So much of Kresge’s work entails a long-term, multi-faceted, sequential build. Constructing multiple grants to create a portfolio taking aim at a particular dimension of a challenge – think the spectrum of grants that form our Education team’s access and success strategy. Combining grantmaking with learning networks – think our Human Services team’s NextGen efforts. Stitching together mutually reinforcing investments across teams – think the Health and Arts teams’ work on FreshLo. Drawing together national expertise and local knowledge – think our Environment team’s now sunsetted Climate Resilience and Urban Opportunity initiative.

Yet another example reached a critical milestone this week when the Social Investment Practice and the American Cities Program announced the formation of the Memphis Medical District Investment Fund, a $30 million fund created through a partnership of Kresge, Memphis-based financial institutions (Regions, First Horizon, and Truist banks), Pathway Lending, the Memphis Medical District Collaborative (MMDC) and the Hyde Family Foundation to provide capital to mixed-use, mixed-income, transit-friendly projects that will build density in the eastern side of Memphis. Kresge is providing an unfunded guarantee of up to $6 million to Pathway, the fund administrator, to cover the first 5% of any losses.

The Memphis Medical District, adjacent to Memphis’ Downtown, has long been recognized as a critical linchpin in the revitalization of Memphis’ central core. The District is home to eight institutions – including St. Jude Hospital, the University of Tennessee Health Sciences Center, Methodist Le Bonheur Healthcare, and the Shelby County Health Department – employs 18,000 people, serves 8,000 medical students, and comprises 10,000 residents with an average median household income of $16,000, 65% of whom are Black and 45% of whom live below the poverty line.

Encouraged by neighborhood revitalization strategies in cities like Detroit, Memphis institutions and philanthropies worked together to envision and build MMDC, which brings together each distinct institution, city government, and district neighborhood associations with the goal of making the District’s neighborhoods more livable, vibrant, and safe. The America Cities Program has provided project, general operating, and other supports to the Collaborative since 2015, including funding community organizing to ensure that the area’s lowest-income residents have a say in, and benefit from, the area’s revitalization.

Building on these initial investments, Kresge funded a market study that demonstrated that the demand for residential and small-scale commercial space in the District exceeded supply. It also found that those markets were broken – capital wasn’t flowing, a function of both the community’s “reputation” and gaps between appraised values and what loan ratios required. Indeed, 90% of the students and employees of the District lived outside the area.

The situation bore a remarkable resemblance to the situation in Detroit’s Midtown district a decade ago when we took the lead in creating the Detroit Woodward Corridor Avenue Funds (I & II). The Memphis Medical District Fund is designed to accomplish a similar result to what occurred in Detroit – serving as an investment accelerant, pulling forward into the next five-to-seven years developments that would otherwise take 15-20 years.

To return to the thesis paragraph, the Fund has not only taken almost three years to come to fruition – something that has tested to the extreme the patience of all concerned – but it also builds on the even earlier investments of the American Cities program. As Aaron Seybert, managing director of the Social Investment Practice, shared in a note to his team upon the closing:

“The Fund was possible only because of a very well-designed, targeted, and consistent grant-making strategy in place years in advance. This is an important evolution from the Detroit work in that we are preserving our cash resources to prioritize organizational capacity while using our guarantee to take full advantage of a state tax-credit program to draw in bank capital. The Social Investments team stayed highly coordinated with program, remained focused on the needs of our grantee, and built carefully on our success in Detroit, all the while adapting to the local context.”

In particular:

• The two teams called on their relationship with the Hyde Foundation and their connection to the Memphis community to bring banks and CDFI’s together time and time again to demonstrate how we could create a shared investment vehicle to accelerate development;
• The American Cities team provided operating support for the partners to hire the staff necessary to launch the fund and to pursue equitable development principles – $450,000 to the Memphis Medical District Collaborative and $200,000 to Pathway;
• The Social Investments team will make available additional dollars in predevelopment support to ensure that equitable development projects have the resources needed to utilize the larger Fund.

This is a “big bet” that is actually multiple small bets rolled into one over an extended time. I can’t wait to see the projects that emerge.