Kresge Foundation

The Foundation has made incredible contributions to the fields of medical research, higher education, health and human services, and the arts.

Definition

The Kresge Foundation is a private independent foundation based in Troy, Michigan that was created “to promote the well-being of mankind” (Kresge Foundation) (1).  Grants from this organization focus on capacity-building for nonprofit organizations mainly in the form of challenge grants so that organizations can broaden their base of philanthropic support and encourage volunteerism with fundraising campaigns.  In 2003, the Foundation had assets of over $2.4 billion and awarded 142 grants totaling $108,120,600 in the United States, Canada and Bermuda (ibid.).  Their main vehicle for giving is through challenge grants toward capital projects as well as through special initiatives important to the mission of the Foundation.  These special initiatives include the “Scientific Initiative,”  “The Detroit Initiative,” “The Green Building Initiative,” “The Kresge Foundation Partnership to Raise Community Capital,” and “The Kresge Foundation Historically Black Colleges and Universities Initiative” (ibid.).

The Scientific Initiative is a challenge grant program created to purchase and repair scientific equipment for research institutions, teaching hospitals, medical schools, and college laboratories.  As part of this challenge grant program, institutions are required to build an endowment into their campaigns to upgrade, repair, and replace equipment as needed in the future (ibid.).

The Detroit Initiative is a challenge grant program with the goal of providing strategic financial investment and support for public and private partnerships in the Metropolitan Detroit Area to better the lives of the people of this city (Kresge Foundation) (3).

The Green Building Initiative is a program created to encourage nonprofit organizations to look at the environmental impact of the facilities they are designing and building.  The Foundation provides educational programs and special funding opportunities to nonprofits designing environmentally friendly buildings (Kresge Foundation) (4).
 
The Kresge Foundation Partnership to Raise Community Capital is an initiative to help six community foundations build their capacity, encourage new programs, and build partnerships in their communities.  The Foundation is doing  this by providing mentorship and helping the foundations build their endowments with new donors through a multi-year challenge grant (Kresge Foundation) (6).

The Kresge Historical Black Colleges and Universities Initiative was started to support the fundraising and advancement capacity of historically black colleges and universities.  The goals of the initiative are to support the advancement of fundraising professionals for these institutions; provide the technical support needed for effective fundraising; support the leadership of the universities as it pertains to advancement; reduce the schools’ dependence on government funding; strengthen alumni relations and capacity building from this constituency; and strengthen the roles of trustees in this area.  Five universities are currently participating in this initiative, and the program is being managed by the Southern Education Foundation (Kresge Foundation) (5).

Historic Roots

Sebastian Spering Kresge was born in 1867 in Bald Mountain, Pennsylvania in a small Pennsylvania Dutch community (Kresge and Spilos 1979).  He had nothing when he began except his conviction and a deep sense of faith in God.  He opened a five and dime store on Woodward Ave. in Detroit, Michigan in 1899 and began the S. S. Kresge Company, which eventually became K-Mart Corporation in 1977 (ibid.).   By the time of their 80th Anniversary in 1979, K-Mart Corporation had reached sales of $11.7 billion with 1,891 stores across the United States and Australia (ibid.).

On the 25th anniversary of the S. S. Kresge Company in 1924, Mr. Kresge founded the Kresge Foundation with an initial gift of $1.3 million.  He was 75 years old at the time, and was quoted as saying at the Foundation’s establishment, “I can get a greater thrill out of serving others than anything else on earth.  I really want to leave the world a better place than I found it (Kresge and Spilos 1979, 330).”  Over the course of the next 33 years of his life, he contributed an additional $60,577,183 to the Foundation.  By the time of S. S. Kresge’s death in 1966, he had given the majority of his wealth to the Kresge Foundation, with his personal estate worth only one-tenth of the value of his contributions to the Foundation.  Sebastian S. Kresge was the sole founder of the Kresge Foundation and the sole contributor (Kresge and Spilos 1979). 

Importance

The Kresge Foundation has made incredible contributions to the fields of medical research, higher education, health and human services, and the arts by providing bricks and mortar support for non-profit organizations in need of new facilities and equipment.  If one were to go to virtually any large university, arts organization, hospital or research institute around the country, chances are the Kresge name would be somewhere.  The sizes of the gifts from the Kresge Foundation are significant, averaging in the hundreds of thousands of dollars, and often in the millions, depending on the project.  The Foundation’s largest single gift of $50 million was awarded in 2002 to the City of Detroit for their aggressive $535 million riverfront renovation project.  At the point that the gift was made, the city had already raised or allocated over $300 million in public and private projects towards this renovation.  The $50 million gift from Kresge was a challenge grant to bring in the additional $200 million needed to finish the project (Ankeny 2002).

In recent years, the Kresge Foundation has contributed to the purchase and renovation of such things as a new rehearsal hall for the New Mexico Symphony (Knight Ridder 2002), new buildings at hospitals such as the Center for Child and Family Advocacy at Children’s Hospital in Columbus, Ohio (Bell 2004) and the hospital expansion at Saint Agnes Medical Center in Fresno, California (Knight Ridder 2003).  The Foundation made contributions to over 500 universities throughout the years (Kresge and Spilos 1979), and through the Kresge HBCU Initiative, historically black colleges and universities are seeing a solid trend of growth in alumni support for their endowments (Anonymous 2004).  The Foundation is currently building a new headquarters in Troy, Michigan and in living up to the standards of their Green Building Initiative, they are building a facility that will showcase an environmentally sustainable design.  They intend this facility to be a classroom for other nonprofits to “demystify the art” of sustainable design and create more environmentally friendly LEED certified buildings in the nonprofit sector (Gallagher 2004).

Ties to the Philanthropic Sector

The Kresge Foundation’s mission is to serve the nonprofit sector by providing capacity building initiatives.  While the majority of their grants are for bricks and mortar projects, the challenge grant format specifically enables nonprofits to build their donor base.  Before a nonprofit can apply for grant support, the organization must first raise anywhere from 20-50% of their campaign goal.  At that time, Kresge will help the organization finish off the campaign with a challenge grant to encourage new funding or larger gifts from current donors.  If the organization does not meet the challenge, Kresge withdraws their gift (Kresge Foundation) (2).  For their Scientific Initiative, the nonprofit must raise two thirds of the money for the purchase of equipment before apply to the Kresge Foundation.  The Foundation will then cover the last third of the expense of the equipment, as well as one-fifth of the endowment for the equipment to help with future replacement or repair.  It is up to the organization to find the rest of the funding for the endowment, which encourages new restricted gifts for the organization.

The Historical Black Colleges and Universities (HBCU) Initiative is another project focused on capacity building.  Traditionally, Historically Black Colleges and Universities have depended too much on government financial support and have not focused their energies on building support through alumni, corporations, foundations or other sources of philanthropic giving.  This Kresge initiative has given these institutions the tools to build their expertise in fundraising.  HBCUs involved with the initiative are seeing the results from this work, particularly in the area of alumni support (Anonymous 2004). 

Currently, the Foundation is exploring other ways to provide capacity building opportunities to more nonprofits.  Under the leadership of the Foundation’s new chairperson, Irene Hirano, the Foundation is focusing new efforts on nonprofits with strong service records, but with little fundraising experience (Begin 2004).  By giving these organizations the management and fundraising skills necessary to excel in this area, the Foundation is contributing to the philanthropic sector in yet another new and exciting way.

Key Related Ideas

Capacity Building is a common term used for nonprofit organizations to “build higher performing organizations” (McKinsey 2001, 13).  This comes in many different forms including strategic planning initiatives, developing effective management skills and providing professional development for staff, as well as building philanthropic support and creating other streams of revenue to keep an organization financially viable.

Challenge Grants are a common tool used by foundations and corporations for nonprofit organizations to build their donor base.  Generally a 2:1 or 3:1 ratio is provided by the grantor and the organization must match the ratio in new funds in order to receive the gift award.  As an example, for every $2 raised by an organization, the foundation or corporation will match the gift with $1 up until the
 award amount is reached.  If a grant was awarded for $300,000 as a 3:1 challenge grant, the organization would need to raise an additional $900,000 to receive the $300,000 from the challenge grant.

Sustainable Design is an environmental initiative to build or renovate facilities by integrating renewable resources, energy efficient systems, water conservation, and quality indoor environmental air systems.  The idea is to use these principals through the entire lifecycle of a building, from construction, to general maintenance and operations, as well as demolition.  The results are a healthy, resource-conscious, and productive work environment (Pollution Prevention Sandia National Laboratories).

Important People Related to the Topic

  • Irene Hirano:  Hirano is the new chairperson for the Kresge Foundation Board of Trustees.  She is the Executive Director and President of the Japanese American National Museum in Los Angeles, California.  Hirano took over the post of Chairperson in December 2003 when Bruce Kresge retired.  Her role, along with the Trustees, is to shape the mission and granting directions for the Foundation (Begin 2004).
  • Stanley S. Kresge (1900-):  Stanley Kresge is the son of Sebastian Kresge.  He had a 53 year career with the S. S. Kresge Company and K-Mart Corporation, and succeeded his father as chairman of the board after his father’s death in 1966 (Kresge & Spilos 1979). 
  • John E. Marshall, III:  Marshall is the President and CEO of the Kresge Foundation.  His responsibilities are to manage the professional staff of the Kresge Foundation and, with the support of his program officers and the Trustees, allocate grant awards to nonprofits applying for funding (Kresge Foundation) (1).
  • Sebastian Spering Kresge (1867-1966):  Sebastian Kresge was the founder and sole contributor to the Kresge Foundation.  He was the founder of the S. S. Kresge Company, which later became the K-Mart Corporation. 

Related Nonprofit Organizations

  • Nonprofit Finance Fund is an organization that services the nonprofit sector by providing funding, as well as financial and investment expertise.  Their purpose is to strengthen the nonprofit sector in fundraising and
    development efforts and build capacity in this area  (http://www.nonprofitfinancefund.org).
  • The Southern Education Foundation is based in Atlanta, Georgia and is a public charity that focuses on creating quality educational opportunities to minorities and those who are disadvantaged in the South.  Their largest programs focus on recruitment of African-American public school teachers, equity advancement in higher education, and working with the Kresge Foundation to develop greater fundraising capacity in historically black colleges and universities (http://www.sefatl.org).
  • Venture Philanthropy Partners is a “philanthropic investment organization” working to help nonprofits whose mission is to serve the needs of children.  Their mission is to strengthen nonprofit organizations by providing funding, as well as capacity building resources, such as management expertise.  They are also an advocacy organization encouraging other philanthropists to share their talents and financial support to nonprofit organizations in their service to non-profit children’s services organizations (http://www.vppartners.org).

Related Web Sites

The Historical Black Colleges and Universities Web site, at http://www.hbcu-central.com, is a reference site for prospective students, enrolled students, faculty, parents and alumni at HBCUs.  Their goal is to provide awareness in the African-American community about HBCUs, increase enrollment at these institutions and create strong networks of support for alumni.

The Pollution Prevention Web site, at http://p2.sandia.gov/design.htm, is hosted by Sandia National Laboratories, a government organization.  The site offers detailed information regarding sustainable designs for new or refurbished facilities. 

United States Green Building Council Web site, at http://www.usgbc.org, provides detailed information regarding LEED (Leadership in Energy and Environmental Design) certification, which is an important factor in sustainable designs for new buildings. The Council is a coalition of professionals from all areas of the building industry coming together to create and promote environmentally responsible and healthy working and living facilities. 


Bibliography and Internet Resources

Ankeny, Robert.  “$200 Million is Key to Riverfront Plan.” Crain’s Detroit Business. Detroit: 16 December 2002. Vol. 18, Iss. 50, 1. In ProQuest [database online].  Accessed 28 September 2004. 

Alumni Gifts on the Rise.” Black Issues in Higher Education. June 17, 2004. Vol. 21, Iss.9: 20-21.  In ProQuest [database online]. Accessed 28 September 2004.

Begin, Sherri.  “New Kresge Chief Experiments with Helping Nonprofits Raise Money.” Crain’s Detroit Business. Detroit: April 12, 2004. Vol. 20, Iss. 15: 6. In ProQuest [database online]. Accessed 28 September 2004.

Bell, Jeff. “Center’s Fund-raising Effort Receives Boost from Kresge.” Business First. Columbus: July 9, 2004. Vol. 20, Iss. 46: A6. In ProQuest [database online]. Accessed 28 September 2004.

Gallagher, John. “Kresge Foundation’s New Headquarters to Showcase Sustainable Design.” Knight Ridder Tribune Business News. Washington: March 17, 2004: 1. In ProQuest [database online]. Accessed 28 September 2004.

Knight Ridder Tribune News. “Fresno, Calif., Hospital May Get Grant, If It Raises Funds for Expansion.” Knight Ridder Tribune News. Washington: September 24, 2003: 1. In ProQuest [database online]. Accessed 28 September 2004.

Knight Ridder Tribune News.” Kresge Foundation Aids New Mexico Symphony Orchestra.” Knight Ridder Tribune News. Washington: October 4, 2002: 1. In ProQuest [database online]. Accessed 28 September 2004. http://gateway.proquest.com/openurl?url_ver=Z39.88-

Kresge Foundation. (1). 2003 Annual Report.  Accessed 1 October 2004. [no longer available]

Kresge Foundation.  (2). Bricks and Mortar.  Accessed 27 September 2004. http://www.kresge.org/content/displaycontent.aspx?CID=24

Kresge Foundation. (3). Detroit Initiative.  Accessed 27 September 2004. http://www.kresge.org/content/displaycontent.aspx?CID=27.

Kresge Foundation. (4). Green Building Initiative.  Accessed 27 September 2004.  http://www.kresge.org/content/displaycontent.aspx?CID=26.

Kresge Foundation. (5). Kresge HBCU Initiative.  Accessed 27 September 2004. http://www.kresge.org/content/displaycontent.aspx?CID=30

Kresge Foundation. (6). Kresge Partnership to Raise Community Capital.  Accessed 27 September 2004.  http://www.kresge.org/content/displaycontent.aspx?CID=31

Kresge Foundation. (7). Science Equipment.  Accessed 27 September 2004. http://www.kresge.org/content/displaycontent.aspx?CID=25.

Kresge, Stanley S., and Steve Spilos.  The S. S. Kresge Story.  Racine: Western Publishing Company, Inc., 1979.  ISBN: 07955253.

McKinsey & Company. Effective Capacity Building in Nonprofit Organizations. Venture Philanthropy Partners, 2001. Accessed 30 September 2004. http://www.vppartners.org/learning/reports/capacity/toc.pdf.

Pollution Prevention Sandia National Laboratories. Sustainable Design. Accessed 2 October 2004. http://p2.sandia.gov/design.htm

This paper was developed by a student taking a Philanthropic Studies course taught at Grand Valley State University. It is offered by Learning To Give and Grand Valley State University.