September 26, 2013
By John McDonald

“Today’s conversation is a really interesting opportunity to talk about philanthropic strategies for revitalizing and rebuilding our cities,” said James M. Ferris, Ph.D., the Director of The Center on Philanthropy and Public Policy, in comments welcoming Rip Rapson, President and CEO, The Kresge Foundation, to an audience of foundation leaders. “But it’s also a wonderful opportunity to talk about foundation leadership and philanthropic stewardship – to explore issues of governance and the importance of partnerships between board members and CEO’s.”

Joining Rapson in the conversation was Irene Hirano Inouye, President, US-Japan Council. Hirano Inouye was the chair of The Kresge Foundation Board when they hired Rapson, who soon chartered a course to refocus Kresge’s philanthropic strategies – one of the topics covered at The Center’s Conversations on Philanthropy series luncheon on September 26, 2013, entitled Expanding Opportunities in America’s Cities. Fred Ali, President and CEO, Weingart Foundation, and Chairman of The Center’s Board of Advisors moderated the conversation.

As the conversation began, Ali noted that The Kresge Foundation has undergone significant change to truly become a leader and innovator in the field – one that has “pushed against the outer fence lines of philanthropic ambition to drive large social change.” And in doing so, “begun to teach us all that grants alone might not be sufficient to get the large scale change we want.”

“At the time I was the Board Chair, […] The Kresge Foundation supported capital campaigns to enable nonprofit organizations to build buildings – new buildings or to remodel existing buildings. And it had been doing that for a very long time and had really become known for that,” said Hirano Inouye. “But when John Marshall decided to step down, the Board began to talk about what we would want in the next leader. It was at a time when the Board was also addressing the needs in Detroit and we would often have conversations about the balance for a foundation, like Kresge, that had an important role to play in the city and in the state. But also as a national foundation.”

Seeking to fulfill their founder’s mandate to ‘promote human progress’, in 2007 The Kresge Foundation hired Rapson as their new President and CEO and began a process of transformation that dramatically changed their strategies and funding to more effectively address the needs of low-income communities and the people who live in them – breathing new life into their founder’s sentiment: “giving away money is not an easy job”.

“The first big change I think we went through was to think about capitalization as a tool that could be applied in a far more flexible, far more differentiated, and nuanced way,” noted Rapson. From there, The Kresge Foundation narrowly defined it’s general funding into seven fields of interest to guide their grantmaking and investing. Rapson added, “And so, some of the strategic conversations that Irene described very early on were, ‘what are those touchdown points in each of these six or seven fields’. And I think fairly quickly, we were able to settle on a suite of strategies, two or three in each of these fields that seemed compelling and how we can all make sure that the added value of philanthropic contribution is really worth the change.”

Referencing The Kresge Foundation’s role in Detroit, Rapson and Hirano Inouye both touched on how the refocusing of philanthropic strategies played out with some of their place-based efforts. “The work in Detroit was the most complicated,” Rapson said. “But we decided that we would maintain our capital stretch structure and we would reinforce these six strategies related to program areas. But in Detroit, we would bring them all together. It was a much more sort of integrative view that you had to bring all of the programs together […] and we tried to work in place in a comprehensive, integrated way.”

“We have gone through, I think, really a remarkable journey, because The Kresge Foundation is very different from what we were back in 2006,” said Hirano Inouye. “We have had many, many conversations at the board level about what the vision would be.” Adding, “the economic downturn helped to bring in even sharper focus the questions around what could a foundation like Kresge could do to ensure that the dollars that we were entrusted with and that we were stewarding would have maximum impact.”

Today, the Kresge Foundation is a three billion dollar national foundation working to expand opportunities in America’s cities through a wide range of strategies and grants. Their work is focused in seven narrowly defined programs including Arts and Culture, Community Development, Detroit, Education, Environment, Health, and Human Services. And it is tied together with a focus on addressing the needs of low-income communities to ‘promote human progress’.

In closing the Conversation on Philanthropy, Ali noted that, “this is an example of a foundation embracing collective action.” Adding that “we all talk about this in a time of constrained resources and great need – working across the sectors is so important.” Addressing Hirano Inouye and Rapson, Ali remarked, “I think you’ve shown the way in many respects on how to do that well. And, I think it’s an example of what two extraordinary leaders can get done.”