News and analysis
August 13, 2015

MacArthur Overhauls Approach to Focus on Big Bets


Julia Stasch, president of the John D. and Catherine T. MacArthur Foundation, is working to fight climate change and improve the conditions of people in prison.

The MacArthur Foundation announced today that as it steps up grants to curb climate change, overhaul the criminal justice system, and tackle other global challenges with big-dollar investments, it is ditching support for many other efforts, such as reworking America’s juvenile justice system, strengthening American democracy, and improving maternal health care in needy countries.

In the first annual report from the fund’s new president, Julia Stasch, she said that under her leadership she plans to "question longstanding orthodoxies, established assumptions, comfortable practices, and even goals."

Ms. Stasch says she is retooling the nation’s 10th largest foundation to get rid of many small grant-making efforts so that the John D. and Catherine T. MacArthur Foundation could better ensure that its $6.4 billion in assets produce "transformative" change.

"We will work primarily through programs and projects that are larger in scale, time-limited in nature, or designed to reach specific objectives," she wrote. "We will place less emphasis on program areas with an indefinite life span."

Impact Investing

MacArthur had already signaled its intentions to go big on climate change and criminal justice.

In February it announced a $75-million effort to reduce incarceration in local jails, and its newly formed Climate Solutions program has made grants totaling $50 million this year.

But today’s announcement made clear that this is just the beginning of work to place bigger sums on a smaller number of ambitious programs. Ms. Stasch, a 13-year veteran of the fund who became president in March, said she would also continue MacArthur’s tradition of looking at ways that all of philanthropy can work differently and deploy more money for social change.

She said the foundation is developing prototypes for a program that would bring nonprofit organizations seeking capital together with impact investors — donors, companies, and other philanthropies seeking to do good and get strong investment returns.

The emphasis on impact investing, Ms. Stasch says, builds on the foundation’s 30-year history of making program-related investments. She says the foundation and other "pioneering" institutions have demonstrated the merit of impact investing, but that the practice had not taken off because of a scarcity of available financial products.

"We expect this new endeavor to use our capital and increased risk-taking, including market-making syndication, to give investors greater transaction ease, liquidity, confidence, and choice," she says.

The foundation is also considering, but has not committed, a large set of grants to a single place. Nigeria, where the foundation has had an office since 1994, is listed as a possible candidate. The reason, Ms. Stasch says, is that the nation has generated momentum around efforts to improve its criminal justice system and weed out corruption.

Also under consideration: channeling support to groups devising new nuclear disarmament strategies.

Ms. Stasch also made it clear she was open to hearing what nonprofits believe are the most important causes to tackle, noting that MacArthur will award a $100-million grant every three years to a proposal that will "significantly mitigate a major problem or seize a compelling opportunity."

What’s more, she said, the organization would regularly put small amounts of money and staff time into considering "what if" questions — such as "What if there is not enough, or any at all rewarding work for millions of people around the globe?" or "What if the pace of technological change outstrips the ability to ensure that it provides a public benefit?" The goal of asking such questions, she said, would be to support research that might lead to solutions MacArthur and others could finance.

A Contrast to Ford

MacArthur is not the only big grant maker choosing to narrow its approach in the hopes of making a bigger difference.

Another major grant maker, the Ford Foundation, this summer also announced a change of course, saying all of its grants will focus on inequality. But Ford’s new approach is quite different from MacArthur’s. Ford says it is trying to build strong nonprofits that will have a long-lasting impact on inequality, in part by giving more operating support, while MacArthur plans to inject large sums on specific topics for a set number of years and then move on to other causes.

Housing and Maternal Health

MacArthur will draw the curtains on some of its signature programs, Ms. Stasch announced.

Some of the efforts were already winding down, including a 20-year project to overhaul juvenile justice and a 15-year endeavor to finance research and policy work on low-income housing.

Ms. Stasch’s letter describes victories in those areas, including juvenile-justice policy changes in more than 40 states and tribal communities and the preservation of tens of thousands of affordable rental homes across the country.

Another MacArthur project, Connected Learning, which promotes the use of technology for education outside of the classroom, will continue operating, but do so outside the foundation.

While MacArthur’s grant making to improve maternal health in India, Mexico, and Nigeria helped lead to a decline in deaths during childbirth, Ms. Stasch said MacArthur would no longer make grants to help those countries with such efforts.

She said global health experts believe it is more important for foundations and others to support work to improve the quality of care, rather than focusing simply on expanding access to doctors and nurses, as MacArthur’s grant money had done. To ease the transition as the health grants end in 2020, MacArthur will support a project to incorporate midwives into Mexico’s health-care system and support health-care improvements in India.

"The next wave of change in maternal health will require new approaches in each country and we aim to leave the field poised to take them on," Ms. Stasch wrote.

Over the next few years, the foundation, a prominent supporter of peace and security causes, will end "aspects" of those types of grants, Ms. Stasch said.

Also on the chopping block: grants for groups working to strengthen American democracy, deal with global migration and U.S. immigration matters, and improve secondary education for girls in developing countries.

MacArthur’s desire to make big, measurable change "means focusing our not-unlimited resources, our leadership, and other assets in fewer areas where we believe real and lasting progress may be possible," Ms. Stasch says. "More focus will require hard choices about some fields where we have been long active."

 

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