In September 2013, I attended a Healthy Communities conference at the Federal Reserve Bank of San Francisco. Between sessions, I ran into Kimberlee Cornett, the managing director of Kresge’s Social Investment Practice — in the bathroom of all places.

I knew Kimberlee because Kresge had funded the organization I was working for, Capital Impact Partners, to organize a national summit on community health center lending and innovation. We had partnered closely throughout the previous year to plan and execute the event. But it was that chance meeting in the ladies room that brought me into the field of impact investing, when Kimberlee asked me (as I was washing my hands) if I might be interested in being her deputy director.

For most of its time since its founding in 1924, Kresge had been exclusively a grantmaking organization. Partially in response to the financial crisis and with the support of the foundation’s executive team and Trustees, Kresge began making social investments in 2008 by providing short-term, emergency loans to human service organizations. By the time Kresge hired me in January 2014, it was making the tricky transition from opportunistic, one-off social investments to an approach more deeply and strategically aligned with Kresge’s Program priorities and more sophisticated in its back-office transaction management.

ENTERING THE DUCK POND

Turns out, all of that was harder than expected. When I came to Kresge as the only full-time social investment staff person based in our metro Detroit headquarters, I thought my job was to develop and execute on a pipeline of deals. What I quickly realized is that work was needed first to bridge the cultural and operational divides between the grantmaking and social investing teams.

After a 15-year career in the public and nonprofit sectors — the previous 10 in community development finance — I was no doubt an outsider at Kresge. My friend and colleague, Allison Clark, once said that impact investors in private foundations are like platypuses in a pond full of (grantmaking) ducks; both animals can survive in the same habitats, but they are actually two different species. And that’s how it felt at first. Most of my Kresge Program colleagues were interested in the idea of impact investing, but it felt foreign to them, and they were unsure if or how it might advance their strategies. Our colleagues in finance and accounting, though supportive, were struggling to manage the back-office needs of transactions that required more complex and longer-term financial management than grants.

But eventually, partnerships sprouted, walls fell, new processes emerged, and the next generation of social investments took off. I am proud of the $60 million in program-related investments and guarantees I originated during my tenure at Kresge. I’m even more gratified to note that these investments were made in partnership with all seven Kresge Program teams. That small fact represents tremendous work by grantmakers to engage with the once-foreign tools and structures of impact investing, challenge their own thinking about how best to achieve their strategic goals, and patiently partner with myself and my team in the long and often complicated process of developing a pipeline of investments.

FLOCKING TOGETHER TOWARD BRIGHTER FUTURES

The impact investing sector has seen accelerated growth during the last five years. The Global Impact Investing Network (GIIN) estimates the current size of this global market at $502 billion. Though a few foundations (i.e. Ford, MacArthur and Gates) have long-established impact investing practices, many foundations that use non-grant forms of capital to achieve charitable purpose are in their initial years. And most foundations do not use these tools at all. Yet, we have seen increased interest among our philanthropic peers in investigating how impact investing can extend impact, return resources to a foundation for future charitable use and leverage investments from the capital markets.

At Kresge, we have created vehicles, funds and co-investment opportunities to create on-ramps for both newer investors and those organizations that don’t have the requisite capacity to independently manage their own portfolios. In this way, we aim to extend our own impact and broaden the availability of capital to fund critical efforts in under-served and dis-invested communities across the country.

After five plus years with Kresge, my last day is Friday, July 19. In September, I will join Housing Partnership Network (HPN) as its executive vice president, capital markets. HPN is an entrepreneurial, member-driven network of the strongest affordable housing developers and community development financial institutions (CDFIs) across the country. During its 20-year history, HPN has harnessed the collective needs and power of its members to develop a portfolio of social enterprises that address market gaps and allow access to new revenue streams, products, and capital that members could otherwise not access alone. During the last eight years, Rebecca Regan skillfully led the capital markets group at HPN, and she is now moving into a new role as chief innovation officer. I look forward to building on her good efforts and continuing HPN’s leadership in developing capital resources that drive the impact of its members and strengthen their ability to address critical housing and community development challenges across the nation.

I’m grateful for all I have learned as a funder and investor and eager to continue to put that expertise to work in a new role and on behalf of our most vulnerable communities. As I prepare to return to the world of nonprofit housing and community development finance – shaking some of the pond water off my platypus fur as I go – I am full of gratitude for the opportunity to have worked with amazing colleagues and peers while at Kresge. And, as I now move to the other side of that funder/investor table, I will look for opportunities to gently ruffle a few feathers in service to creating more inclusive, equitable communities for all.

Kim Dempsey was Kresge’s Social Investment Practice deputy director from 2014 to July 2019. Follow her at her new organization the Housing Partnership Network on Twitter @HPN_Network. Follow Kresge’s Social Investment Practice @kresgesocinv.