How This 100-Year-Old Foundation Helped Save Detroit

“In some ways, I’m a little sheepish because we don’t have a big splashy announcement,” admits Rip Rapson, referring to the 100-year birthday celebration of the Kresge Foundation (“Kresge”), over which he presides. Yet, the centennial celebration of this Detroit-based philanthropic powerhouse is anything but low-key. Earlier this month, Rapson marked the occasion by sharing the stage with former President Barack Obama, who lauded Kresge’s legacy.

If you’re not familiar with Kresge, you’re probably not alone. Named after Sebastian Spering Kresge, founder of the company that became the once-dominant Kmart retail chain, the foundation is hardly a household name outside Detroit. While Kresge’s $4.3 billion endowment is substantial, it’s less than a tenth the size of the Gates Foundation.

Yet, in Detroit, at least, Kresge’s impact has been well documented and is even credited with helping to save the city at one point. During our conversation, Rapson, who has led Kresge since 2006, traces its century-long journey from “pocketbook philanthropy” to providing $3 billion in funding for major infrastructure projects in the late 20th century through initiatives like it’s Capital Challenge Grant Programs.

In recent years, Kresge has shifted focus to bolstering cities and supporting their most vulnerable communities. Rapson lists countless examples, such as transforming “brightened and abandoned land”—sites that private investors avoided and government officials left unaddressed due to electoral blowback—for years. One standout moment was Kresge’s pivotal $100 million contribution to Detroit’s ‘Grand Bargain’ during the city’s 2013 bankruptcy, a move credited by Mayor Mike Duggan with stabilizing and revitalizing Detroit. Many projects Kresge now invests in involve new, untested ideas that might be too sensitive for the political class to touch. As Rapson explains, philanthropy can leverage its credibility to convene discussions, secure technical resources, invest in community engagement processes, and undertake various initiatives to foster consensus.

As the foundation turns 100, it faces some potential criticism. Unlike the current trend in large-scale philanthropy to spend down endowments for greater immediate impact, Kresge has chosen to ensure its annual grants do not erode its endowment, effectively meaning it will continue to exist in perpetuity. This approach contrasts with the philosophy of spending down philanthropic assets, famously championed by Chuck Feeney, who donated nearly his entire $8 billion fortune before he died in 2020. Similarly, in its latest annual letter, the Gates Foundation pledged to spend down its entire endowment within 20 years of its founders’ passing, significantly increasing its annual expenditure to achieve this goal. Countless other foundations have also opted to implement sunset clauses. These commitments arise amid global calls for immediate financial intervention, especially as foundations worldwide collectively hold a record $1.5 trillion in assets that some argue could be put to better use during times of pressing need like the present.

Reflecting on Kresge’s decision, Rapson is introspective. Amid multiple crises that hit Detroit over the years, from automotive bankruptcies to political turmoil, the Foundation could have immediately deployed $3-4 billion for maximum impact. However, Rapson ponders the long-term consequences and trade-offs of such a decision. He notes that Kresge has granted out $3-5 billion over its lifetime, roughly equivalent to its current endowment. Yet, this figure doesn’t include the additional philanthropic and public investments it has spurred. For example, when funding infrastructure projects, Kresge required recipient organizations to secure at least two-thirds of project costs from other sources before providing a matching grant. A more recent example is Kresge’s investment in the Justice40 Accelerator, a collaboration with Partnership for Southern Equity and other partners. This has enabled community-based organizations to access over $15 million in funding, empowering them to compete for federal, state, local, and philanthropic grants. It may not attract ‘splashy’ headlines, but when considering this leveraging power, Kresge’s indirect financial impact over the long term is likely far greater than its total grant outlays.

Now, using its centennial as a platform, Kresge aims to export its core philanthropic philosophy of leveraging broader resources to support urban communities beyond Detroit. Like Obama, Rapson views cities as pivotal economic opportunity, innovation, and culture centers. However, cities across America and worldwide face significant challenges, and new infrastructure and community development programs need to be designed with these in mind. As Rapson explains, climate change presents new challenges, necessitating new adaptive practices to mitigate wildfire risks in California, elevate sidewalks against rising sea levels in Miami, and raise houses on stilts in New Orleans.

In addressing such challenges, Rapson acknowledges the potential of significant public investments promised by the Inflation Reduction and Infrastructure Acts. However, he also emphasizes the difficulties cities encounter in accessing these funds and other philanthropic resources, such as donor-advised funds (DAFs), which lack mandatory spending requirements but could be motivated to contribute through streamlined approaches. For the latter, Rapson wonders if community foundations could blend aspects of DAF spending alongside their perpetual existence. For example, the San Francisco Foundation could set long-term priorities—addressing housing crises, health emergencies, or urban flooding—while maintaining a dedicated fund replenished by DAFs. If successful, this model could incentivize DAF holders to spend down and continuously contribute to the fund over time.

Ultimately, Rapson envisions foundations playing a multi-stakeholder “sherpa” role to municipalities, providing technical assistance and testing new ideas that other public and private funders might otherwise initially avoid until proven successful. As Rapson’s counterpart at the Rockefeller Foundation, Raj Shah, notes, philanthropy at its best often serves as the best source of capital to make “big bets” on ideas to solve some of the world’s most pressing challenges.

As Kresge looks to the future, its true legacy does not rest solely on the size of its grant contributions—whether that’s $5 billion or more in the decades to come. Nor does it lie solely in the billions its grants might unlock. Instead, the measure of its influence will ultimately be seen in the widespread adoption of Kresge’s philanthropic playbook by other community foundations that, as Obama reflected, are often too cautious. If widely adopted, Kresge-style practices promise to exponentially catalyze transformative investments in cities, fostering health, inclusivity, and sustainability worldwide. If this promise holds true, countless urban communities will be glad that Kresge decided to stick around for another century to come.