Kresge Foundation

Investment Strategy

The Kresge Foundation is a private foundation with approximately $4 billion in endowment assets. Founded in 1924 by Sebastian Kresge, the founder of Kmart, the foundation is headquartered in Troy, Michigan. Kresge focuses its grantmaking and investment activities on six program areas: health, environment, education, human services, arts and culture, and American cities. Annual grantmaking and social investments total approximately $160-180 million.

The foundation’s endowment is managed through a diversified portfolio spanning public equities, fixed income, private equity, real assets, and social investments. The portfolio targets a long-term real return rate that sustains the foundation’s grantmaking while preserving endowment purchasing power. The alternatives allocation represents an estimated 35% of the portfolio, providing exposure to illiquidity premiums and diversified return sources.

What distinguishes the Kresge Foundation from many peer institutions is its integrated approach to investing and grantmaking. The foundation views its endowment not only as a source of grantmaking revenue but as a tool for advancing its mission through capital deployment. This philosophy is operationalized through the foundation’s Social Investment Practice, which sits alongside traditional investment activities.

Private Markets Approach

The Kresge Foundation’s private markets program includes traditional private equity commitments alongside its mission-oriented social investment activities. The traditional portfolio commits to buyout, growth equity, and real assets strategies managed by external fund managers, with attention to diversification across vintage years, geographies, and strategies.

The Social Investment Practice is the most distinctive element of Kresge’s investment approach. Launched formally in 2008, the practice has deployed hundreds of millions of dollars in endowment capital into investments that advance the foundation’s programmatic objectives. These investments include program-related investments and market-rate mission-related investments in areas such as community development financial institutions, affordable housing, healthcare facilities, and clean energy infrastructure.

The foundation has been a leader in the field of impact investing, frequently publishing case studies and research on its social investment activities. Kresge’s approach demonstrates that foundations can use their endowments as active tools for mission advancement beyond traditional grantmaking, and the Social Investment Practice has served as a model for other foundations exploring similar strategies.

For fund managers, Kresge presents two distinct engagement paths. Traditional fund managers can pursue endowment commitments through the standard institutional process. Impact-oriented managers whose strategies align with Kresge’s programmatic focus areas can engage with the Social Investment Practice, which evaluates opportunities based on both financial merit and mission alignment. In both cases, the foundation’s 990-PF filings and annual reports provide transparency into current portfolio positioning.