The foundation was started in 1936 with a gift by Henry Ford and his son Edsel of a controlling interest in the Ford Motor Company. In the 1950s, the foundation was firmly planted in the comfortable postwar consensus of anti-communist “small-l” liberals like chairman John J. McCloy, architect of the Marshall Plan. In the late 1960s and 1970s, Ford gravitated toward the then-cutting edge of identity politics, becoming a target of politicians over episodes like the foundation’s support of Louis Stokes during his successful mayoral bid in Cleveland.

In her first Philanthropy interview, Ford president Susan Berresford fields questions on her interest in shaping public policy, the foundation’s experiments with Individual Development Accounts and other asset building approaches, Ford’s endowment meltdown during the 1970s, the resignation of Henry Ford II from the foundation’s board, and the foundation’s professed openness to funding religious organizations. Berresford, president of the foundation since 1996 and a staffer there for nearly three decades, also describes the challenge of managing what by foundation standards is the ultimate bureaucratic colossus.

Philanthropy spoke with her at her New York City office.

PHILANTHROPY: What is the “fat boy” doing these days that is new?

MS. BERRESFORD: For one, we are trying to figure out whether we should help create a new institution that would be a resource for people around the world concerned with what is called transitional justice: truth commissions, reconciliation processes, and prevention. We have been funding, one by one, various aspects of these processes around the world, and we have come to believe that there is too much reinventing of the wheel going on.

PHILANTHROPY: Did the Ford Foundation support the “Truth Commission” in South Africa?

MS. BERRESFORD: We supported various activities related to it. At the very end of the process, when the Commission report came out, we helped fund a supplement in one of the newspapers there. So a summary copy of the report would go to every single person who got the newspaper that day. Right now, we are assisting people in Nigeria who are beginning to think about how Nigeria would have some kind of a truth commission. We’ve also been approached by people in Indonesia about this.

PHILANTHROPY: How do you differentiate between a legitimate process of reconciliation and an opportunity for a new regime to dance on the bones of the deposed ruler?

MS. BERRESFORD: I think part of the answer lies in the thoughtfulness of the process that the people wanting to do this lay out for you. The broader the engagement of people across the whole society, the more legitimate it’s going to be. If it is a process controlled by a small number of people and done quickly, it is more likely to be hijacked for some particular purpose.

PHILANTHROPY: The Bill and Melinda Gates Foundation manages $20 billion with roughly 20 people, not including the folks who handle their Internet program. You have something like 600 staff and 14 offices around the world. How are you different?

MS. BERRESFORD: Well, it depends on the kind of grantmaking you want to do. If you want to make very large grants to support major initiatives, you can do that, as Gates does. If you also want to do work at the grassroots and community level worldwide, you’re going to need a different kind of staffing structure. At the moment, the Gates Foundation is doing some very significant sized grants to major initiatives and they can manage it.

PHILANTHROPY: How about Ford?

MS. BERRESFORD: We do both. For example, we made a grant for $52 million about two years ago to test a secondary market for loans to very low-income homeowners, first-time homebuyers. It was a way of creating a guarantee for loans that would be delivered to homebuyers by regular banks, and those loans would then be bought by the Center for Community Self-Help in North Carolina, then sold to Fannie Mae. We were guaranteeing the Fannie Mae purchase. At the end of an eight-year period, if most of these loans have proven good investments and the people good risks for taking the loans, we would then have demonstrated that there is a basis for pushing lower into the income range for home ownership. We also make much smaller grants related to housing policy and neighborhood housing.

PHILANTHROPY: How do you differentiate between the people who are poor because of bad decisions, not injustice and oppression?

MS. BERRESFORD: I think you have to rely on the judgment of institutions that know the communities they’re dealing with and know how to sort through credit records. They can tell the difference between having a blotch on your credit record because you don’t pay your phone bill regularly versus people who have a blotch on their credit record because they were in the emergency room a year ago and are still paying for that. We are also supporting the largest test of Individual Development Accounts in the United States. These are matched savings accounts that enable low-income people to accumulate savings that can be used to buy a house, or invest in education or a business. I visited one of the largest individual development account programs in California, the one that’s based in Oakland. One of the insights I took away from that program was the tremendous power of the activities that the local IDA sponsors offer: the credit counseling, the savings club, the home ownership events that savers go to.

PHILANTHROPY: It sounds a bit like the immigrant self-improvement societies. It also sounds like a change for Ford—in the 1960s, the foundation was going after large firms like IBM and getting them into underserved areas like Bedford-Stuyvesant, trying to leverage the involvement of corporations to help poor communities. Do the IDAs and the home mortgage guarantees represent an evolution of that thinking to a more micro approach?

MS. BERRESFORD: I think one difference is that today, most communities no longer see the one big employer coming into town as the answer. They’re looking to increase the capacity of small-scale entrepreneurs, to expand their businesses as well as to link people from poor communities through new transportation systems to where employment may be with larger employers.

PHILANTHROPY: Is it harder to evaluate these more modest programs, where you might be trying to put a bus line in over here or tweak mortgage lending criteria at the bank down the street?

MS. BERRESFORD: I think it is always hard to evaluate the economic effect of employment efforts in poor communities because the residents of the community are so mobile. People get a job, begin to do well, and they often move away. But I think it was as hard in the old days with the IBM kind of model as it is now. And what it really means is that the groups that do this kind of work have got to invest substantial resources in research, or they’ll never really know whether they’re accomplishing anything.

PHILANTHROPY: Ford has been somewhat unusual in the sense that you’ve been willing to publish research, including some notable failures. Aside from the obvious reasons, why is this so rare?

MS. BERRESFORD: I don’t know why there’s such a reluctance. It seems to me that if you define your role as a foundation as an R&D fund for society, and what you’re after is innovative ideas and figuring out what works, then you have to know that there will be a lot of blind alleys. You and your grantees have to accept the fact that you’re going to have failure and frustration, and you have to go back and try again until you get it right. If you are an R&D fund you ought to be sharing the knowledge that produces.

PHILANTHROPY: You did a report a few years ago about education, which argued that some of the ideas you supported hadn’t worked. What has Ford learned about education?

MS. BERRESFORD: It is striking that after more than a decade of school reform efforts, few programs were studied carefully as to learning gains, not just what people did—the input—but the outcome. And of those that were studied, it’s striking how few showed the results that one really wanted. After some involvement with that, Ford drew back, and said we were not going to be putting new money into local education reform until real evidence of success begins to be accumulated. In general, we’re trying to get away from little boutique experiments in favor of things that operate on scale with proven learning gains.

PHILANTHROPY: Ford is still the one foundation everybody’s heard of, you’re a household word, but it seems as though you’re more behind the scenes and less on the front lines in recent decades.

MS. BERRESFORD: The leaders of the foundation in the 1980s and some of the 1990s wanted the foundation to construct partnerships with other donors around one topic or another. Being the “heavy” wasn’t the best way to be a partner. So there was a deliberate stepping back. Also, in our field, the 1980s and part of the 1990s were a quieter time, when a lot of power was shifting from the federal government down to the state and local levels.

PHILANTHROPY: Back in the 1960s you had people like McGeorge Bundy running Ford and former Defense Secretary Robert MacNamara as a trustee. They fairly radiated, as author Martin Morse Wooster puts it, a “can-do, new frontier activism,” a sense that anything was possible. These are folks who wanted to prove a concept and then “take it to scale.” When grand new social schemes were less in prospect, whether it was because of the economy or because of the election of President Reagan, was that an adjustment process for foundations initially?

MS. BERRESFORD: In the 1960s and 1970s, many national foundations focused their work on developing model programs and then using the proof from those programs to convince a federal agency to take it on to scale. As power devolved to states and local authorities, we became much more engaged in looking at the state level and what was happening and working with a variety of state actors. So absolutely, the “New Federalism” caused an adjustment and should have caused an adjustment. The politics of the country, and the political structures of the country changed, and one ought to then see a change in the way you do your work.

PHILANTHROPY: Is Ford today less likely to support a pilot program with the notion of scaling it up?

MS. BERRESFORD: We still do plenty of pilot programs, but we would look at the beginning for what is the long-term plan for sustainability. And we would try it in five or six states, and would be working from the very beginning on how those states would sustain it and what would happen afterwards. At the same time that this New Federalism was occurring, for instance, Ford invented one of its now signature programs, called the Innovations in American Government Awards. It grew out of the1980s, noting that state and local government had new authority, and a lot of innovation was occurring there, but was getting lost. And our view was, if you had an annual competition for people to nominate the best programs that can prove they have solved a social problem there would be a natural replication process. Many state governments are trying to solve the same problems.

PHILANTHROPY: Under McGeorge Bundy there was a movement away from academic research and toward legal advocacy. I’m thinking of seeding grants and things for programs like the Mexican American Legal Defense and Education Fund, better known as MALDEF. What prompted that?

MS. BERRESFORD: The country was seeing, through the activity of the civil rights movement, legal barriers that existed that needed to be challenged, and decisions needed to be made ultimately in the courts. What the foundation did was help establish institutions that brought cases on behalf of people who felt they were discriminated against. The country had a pattern of racial discrimination that needed to be challenged in employment and education and voting and a whole range of fields. So the foundation supported people who wanted to create litigating organizations to raise these questions.

PHILANTHROPY: How do you run the Ford Foundation?

MS. BERRESFORD: I run it with a team of fabulous people whom I trust and have come to know over a period of time. We have a senior management team that meets every Monday morning in my office. You have to create a structure where power and authority are shared and people understand what the guidelines are so they can operate with some confidence and make decisions. You have to create a structure so that the creative ideas of other people bubble up, because this is a large institution.

PHILANTHROPY: Who runs the meetings when you’re not there?

MS. BERRESFORD: Barron Tenny, who is the executive vice president. And if he’s not there, Barry Gaberman, and if he’s not there, Alex Wilde, who’s the vice president for communications.

PHILANTHROPY: Can staff make grants, and is there a threshold?

MS. BERRESFORD: I approve all grants over $100,000. Grants up to $100,000 can be made by staff at various levels. We budget on a two-year basis, and we work with our board and the worldwide senior leadership to say, “This is it that we’re going to try and accomplish over the next two years, in each of the fields, in each of the countries we work in.” And then we devolve the authority to take that general plan and translate it into grants. So, a good proportion of the grants—60 or 65 percent—fit squarely in the understanding that we’ve had from the beginning of the two-year period. Then, because we want to be a resource for innovation, we always save something like 40 percent of the money for unanticipated grants.

PHILANTHROPY: Ordinarily, would an implementation plan be staffed out, and then approved at a higher level?

MS. BERRESFORD: Yes. Every grantmaker writes what we call a program officer memo. That is ultimately approved by his or her immediate supervisor and then by someone at a vice presidential program level. Then, all grants that they make under $100,000 pursuant to that memo, they and their immediate supervisors can approve. And anything over that needs my approval. We meet every other week for an entire morning, and all the grants over $100,000 that have been recommended in the prior two-week period are on a list and we talk about them.

PHILANTHROPY: How does that go?

MS. BERRESFORD: I get a write-up on every single grant. There may be 50 on the list, or ten on the list. I read them all, think about them all, and we discuss some of them. I think the hardest thing is they cover such an enormous range of geography and subject matter, and none of us is familiar with every one of those places and subjects. The meeting is really a group discussion. I lead it, and I have to put my signature on the grant in the end, but all the officers of the foundation are there, and any program officer or any staff member who wants to attend can attend and participate.

PHILANTHROPY: Are there any “Susan Berresford” rules? Any pet peeves?

MS. BERRESFORD: No. I don’t have any pet peeves. In fact, Ford has many wonderful qualities, but one of the best is its flexibility. We make grants of $1,000, and we make $50 million grants. We make endowment grants and project grants and general support grants. We make loans and we make recoverable grants. We try and figure out what is the tool that fits this task, and we can create it if we haven’t got it already. We don’t say we won’t fund you more than ten years or we’ll only fund you for two years.

PHILANTHROPY: Is the burden of expenditure responsibility something you weigh before making individual grants?

MS. BERRESFORD: We make lots of individual grants—mostly overseas. Expenditure responsibility is just something you take on board. We do not make that a barrier.

PHILANTHROPY: Does your board approve any grants?

MS. BERRESFORD: No, and it’s been that way for as long as I can remember. It’s a policymaking board instead of a grantmaking board.

PHILANTHROPY: It that a trend among the larger foundations?

MS. BERRESFORD: Yes, and I think there are two things that drive that. One is size and scale. If you are making a significant number of grants, unless your board meets very, very frequently, it’s not likely to be able to review, in any depth, all the grants. So, the number of grants you make partly drives the review process. But most important I think is deciding what the board brings to this process that is most valuable. In our foundation we draw our board members from all over the world, and it wouldn’t make a great deal of sense to have someone from South Africa deciding whether a grant in California is the right grant or not. How would that person have any basis on which to make that judgment? It makes more sense for the board to set foundation policy.

PHILANTHROPY: Does the board make broad decisions such as, you shall allocate x percent of your endowment in the fiscal year 2001?

MS. BERRESFORD: Yes, they set the budget level and broad allocations. We have a formula, and then there’s some tweaking we do. We set our budget at 5.8 percent of a three-year rolling average of our portfolio value. Then, depending on our judgment about the stock market and other things, we may move around a little bit from that. Obviously if the federal requirement drives us higher in a given year we do that. Using a three-year average basis tends to even out the peaks and valleys.

PHILANTHROPY: What kind of feedback do you get from grantees?

MS. BERRESFORD: We convene groups of our grantees with groups of our staff who make grants to them, all working on a common topic, let’s say human rights. If you have grantees who outnumber you they’re going to tell you whether they think they’re getting to where you want to be. A lot of people say that because you give money no one will ever tell you the truth—that’s really not true [laughs]. People tell you a lot of hard stuff.

PHILANTHROPY: You mentioned feedback from grantees, and creating an environment where ideas can bubble up. Some management experts worry that large foundations tend to become bureaucratic and ineffective. We interviewed Peter Drucker, and he was critical of Ford:

Name a single major foundation that has done a good job for more than five or eight years, without turning into a grantmaking machine where grant requests come in and the money flows out. The Ford Foundation had this one accomplishment—the Green Revolution in India—but otherwise, all their spending has had absolutely no results.

MS. BERRESFORD: Well obviously I disagree with that. The foundation I know, the Ford Foundation, has done many extraordinary things besides the Green Revolution, including helping create public broadcasting, building the community development movement by helping support the emergence of Community Development Corporations around the country, and then funding a financial and technical support system. We supported the civil rights movement, and created institutions across this country that have been the premier organizations analyzing welfare policy, criminal justice policy, and policing policy. I think that one of the reasons people make comments like Peter Drucker’s is that the farther away you get from an activity, the easier it is to see what is the standing extraordinary accomplishment. If you were looking at the time of the Green Revolution as it was going on, you would have seen a lot of dead ends and blind alleys, but ultimately, 40 or 50 years later, you can see the enormous accomplishment, and everything else fades away.

PHILANTHROPY: Would you be immodest for a minute and talk about your role in some of those accomplishments? What are you proudest of?

MS. BERRESFORD: Well, I am proud of some of the new foundations Ford is helping create around the world. We first did this in Puerto Rico, working with other foundations—MacArthur, Carnegie, and Rockefeller—and the Puerto Rico Community Foundation stands today as a fabulous example of new philanthropy, and in fact has been an inspiration for community foundations around the world. There’s one in Kenya that we’re supporting, there’s one in Nigeria, there are two in India. People ought to be able to direct the development of their own country, and that’s what these foundations helped accomplish..

PHILANTHROPY: The foundation had something of a near-death experience when the bottom dropped out of the stock market in the 1970s. Endowment assets slumped from $4.1 billion to $1.7 billion. Annual grants were cut from $197 million in 1973 to $75.8 million in 1979—an inflation-adjusted decline of 70 percent. Now, the best paid member of your staff is the person who handles the financial trading, and you have an in-house trading room.

MS. BERRESFORD: Yes, Linda Strumpf is the vice president for investment at the foundation. We have an investment committee of the board. They are in touch regularly, and Linda and I talk frequently. We all think hard about asset allocation and the broad investment choices we make. Then we hire very, very good people and give them authority to make the decisions within broad policy guidelines. And they’ve done very well. In recent years, we have put a significant amount of money into venture capital, and a lot of that in technology, and have done very, very well with those investments.

PHILANTHROPY: Do you practice “socially responsible” investing?

MS. BERRESFORD: We have a proxy committee of the board that discusses questions of how we vote our proxies, or whether to write a letter to corporate management if we don’t want to vote in a particular way but we still want to express our view. But we do not, other than in a very few cases, screen investments.

PHILANTHROPY: Is Ford more focused on religion than in the past?

MS. BERRESFORD: Yes, this was something new that I brought to the foundation when I became president. In many of the societies we work in, there is a questioning of where values are going to come from, as old systems and old ideologies are breaking down and market systems come in. In many of the countries we are working in, people are beginning to look sometimes to religious communities for values. So it seemed to me important to be able to support that kind of inquiry and dialogue and discussion. Second, in a number of the places in which we operate, the work we do is strongly influenced by beliefs in religious communities. The role of women is defined in certain ways by religion in one part of the world or another, or at least how those religions are interpreted. And third, it seemed to me that in every major period of reform in this country, religious voices had been very important as a force for the betterment of mankind in some way. The foundation also had a history of working with black churches and black communities, and that we could build on that in this country and move in other directions overseas. So, that’s what we’ve been doing.

PHILANTHROPY: Would the Ford Foundation support, for instance, a faith-based drug treatment program…

MS. BERRESFORD: Absolutely.

PHILANTHROPY: …where the goal of the program is to change the person, by leading him or her to a religious conversion?

MS. BERRESFORD: No, we would try—let me give an example of some of the things we’ve supported. In this country we have been supporting some religious organizations that are playing an important civic role. If institutions—churches, synagogues, mosques, etc.—are organizing large-scale programs to serve youth or to serve homeless people, that’s of interest to us. We are not supporting their efforts to convert people to their religion, but we are supporting their social and civic role, which in many communities is very important.

PHILANTHROPY: You can see how, when you have a debilitating problem like alcoholism or drug addiction, where the person is in need of a complete transformation. Yet there has been a real reluctance for many private foundations to support the people who Robert Woodson describes as “urban healers,” and the groups that are actually transforming individuals and neighborhoods on a daily basis, through the power of faith.

MS. BERRESFORD: Well, they generally have support from their own congregations for their own religious activities, and they are able to do whatever proselytizing they want to do. Where they often fall short in support is for the extension of their civic activity into the broader community. So that’s why I think foundations tend to go in that direction.

PHILANTHROPY: Why did Henry Ford II resign from the foundation board?

MS. BERRESFORD: I think he resigned for a number of reasons. I recently reread his resignation letter, and I think on the one hand he felt extremely proud of the foundation. He lists a number of the things that he particularly admires that the foundation has done. On the other hand, I think there were aspects of what the foundation was doing that he felt uncomfortable about. This led him to the conclusion that he should withdraw. He knew there was a full board, with lots of different opinions. He respected the members of the board, and the choices they made. But they were not always the choices he would have made. So he decided he shouldn’t be here.

PHILANTHROPY: He also wrote:

The foundation is a creature of capitalism, a statement that I’m sure would be shocking to many professional staff people in the field of philanthropy. It is hard to discern recognition of this fact in anything the foundation does. It is even more difficult to find an understanding of this in many of the institutions, particularly the universities that are beneficiaries of the foundation’s grant program. I am not playing the role of a hard-headed tycoon who thinks all philanthropists are socialists and all universities and professors are communists. I’m just suggesting to the trustees and staff that the system that makes the foundation possible very probably is worth preserving.

MS. BERRESFORD: He does say all that, but the top part of the letter has more balance than that would suggest. But I think he felt at the time that some of the work in public interest law, for example, was challenging the activities of some businesses, and therefore challenging, as he says, sort of the engine that created foundations. Today, if you look at what the foundation does, we work closely with businesses in a range of things like the home ownership example I talked about. So I’m not sure where the critiques fit in; they certainly don’t fit now. We see partnerships with business, here and around the world, as a very important part of what we do. It’s not the only thing we do, but a very important part of it.

PHILANTHROPY: Yet you support groups like the NOW Legal Defense Fund, MALDEF, Union of Concerned Scientists, Physicians for Social Responsibility, and the Pro-Choice Resource Center. Don’t most people unhesitatingly describe the Ford Foundation as liberal?

MS. BERRESFORD: Absolutely, but at the same time I think it is a mistake to try and pigeonhole institutions into these polar categories. Because if I look at the work we’re doing on home ownership and IDAs, for example, there is nothing more basic and closer to the heart of what I think conservative values are in this country than those kinds of things.

PHILANTHROPY: So you wouldn’t characterize Ford as liberal?

MS. BERRESFORD: I think there are a number of things the foundation does that could be characterized as liberal—the work on human rights, the work on women’s rights, the work on reproductive rights—of course. And I’m very proud that I work in a foundation that has those kinds of values. But that does not define the whole of the Ford Foundation. The work we do to build community foundations all around the world and all around this country is, at its core, building capital for communities to improve their museums and their hospitals and their civic life.