moldy old house. And they can’t get to work because the kid can’t breathe or has to go to the hospital. They can’t pay the medical bills. They go broke. All of those things are the ongoing reality of many people who are at the edge.

“People really want to succeed. It isn’t some big character defect.”

And having to rely on social support is not easy, Babcock says.

“The pathway to family economic stability has drastically changed over the past 25 years,” she says. “In past generations, unskilled workers willing to work hard could often obtain jobs that paid solid wages, but the labor market has become increasingly bifurcated. Almost all jobs that pay families sustaining wages now require postsecondary education, and the increased competition for unskilled jobs left at the bottom of the wage scale are driving those wages further down.

“Stress on families at the bottom of the wage scale has increased, along with unmanageable debt, unstable housing and family homelessness and a host of attendant medical, social and developmental consequences.”

Breaking the Cycle

Traditionally, human services organizations have focused on addressing immediate needs, such as shelter, clothing and food. What appeals to Kresge about Crittenton is how it goes beyond the basics, with the goal to bring people out of the poverty cycle — for good.

As one of the largest providers of services to homeless families in Massachusetts, Crittenton operates a supportive housing program for 400 formerly homeless single-parent families in addition to its other services. Because of its successes, Crittenton was selected by the U.S. Department of Housing and Urban Development to pilot a 1,000-family, five-year randomized control trial of how it delivers services. It’s also the backbone entity for two national learning communities — one focused on improving economic mobility and the other on outcome evaluation.

“Crittenton Women’s Union is a national leader in advancing strategies that support women with low incomes and their children as they move to economic independence and well-being,” Fukuzawa says.

One of them is Charell*, who worked with a Crittenton mentor to focus on school and career. She’s since become a certified paralegal.

Another is Mary Jane*, who turned to Crittenton Women’s Union after the economy crashed in 2008. Until then, she lived paycheck to paycheck, working one or two jobs to make ends meet. Then she got laid off, and she and her eight-month-old son became homeless.

“I was scared and I needed help,” she says. “I wanted to go back to school for a degree in the health care field. But I was worried about housing and not knowing what would happen to me and my son down the road.”

With Crittenton’s assistance, Mary Jane moved into an apartment, applied to college and secured financial aid to study medical information management.

“I have big plans for the future and my head is held high,” she says. “I know I am moving in the right direction. It’s been a long road from homelessness to greater stability, and this is just the beginning.”

Single mother of four Ebonee Scott was out of work. Unable to find a job that would pay enough for her family to live on, she moved in with her mother. Then she saw an opening for a position at Goodwill Industries of the Southern Rivers in Columbus, Ga. She was hired and eventually promoted. Now she’s retail store manager in Albany, Ga.

“Working at Goodwill has changed my life for the better,” Scott says. “I was able to move out of the housing projects, get off government assistance and provide for my kids.”

At the 165 Goodwill organizations across the country, more than 100,000 employees like Scott develop skills while earning a living wage with a full package of benefits. But Goodwill leaders saw a need to do more. By expanding their retail presence, they could invest more deeply in creating new jobs and providing supportive services for people with disabilities and economic disadvantages in their communities. Those store leaders went to Goodwill Industries Inc., the stores’ umbrella organization, for help getting investments.

Goodwill in turn connected with Kresge. The foundation’s Human Services Program authorized a planning grant of $150,000 in 2012 so Goodwill could assess how it could pull together a pilot fund to invest in its member organizations.

When the evaluation was complete, the foundation made a low-interest $3.3 million loan in 2013 through its Social Investment Practice. Combined with investments from the Annie E. Casey Foundation and the Ford Foundation, the pilot fund totaling $10 million launched Goodwill Mission and Job Creation Services Inc. 

With the long-term financing and a low 2 percent interest rate, Goodwill had the capital and flexibility it needed to expand the retail operations that support its social enterprises, employment and job training activities. The idea was to foster job creation in a few areas, see how it worked and if successful, replicate it in other stores around the country.

“Goodwill Industries International committed loans totaling $8.7 million to create or expand 27 Goodwill stores and 12 attended donation centers,” says Goodwill International President and CEO Jim Gibbons. “The Kresge Foundation’s planning grant and program-related investment were essential.”

At the end of 2015, the program was responsible for creating 581 Goodwill job openings, including 70 in management. The program also supported more than 6,100 community job placements. With an average hourly wage of $11.79 and typical work week of 34 hours, those employees combined earned more than $95 million. The funds also provided more than $400,000 in emergency loans to Goodwill employees, who are current in their payments.

“Goodwill incubates job opportunities for people with disabilities or in vulnerable situations in their lives,” says Kresge Human Services Program Officer Michael Shaw. “Not only has it been great for the stores and great for the communities they serve, but it’s been great for us in terms of a solid investment. It’s proven that human services organizations can accept debt risk in order to expand and improve on their mission.”

One of those Goodwill helped find work was Tonya Jones, who survived vocal cord cancer when she was 25. Having retired, Jones was attempting to reenter the workforce and realized her altered voice was hindering her search. She turned to Goodwill for help.

“When I walked in there … I was accepted,” she says. “I began to feel that hope growing inside me.”

Goodwill coached her and sent her notices for job fairs and openings.

“I did meet someone through one of those job fairs … and I was given the position I have now,” says Jones, a volunteer coordinator for Georgia Cares, a nonprofit serving the elderly and disabled. “I am so grateful.”

The Kresge Foundation’s $3.3 million loan to Goodwill Industries demonstrates that putting money in motion to effect societal change can benefit both funder and investee.

Goodwill wanted to offer loans to its community-based stores to pave the way for expansion of local social services and employment opportunities. But there wasn’t always an available source of capital to fund it.

“If they were a small business, they’d go out and get a Small Business Administration loan or a bank loan or credit union loan,” says Michael Shaw, Human Services program officer at The Kresge Foundation. “But SBA loans are not available for nonprofit entities. And lots of credit unions and banks don’t see the return on an investment like this worthy of the risk.”

The Kresge Foundation made it happen by starting with a grant from its Human Services Program, which has had a long relationship with Goodwill. Kresge’s Social Investment Practice stepped up next with a six-year loan at an interest rate of 2 percent. That was combined with investments from the Annie E. Casey Foundation and the Ford Foundation.

Here’s how it came together:

• In 2011, Goodwill Industries was exploring ways to accelerate the funding available to local Goodwills in the business of growing social enterprise revenue and creating jobs. That was prompted by the development of a new strategic focus at Goodwill to expand capital sources.
• A year later, Kresge supported Goodwill with a $150,000 planning grant through its Human Services Program to research capital aggregation strategies and the feasibility of a loan fund.
• In 2013, Kresge’s Social Investment Practice gave Goodwill a low-interest $3.3 million loan. Kresge was one of three program-related investors in the initial $10 million loan fund.