Kresge Investing $14 Million to Community Finance Institutions Serving Low-Income People
The Kresge Foundation announced today $14 million in investments to six Community Development Finance Institutions (CDFIs) and Development Finance Agencies (DFAs) working to expand opportunity for low-income people in America’s cities through an initiative called Kresge Community Finance (KCF).
KCF invited proposals from qualifying CDFIs and DFAs working in American cities on projects that align with Kresge’s strategic priorities in six program areas – Arts & Culture, Education, Health, Human Services, Environment and Detroit.
More than 130 organizations submitted proposals for funding, representing more than $280 million in capital requests. The resulting investments from Kresge’s Social Investment Practice pair standardized loans, available for up to 10 years, with small operating grants.
Program-related investments made in the first round of Kresge Community Finance funding include:
- $3 million to Reinvestment Fund to support creative placemaking efforts in Baltimore, Atlanta and New Orleans.
- $3 million to Connecticut Green Bank to support the installation of solar generation and storage systems in affordable housing and other community facilities in Connecticut’s urban and coastal communities.
- $1 million to the Cooperative Fund of New England to support the development of resident/member-owned and managed cooperative housing, and healthy food retail projects in cities in Southern New England
- $3 million to Enterprise Community Loan Fund for the equitable revitalization of the Jefferson-Chalmers Corridor in Detroit’s East Jefferson neighborhood.
- $3 million to Boston Community Capital in support of its collaboration with MassDevelopment, Massachusetts’ economic development and finance authority, to finance mixed-use projects in Massachusetts cities pursuing community-led placemaking redevelopment.
- $1 million to Capital Impact Partners in support of its partnership with the Memphis Medical District Collaborative to finance and promote community development, residential density and walkability.
In total, the Foundation plans to award up to $30 million in financing and up to $1.5 million in grants through KCF to at least 15 organizations. Additional investments through KCF will be announced in 2017.
“We wanted to test the demand for a standardized product of patient capital for CDFIs and DFAs,” said Joe Evans, the foundation’s portfolio manager, Social Investment Practice, “and to demonstrate to other investors an efficient approach to meeting the capital needs of low-income communities.”
Kresge’s Social Investment Practice uses a variety of financial tools to invest in projects that bring both a social and financial return. The foundation has committed to investing $350 million in social investments by 2020.
“To move that amount of money, we wanted to explore innovative ways of sourcing and funding a large pipeline of investments that advance our mission, while balancing risk and portfolio construction considerations,” said Kimberlee Cornett, Kresge’s managing director, Social Investments Practice. “The demand for KCF proved to us that there is a market for this type of product, and we’re thrilled to partner with and support so many important efforts that will improve opportunity for thousands of low-income people.”
CDFIs are private nonprofits that leverage private sector investment to provide financing and technical assistance for a range of community development activities, including job creation, small business development, housing and other community development.
DFAs are public, private and non-profit development entities that provide financing for programs that foster job creation and economic development with a focus on growing housing and employment opportunities in low income communities.