News and analysis
January 11, 2016

Inside MacArthur’s Rapid Strategic Shift to ‘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.

Julia Stasch didn’t waste any time. Less than half a year after being promoted in March to president of the John D. and Catherine T. MacArthur Foundation, she announced a major shift in strategy, concentrating more money on a small number of "big bets," including climate change and reducing America’s jail population.

The Chicago foundation will also help Nigeria rid itself of systemic corruption and offer a challenge grant of $100 million to a person or group that devises a solution to a problem outside of MacArthur’s grant-making areas.

The change at the nation’s 10th largest grant maker, with $6.4 billion in assets, requires shedding some longtime priorities, including efforts to strengthen democracy and support for maternal health care.

Ms. Stasch, a 13-year veteran of the foundation, sat down with The Chronicle recently to discuss her priorities as president. The following has been edited for brevity and clarity:

How did you enact such dramatic changes in the foundation’s strategic direction so fast?

I came up from inside. I wasn’t recruited from McKinsey or something like that, and I didn’t come in and say, "We’re out of business for a year" while I try to understand what we needed to do. I already understood. I was able to accelerate the potential for change within the foundation. I didn’t have to build my credibility with the staff.

Why did you decide to focus on fewer "big bets?"

There are so many issues that merit attention. We have substantial resources, but they’re not unlimited. We need to make bigger bets on fewer things.

For us a transition plan is not, figure out who your grantees are and give them less money every year until you slip away. It’s what is the best way to use the next two, three, or four years to secure the gains that have been made, with a goal of leaving the sector even stronger.

Now that the Paris climate accord has been completed, what role will MacArthur take on climate change?

One of the reasons I feel so keenly that the times demand an agile philanthropic approach is that the situation changes so much. I introduced something at the foundation called design-build that comes from the fact that I used to be in the real-estate development industry.

Unlike in the past, when a foundation identified a problem and then took a very long time figuring out what they were going to do and came up with a giant work plan, the times actually demand you start doing it while you’re designing it. Climate change is the quintessential example.

We knew post-Paris would be a time to assess and ask if we have all the right grantees in place. There will be another time to assess — post-election in the United States. Do we have the right grantees, and is the right leadership in place to flourish in a political environment that’s potentially even more hostile to addressing climate change?

To what extent will MacArthur continue to provide grants for general operating support, even as its new strategy is focused on specific, time-limited projects?

We’ve always done general operating support, but we’ve also done project support. In this rush toward much more general operating support, let’s not cast all project support as if it were bad. It’s bad sometimes when a foundation treats a grantee as if it were under contract to execute something the foundation wants it to do. So there is a role for both.

We’re in the middle of that debate right now about what is appropriate overhead for grantees. I saw the Ford Foundation has moved from 10 percent to 20 percent for each project it supports. Right now our standard overhead is 15 percent, and I’m certain we’ll take a look at that.

Will MacArthur’s new focus on reducing the jail population address the high tensions between the police and members of the black community?

What’s going on in Chicago and Ferguson and all these places is not an isolated series of events by some weird circumstances that are popping up. It’s a phenomenon of our time. I’m glad there’s as much activism around it as there is. It’s essential if we’re going to get past an era when many police departments feel a sense of impunity for their actions.

We’re at a moment of change, and it’s something philanthropy has to get into. In the whole spectrum of criminal-justice reform, we said we wanted to work on jails. This is where most Americans have their experience with the criminal-justice system. If it feels racially discriminatory, that has terrible potential for the legitimacy of government as a whole.

So it isn’t just something to be worried about in the context of, Can we do some jail reform? If we don’t get it right, the cynicism and the withdrawal from civic engagement will be the harbinger of a deep erosion of engagement with democratic government.

Mark Zuckerberg and Priscilla Chan have created an LLC to serve as their primary giving entity, allowing them more flexibility to both give grants and make investments. Are the days of private foundations as the giving vehicles of choice for the superwealthy numbered?

It depends on how agile we are. I’ve asked for an analysis of all the corporate structures we could adopt or create. That search for what is the right vehicle for impact drove our decision to spin off our digital media and learning work. We spun that off into a nonprofit because any organization that was going to deal with student data had to be a nonprofit for people to have the confidence that student data wasn’t going to be used for something inappropriate. Already corporate money is attending to them in a way that wouldn’t have happened if we had kept it inside the foundation as a program.

An LLC might be on the table for us. If it was the right vehicle for something we wanted to do, I’m confident that I’m going to do it. We will keep the core of the private foundation, but we will look at adjacent organizations or spin-off organizations.

Russian lawmakers placed a number of U.S. philanthropies, including MacArthur, under scrutiny. Why did you decide in August to close your operations there?

When we were challenged with the situation in Russia, I sought the council of former ambassadors to make sure I was thinking as deeply and knowledgeably about whether or not we should close our office. When we were on the initial list of 12 organizations that Russian authorities recommended to be considered "undesirable," several grantees said, "Don’t give us any more money because of the potential negative consequences." So ultimately we decided we weren’t having enough impact, we weren’t getting enough money out the door. I decided I didn’t want to be martyred out of Russia.

Send an email to Alex Daniels.

Send an email to Alex Daniels.