Port Authority uses Impact Investing to drive neighborhood revitalization


The Global Impact Investor Network defines impact investing as investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return. The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education.

As foundations consider mission-related investing, Council of Development Finance Agencies (CDFA) has been a driving force in identifying opportunities for DFAs, such as the Port of Greater Cincinnati Development Authority, and philanthropy to collaborate in new and innovative ways.

In 2017, The Kresge Foundation invested $5 million in the Port of Greater Cincinnati Development Authority to establish a commercial development loan program, which is geared toward neighborhood revitalization and transformation through mixed-use, mixed-income projects. The partnership represents the first time this kind of investment has happened ever in the United States between a traditional finance agency and an impact-interested foundation. The result is the Port Authority’s DREAM Loan Fund for neighborhood revitalization – DREAM is an acronym for “Driving Real Estate to Accelerate Microenterprise.”


Kresge and Cincinnati have made history with this impact investment. This is one of the first-ever examples of philanthropy and development finance collaborating in a true investment-driven strategy.



CDFA had a hand in creating the match between Kresge Foundation, Troy, Mich., and the Port Authority. According to Toby Rittner, President & CEO of CDFA, the conversation began in 2015. Attending a manufacturing finance event, Rittner listened to a group of foundation leaders discuss how to best get capital into the advanced manufacturing sector. At the time, his friend David Wood, from Harvard’s Institute for Responsible Investing, “leaned over and said, ‘why don’t you just use the development finance agencies’?” And they started to consider, “what would it look like if a foundation wanted to make an impact investment a market rate, market return investment into a development finance agency that would allow that agency to leverage bonds, its direct lending, its indirect lending, its targeted loan funds, to move forward as an investment partner, not just a grant?”

Around the same time, the Port Authority’s board of directors had developed and approved a bold new strategic plan that calls for the organization to accelerate its work in neighborhood transformation, and build a holistic approach out of the agency’s residential rehabilitation program. The Port Authority had projects we wanted to do and programs we wanted to fund for which we did not have capital. Looking for ways to raise capital, we ran up against the idea that the private market, whether it’s commercial banks or global capital markets, do not evaluate risk in a way that makes them want to do the kind of work that we want to do. Almost everything we do or fund is a capital improvement of some sort. So, we had to start looking outside the box to be able to raise capital to fund our work.

Kresge Foundation believes that the challenges they see across program areas are suffering from barriers to capital – meaning the market is not doing the correct “risk / return” valuation and private capital dollars are not flowing to people in low-income places in a way they could if someone were to just bring the right toolkit. According to social investment officer Aaron Seybert, “We think we can be more effective by bringing new tools.”


DREAM Loan Fund is a commercial revolving loan fund, It makes real estate based loans into properties that are in neighborhood business districts only in focus neighborhoods where the Port Authority is working as part of our neighborhood strategy. It is real estate based lending, specifically designed to provide financing for capital improvements in places where the market won’t go. The product we designed will allow the Port Authority to either add subordinate financing behind traditional financing through our CDFA, and first mortgage lending at a higher level. It gives us the flexibility we need, not replicating something already being done in the market.

This is an investment by Kresge; not a grant. This investment will facilitate Cincinnati’s ability to make loans to development projects in targeted redevelopment areas. These investments will drive urban revitalization and serve the entire community. Kresge will be paid back over the course of 10  years at a below market rate return.



These loan funds will finance housing and economic development projects in two Cincinnati neighborhoods, where the Port Authority will build a portfolio of investments that strengthen micro-commercial districts and provide access to neighborhood-based entrepreneurs.


Through social investing, we’re finding ways to complement grantmaking and play an influential role in driving needed capital to underserved populations.”

Kimberlee Cornett, The Kresge Foundation



The foundations and development finance industry operate differently. Language, structural and perception barriers are the primary challenge followed by investment, mission alignment and local politics. Nonetheless, the potential for this collaboration is abundantly clear.