The Times, They Are a Changin’
Kresge Foundation Announces Recasting of Grant Process

Connie Clark, Vice President
Great Lakes Region

Elizabeth Sullivan, senior vice president of program for the Kresge Foundation, discusses changes to the Foundation’s grantmaking with members of the Giving Institute at the group’s winter 2007 meeting.

The Kresge Foundation has announced changes to its grantmaking approach that will open the doors for new categories of nonprofits to apply. The changes should also streamline the process for small- and medium-sized organizations. These changes, in discussion and preparation for launch for the past nine to 12 months, become official this spring, beginning with a change in the Foundation’s application process, effective April 1.

The Kresge Foundation’s vision statement, “Stronger Nonprofits. Stronger Communities,” sums up the organizations focus on helping nonprofits grow stronger so they can help strengthen the communities they serve.

Kresge has always based grant decisions on the belief that a strong organization is evidenced by strong institutional advancement. The Kresge Foundation’s traditional focus – not on the actual bricks and mortar, but on what buildings can do for the communities they serve –  has not changed. Kresge has always wanted nonprofits to grow both internally and externally. Internal growth comes through building the capacity of the organization to support itself through stronger volunteers and expanded fundraising, while external growth comes by reaching larger groups of constituents and individuals, corporations, and others who can lend financial support into the future. Individual giving is still the backbone of that philosophy.

However, the foundation has continued to evolve in its beliefs. In the 1990s, The Kresge Foundation saw a downturn in major institutions applying for capital grants. Its leaders began to believe it didn’t make sense for large organizations to “toil away” to attract donors at the bottom of the giving pyramid, an approach the Foundation had encouraged for decades through its gift chart and prospective donor development recommendations.

At the same time, smaller nonprofits often did not have the knowledge or capacity to reach the “bar” Kresge had set for its challenge grants. According to Elizabeth Sullivan, senior vice president for program, who addressed members of the Giving Institute this winter, “For smaller organizations, we knew our thresholds were too high; we were asking too much.”

During 2005 and 2006, the Foundation saw a change in leadership, not only with the arrival of Rip Rapson as president, but also as other staff were added or changed positions within the Foundation. The new leadership saw that the Kresge Foundation could leverage capital development and private philanthropy for a much greater impact on the challenges facing our society.

In a speech at The University of Richmond in July, 2007, Rapson began to reveal the foundation’s new directions. He discussed how critical challenges in the nonprofit environment have caused The Kresge Foundation to think differently about its role, and he offered a description of some of the reasons an adjustment in the Foundation’s course was merited. Rapson offered an overview of the new framework that is emerging, including these observations about how this might play out for nonprofit institutions:

“We have the luxury of being able to deploy multiple tools. First and foremost, we make grants. But we can also convene as a way of forging relationships, promoting joint inquiry, and fostering concerted action. We can invest in research to create a solid empirical base for change. We can communicate to deepen public understanding of, and engagement in, the work of grantees. We can support networks to harness and amplify the collective intelligence of organizations working in common purpose.

“Secured by our assets and free from re-election cycles, quarterly profit reports, and appropriations from others, we have the independence to take bets – both the small bets required in the daily routines of nonprofit life and the larger bets that promise to catapult a community beyond its fixed and safe positions to more profound and enduring social change. Philanthropy as society’s social venture capital.

“We can, in a word, use our flexible resources and multiple tools to explore the kind of interdisciplinary, multi-sector solutions demanded by the scale and seriousness of contemporary problems.”
 
We urge our nonprofit partners who subscribe to New$ You Can U$e to go to the Kresge Foundation’s website at www.Kresge.org and download a copy of Rapson’s speech. It will give you great insight into what is guiding the Kresge Foundation and making it a leader and innovator in global change.

As a result of lessons learned and the needs of our greater society, the Kresge Foundation’s capital challenge grant initiatives have started to be recast. A first step in that re-casting has been to simplify the process for the applicant through the electronic submission of a letter of intent. Organizations that now apply are being asked to:

• Focus directly on mission and values. Kresge is asking organizations to not only detail their own mission and values,  but also to demonstrate how these values match and promote values held dear by the Kresge Foundation.

• Use broader strategies that move beyond traditional bricks and mortar.

• Advance construction of buildings that are “green” or have green components. A special funding track has been developed to support the costs associated with plans that build or renovate facilities that are green.

• Look at broader ways the Foundation can help leverage resources for those organizations that are philanthropically challenged.

Institutional advancement is still important, but now the Kresge Foundation is looking at much more. It is interested in helping provide a “tool box” to help organizations become stronger nonprofits. The Foundation understands that, while for-profit organizations have much broader sources for capital, nonprofits have fewer choices, and attempts at revenue-generating business have caused some nonprofits to run the risk of financial ruin. However, the Foundation’s experience indicates that many nonprofits fail to realize the full potential of their campaigns. This is another reason that Kresge is now moving into much broader areas of support through its challenge grants.

Not only will Kresge fund the bricks and mortar, it will now consider providing unrestricted capital to use against an organization’s growth benchmarks. Kresge has provided funding for model programs that involve multi-year support, using the challenge grant to meet benchmarks. The Foundation is interested in additional projects that can be replicated across the nonprofit sector and used as a model strategy.

Sullivan, Kresge’s vice president for program, recently stated in a presentation, “Our dollars will act as incentives to achieve the growth strategy we are looking for. We are gaining experience with early planning or ‘capacity building’ grants. We are exploring financial management, governance – the components that help (nonprofits) be strong. We could do it directly, but it will be more likely through intermediaries each in the field that know the nonprofit . . . instead of generalists, we are now becoming field specialists.”

Over the last year, using its website, the Kresge Foundation has become much more direct in explaining its intent, and what it expects of organizations that apply for challenge grants. The process for submission and the guidelines for future proposals have changed. On April 1, only letters of intent will be accepted. Once reviewed, if the applicant organization meets certain benchmarks and criteria, a full proposal will be requested.

This spring, The Kresge Foundation begins a new chapter in its philanthropic support of nonprofits, and the foundation is being very clear regarding what it wants to do and what it expects the nonprofits it supports to do.
           
An overview of the changes in the Kresge Foundation’s approach includes:

• Values criteria applied to the six fields of interest within the Foundation (Health, the Environment, Arts and Culture, Education, Human Services, and Community Development). This values-overlay covers nine areas:

1. Creating opportunity
2. Community impact
3. Institutional transformation
4. Risk
5. Environmental conservation
6. Innovation
7. Collaboration
8. Underserved geography
9. Diversity

• A new website that helps nonprofits better navigate the changes
• Initial application through a letter of intent
• Community colleges may now apply for Foundation funding
• More emphasis on “green” and elevating the criteria for Green Building grants to Platinum LEED certification
• A comprehensive, five-part strategy that focuses on the Foundation’s “home area” of Detroit, Michigan

Unrestricted dollars remain key, despite the changes. Once they have built private philanthropy, organizations will learn that success with Kresge is more about the resources than operating up. The Foundation will expect 100 percent board giving, continued growth in philanthropy, and for this growth to occur through individual, eyeball-to-eyeball solicitation. That has not changed.